A Process Model of Budgeting in a Public School System

This paper is concerned with the resource allocation process in public organizations. In particular, the operating budget of a large urban school system is investigated in an effort to discover the manner in which appropriation decisions are made. A computer simulation model is developed which consists of the sequence of operating procedures used by the school system's administrators in making their choices. The model consists of preliminary decisions on departmental requests, decisions on a general salary increase and new debt service, a comparison of revenue forecasts to total expenditures and processes to balance the budget by removing a deficit or distributing a surplus. Preliminary departmental appropriations are influenced by expectations of added revenues and the existence of an informal priority system. A general salary increase is budgeted as the result of a comparison of the existing salary structure with those of certain similar organizations. New debt service is influenced by the financial pressure exerted by the level of working capital in the bond fund. An important factor in removing a deficit is the attempt to use strategies which will not affect existing appropriations. Surpluses when they exist, are distributed in order to prevent certain pressures from building up. The predictions of the model are tested in so far as possible and a sensitivity analysis is conducted on certain parameters estimated from sparse data.