Budgets are of different types depending on their purpose and the requirements of the institution. They may be classified as follows:
1. Responsibility Budget:
A budget set by the person responsible for implementing it is known as a responsibility budget. It may be based on one or more functions of the executive.
2. Programme Budget:
Here, budget is set for each programme. The programme may be continuo is or time-bound.
3. Functional Budget:
If a budget is set for a function (e.g. sports, annual day, staff development, library), it is known as a functional budget.
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4. Financial Budget
It refers to the budgeted balance sheet, the budgeted income and expenditure account and cash budget.
5. Capital Budget:
A budget for capital expenditure (e.g. purchase of land, construction of building) is called a capital budget.
6. Fixed and Flexible Budget:
A fixed budget is one which is prepared keeping in mind one’s pre-determined level of activity. On the other hand, in a flexible budget, different budgets are prepared for different levels of activity.
7. Zero Base Budgets (Z.B.B.):
It is an operating, planning and budgeting process aimed at more efficient use of limited and scarce resources for attaining pre-determined goals. It does not take into account previous year’s income and expenditure. It is rather a technique which complements and links the existing planning, budgeting and review process.
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It identifies an alternative and efficient method of utilizing limited resources in the effective attainment of objectives. It systematically reviews and justifies workload, performance levels of current programmes and activities and allocation of funds. Thus, it is a flexible management approach. The steps in preparing a zero-base budget include:
(a) Defining the objectives of the institution and its components (e.g. entire school, primary section, secondary section; or the entire college, junior college, senior college and different departments). These objectives will be both, short-term and long-term.
(b) Classification of activities including teaching, examination, administration, library, laboratory, co-curricular activities and so on.
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(c) Restructuring of activities with a view to avoid any waste of stationery, manpower and other materials, duplicate an of human efforts/jobs etc. It also includes proper classification of activities so that absence or non-availability of one of the staff members need not make others idle.
Restructuring include: ordering of activities for continuity and flexibility i.e. enabling an institution or its components to change the priority of activities as per its requirements, staffing pattern and allocation of duties. Besides, there are certain activities which have i heavy rush during a specific period but dry up later.
Persons doing such activities can be transferred to other jobs during slack period. Similarly, person’s total workload should be judged and if found inadequate, he/she can be given two functions or t divides to be performed. These two also are included in restructuring of activities.
(d) Wherever possible, alternative and more efficient methods of activities can be employed based on (i) urgency, (ii) requirements, (iii) amount of money available, iv) nature of activities and (v) cost-benefit analysis.
(e) Every institution and its components have certain minimum and basic functions to be performed. Hence the minimum amount of funds to perform these functions should be treated as minimum funding level. This amount should be determined in advance.
(f) The principal now should decide how the funds allotted should be used i.e. he/she can decide to spend the whole amount in one go or to spend it in installments. The different activities and materials on which money has to be spent need to be prioritized.