0.1 Literature review  (Page 12/19)

One of the largest sources of income for all public schools is the states Norms and Standards budget allocation. According to the South African Schools Act Section 34 (2): “The state must, on an annual basis, provide sufficient information to public schools regarding the norms and standards budget allocation to enable public schools to prepare their budgets for the next financial year” and the National Norms and Standards for School Funding (2000; 9) states that by the 30 ^th September each year the Provincial Education Department must notify the school the amount of its indicative budget, that is, how much has been allocated to the school for the following financial year for non-personnel costs.

Other sources of income include: School Fees; Interest Income; Rental of School Premises; Fund Raising; Donations. The main expenditure items include, but are not limited to: Audit Fees; Bank Charges; Cleaning and Sanitation; Electricity and Water; Printing and Stationery; Repairs and Maintenance; Salaries and Wages; Security Services; Sport and Extra-curricular Expenses; Telephone and Fax; Textbooks.

Bischoff and Mestry in Mestry (2004; 129) states that the budget should reflect the schools prioritized educational objectives, seek to achieve the efficient use of funds and be subjected to regular, effective financial monitoring. One of the intentions of budgeting is to ensure that the school raises sufficient income to meet the anticipated expenses so that the school can provide quality education efficiently, effectively and economically.

There are several different strategies available to the FINCOM when they plan to construct the budget:

(i) Incremental budgeting – is a method of budgeting wherein the previous years budget is adjusted with increments for any anticipated increases in income and expenditure items (or in the case of decreases, decrements), that is a fixed percentage is added to each and every income and expense item in the previous years Statement of Receipts and Payments (Income Statement). This added percentage is usually an inflation-linked percentage.

(ii) Pragmatic budgeting – is a method of budgeting that bases the following years budget on the previous years one but attempts to improve the previous years one via savings and redeployment.

(iii) Base budgeting – is a method of budgeting which advocates the schools planned priorities as the starting point however it accepts that the major part of most schools’ budgets will be “irrevocably committed to core activities and therefore not available to alternative uses” [Knight (1993; 134)]. This ideology is advocated in the Norms and Standards for school funding where the budget allocation has been “ring fenced”.

(iv) Zero based budgeting – is a method of budgeting which involves “wiping the slate clean”, that is by beginning the process with a blank sheet of paper. All expenditure is then estimated based on the planned priorities and identified needs of the school, that is, a cost is attached to each and every planned activity and each and every identified need in order to ensure the efficient, effective and economic functioning of the school. Sources of income are then identified and the difference between the estimated expenses and estimated income is attributed to the school fee to be levied (taking into account school fee exemptions).