Budget Systems: Underlying Structures and Characteristics

Budgets are prepared using a formal structure that ties the various elements of a budget into a coherent document. The structure provides the foundation that guides the development of the budget, which, for convenience, we will call “budget systems.” Although terms such as “budget formats,” “budget approaches,” and “budget types” are often used, ‘budget systems” seem more appropriate because, like any system, all budgets have a formal structure with interrelated components that are tied together in a coherent fashion to achieve the goals and objectives of a government. Understanding the systems and their structures is important to understand how budget decisions are made and the results those decisions have on individual agencies and departments, their functions, programs, and activities, as well as the public vis-a-vis society at large. Understanding the systems and their structures is also important to understand the management structure of a government: from the chief administrative officer to the budget director and the Central Budget Office, to various agencies and department heads, and all the way down to the unit managers dealing with individual components of the budget. This chapter provides a brief discussion of the role the budget systems play in the overall budget process, followed by a detailed discussion of some of the commonly used budget systems in government.