P.G.

COLLEGE OF NURSING,BHILAI

SEMINAR ON
BUDGET MANAGEMENT IN
PROFESSIONAL EDUCATION

GUIDE -

Mrs. SUSHILA SINGH

LECTURER
P.G.COLLEGE OF
NURSING

SUBMITTED BY -

Ms. S. ANITA
MSc (N)Final year

INTRODUCTION
Budget is a plan for the allocation of resources and a control for ensuring that results
comply with the plans. Results are expressed in quantitative terms. They are frequently prepared
for each organizational unit.
DEFINITION
A budget is a plan that uses numerical data to predict the activities of an organization over a
period of time.
A budget is a quantitative statement usually in montetary terms, of the plans and expectations of
a defined area over a specified period of time.
PURPOSES
1 To meet organizational short and long term needs.
2 It provides a mechanism for planning and control as well as for promoting each units needs and
contributions.
3 It provide a foundation for managing and evaluating financial performance.
4 To ensure that resources necessary to achieve the objectives are available at appropriate time.
5 To increase the awareness of costs.
TYPES OF BUDGETS
1 OPERATING OR REVENUE &EXPENCE BUDGETS
The operating budget provides an overview of an agencys functions by projecting the
planned operations usually for the upcoming year. Among the factors that nurse manager might
include in their operating budgets are personnel salaries, employee benefits, insurance office
supplies, rent, light, housekeeping, laundry service, educational leaves, books, periodicals, dues,
membership fees& recreation.
2 CAPITAL EXPENDITURE BUDGETS
Capital budgets plan for the purchase of buildings or equipments that has a long life.
The long term major component include the acquisition of a positron emission tomography
imager. The short term component includes equipment purchases with in the annual budget cycle
such as call-light systems, hospital beds &medication charts.

3 PERSONNEL OR LABOR BUDGETS

Personnel budgets estimate the cost of direct labor necessary to meet the agencys
objectives. The nurse manager decides on the type of nursing care necessary to meet the nursing
needs of the estimated patient population. How many aides, orderlies, LPNS& RNs are needed
during what shift, what months & in what areas.
4 CASH BUDGETS Cash budgets are planned to make adequate funds available as needed and to use any extra
funds profitably. Using a cash budget the nurse manager estimates the amount of money to be
collected from clients &other sources &allocates that cash to expenditures.
5 FLEXIBLE BUDGETS
Some costs are fixed &do not change with the volume of business. Other costs vary
proportionately with changes in volume. Some variable expenses are unpredictable &can be
determined only after change has begun thus the need for flexible budgets.
6 STRATEGIC PLANNING BUDGETS
Long range budgets for long range planning are often called the agencys strategic plan and
are usually projected for 3 to 5 years. Program budgets are part of the strategic plan that focuses
on all the benefits and costs associated with a particular program
7 ZERO BASED BUDGETING
In this the funds are allocated to departments on the basis of their previous years
expenditures. Then the department manager decide how the funds will be used. Each service
must be justified each time funds are requested .A decision package is prepared then they are
ranked in order of decreasing benefits to the agency. They are divided into high ,medium &low
priority categories& reviewed in order of rank for funding.
8 SUPPLEMENTARY BUDGETS
A minimal budget is planned usually for a year time ,to outline the framework for the
agencys plans, establish department objectives &coordinate departments. Then a monthly
supplementary budget is prepared on the basis of the volume of business forecast for that month.
9 MOVING BUDGETS
It is used when forecasting is difficult. It plans for a certain length of time, such as a year. At
the end of each month another month is added to replace the one just completed. Thus the
budgetary period remains constant.

1O INCREMENTAL BUDGETING
Incremental or the flat percentage increase method is the simplest method. By multiplying
current year expenses by a certain figure ,usually the consumer price index, this method arrives
at the budget for the coming year.
BUDGETING PROCESS
1 Determine the requirements of the budget First step in the budget process is the establishment of operational goals and policies for the
entire agency. Top level managers frequently developed the budget for an institution. A
composite of unit needs in terms of manpower, equipment & operating expenses can then be
compiled to determine the organizational budget.
2 Develop a plan
Second step is to develop a plan. A budgeting cycle that is set for 12 months is called a fiscal
year budget. This fiscal year is then broken down into quarters into monthly quarterly.
3 Analyse & control the operation
The third step is implementation , in this step, ongoing monitoring &analysis occur to avoid
excess or inadequate funds at the end of the fiscal year. Top level managers must watch for
&correct unrealistic budget projections before they are implemented.
4 Review the plan
The last step is evaluation. The budget must be reviewed periodically and modified as needed
throughout the fiscal year. With each successive year of budgeting, managers can more
accurately predict their units budgetary requirements.
ADVANTAGES OF BUDGETING
1 Budgets plan for detailed program activities. They help fix accountability bu assignment of
responsibility & authority.
2 They state goals for all units ,offer a standard of performance.
3 Budgets encourages managers to make a careful analysis of operations and to base decisions on
careful considerations.
4 Staffing, equipments &supply needs can be projected &waste minimized.

5 Financial matters can be handled in an orderly fashion &agency activities can be coordinated
and balanced.
DISADVANTAGES OF BUDGETING
1 Only those aspects that are easy to measure may be considered and equally important factors
such as organizational development& research efforts may be ignored.
2 The budget may become an end in itself instead of the means to an end.
3 Budgertary goals may supersede agency goals &gain autocratic control of the organization.
4 There is a danger of over budgeting the budget becomes cumbersome, meaningless&
expensive. Forecasting is required but uncertain.
5 Skill &experience are required for successful budgetary control.
PRINCIPLES OF BUDGET
1 Budget should provide sound financial management by focusing on requirements
of the organization.
2 It should focus on objectives& policies of the organization.
3 It should provide the most effective use of scarce financial & non financial
resources.
4 It requires that a programme activities planned in advance.
5 It requires consistent delegation for which fixed duties & responsibilities are required to be
allocated to managers at different level for executing budget.
6 It should include coordinating efforts of various departments establishing a frame of reference
for managerial decisions, & providing a criterion for evaluating managerial performance.
7 Setting budget target, requires an adequate checks & balance against the adoption of too high
& too low estimate. Utmost care is a must for fixing targets.
8 Budget period must be appropriate to the nature of business or service & to the type of budget.
9 Budget is prepared under the direction & supervision of the administrator.
10 Budget are also prepared & interpreted consistently throughout the organization in the
communication of planning process.
11 Budget necessitates a review of the performance of the previous year & an evaluation of its
adequacy both in quality & quality.

12 While developing a budget the provision should be made for its flexibility.
BUDGET MODEL ESTIMATES
Previous year

Current year

Budget for next year

2007-2008

2008-2009

2009-2010

Item
1 Trust

Income
50,000/yr

2 Donations

50,000/yr

3 Voluntary

50,000/yr

Expenses

Income

agencies
4 Fees from
-MSc (N)

4500000

Students
-BSc (N)

3750000

Students
-Post basic

300000/yr

students
5 Bank interest

80000

6 Salaries for
- Externals

non

- Principal

recurring

-vice

1000000/yr

principal
- Lecturer

420000

-clinical

4500000

instructor
-office staff

2160000

- class IV

60000

- kitchen

30000

Expenses

Proposed

Approved

staff

36000

-stationary

Recurring

-news paper

5000

-equipment

1200

repair

10000

-transport&
petrol

12000

-educational
tour

5000

-stipends for
students

18000

- sports
material

5000

-college
building fund

50000

-hostel
maintainance
- fund for

32000

professional
activities

5000

-workshops
-National
conference

5000/yr

-purchase of

10000

books&
journals

25000

-internet
facility
-linens for lab

20000

-household
supplies for

5000

nutrition lab
-AVA

5000

-electricity
-water
20000
22000
10000/yr

Total

8480000

8471200