Topic 2

Question 1

Operationalize business strategy, Allocate resources, Incentivize managers, Control spending, Communication, Achieve effectiveness, efficiency, and equity

Answer 1

purpose of a budget

Question 2

is an example of an implicit rule

Answer 2

“Use it or lose it”

Question 3

Budget ______ give constraints to inputs of different departments

Answer 3

appropriations

Question 4

 Allows units to express the needs of the organization

 Enables leadership to assess the organization

Answer 4

Communication Internally

Question 5

 Budgets communicate organizational plans and expectations to stakeholders
 Disclosure of intent for and use of resources
 Expression of priorities

Answer 5

Communication Externally

Question 6

whether a current policy or program provides benefits

Answer 6

Effectiveness

Question 7

maximizing benefits and minimizing costs

Answer 7

Efficiency

Question 8

considers whether benefits and costs are distributed equitable across citizens

Answer 8

Equity

Question 9

 Top-down flow of information
 Central office controls the budget process
 Seeks efficiency in distribution of resources among units

Answer 9

Centralized budget system

Question 10

 Bottom-up flow of information
 Units and program managers are involved in budget development and control of spending
 Reallocation of resources is more difficult

Answer 10

Decentralized budget system

Question 11

 Future allocations are based on current allocations
 Assumes base budget is correct
 New budget: percentage increase/decrease to base budget
 Tends to minimize political conflict
 Lacks a mechanism for significant adjustments

Answer 11

Incremental budgeting

Question 12

 Revisit budget allocations each year
 Can address funding disparities
 Requires consensus-building

Answer 12

Redistributive budgeting (Example: Zero-Based Budgeting)

Question 13

 Budget focuses on the organization as a whole

 Assumes pooled resources

Answer 13

o Institutional perspective

Question 14

 Budget is divided into independent parts
• Departments, programs, business units
 Assumes financial independence
• Each unit is responsible for own revenue generation and expense control

Answer 14

o Center-based perspective

Question 15

 Budget is viewed as an annual event
 Organization begins each fiscal year with a new budget
• Revenues and expenses reset to zero

Answer 15

o Single-year appropriations

Question 16

 Funding is obligated over the course of more than one year
 May receive funding in lump sum or several allotments
 Enables carryover of surpluses and deficits
 Limits the flexibility of central budget office

Answer 16

o Multi-year appropriations

Question 17

 Detailed funding plan for a fiscal period
• Annual or biennial
 Specifies sources of funding, allocations, types of spending
 Communication to oversight entity and to members of the organization

Answer 17

o Organizational Budgeting

Question 18

 May span several organizations

 Constitutes a portion of the organization’s overall budget

Answer 18

o Program Budgeting