Line Item Budgeting

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Line Item budgeting is the most widely used approach in many organizations due to its simplicity and its control orientation. “It is referred to as the "historical" approach because administrators and chief executives often base their expenditure requests on historical expenditure and revenue data. One important aspect of line-item budgeting is that it offers flexibility in the amount of control established over the use of resources, depending on the level of expenditure detail (e.g., fund, function, object) incorporated into the document” (National Center for Education Statistics). The advantages of line item budgeting are that it offers simplicity; “you can easily budget for each area or department of your company based on historical …show more content…
Due to the line item budget certain departments could have unused money at the end of the year and their theory is if it’s still there than the budget could be slashed next year (National Center for Education Statistics). Performance based budgeting is also referred to as outcome budgeting, it’s the practice of developing budgets based on the relationship between funding and the expected results. These budgeted expenditures are “based on a standard cost of inputs that are multiplied by the number of units of an activity to be provided in that time period (Joseph). Performance based budgets improves cost efficiency and manages effective budgeting outlays, increasing visibility into how government policies into spending and making systematic use of performance information. This type of budget needs to be tailored to the needs of each organization, it needs to incorporate any unique process and industry-specific best practices but also maintain the core components of performance based budgeting. There are six key components to performance based budgeting, must include input from impacted workers, this will help ensure the overall foals, agency objectives, and performance indicators are realistic. Set realistic time frames and expectations, PBB can provide the tools for legislators and agency administrators to promote performance accountability and transparency. Must budget enough recourses, time, money, and human

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