The planning and control functions inherent to any organization, including schools, underscore the importance of sound budgeting practices for the following reasons:

• The type, quantity, and quality of goods and services provided by governments often are not subject to the market forces of supply and demand. Thus, enacting and adhering to the budget establishes restrictions in the absence of a competitive market.
• These goods and services provided by governments are generally considered critical to the public interest and welfare.
• The scope and diversity of operations in an organization make comprehensive financial planning essential for good decisionmaking.
• The financial planning process is critical to the expression of citizen preferences and is the avenue for reaching consensus among citizens, members of the governing board, and staff on the future direction of the governmental unit’s operations.

The link between financial planning and budget preparation gives the budget document a unique role in governmental organizations. Budgets in the public arena are often considered the definitive policy document because an adopted budget represents the financial plan used by a government to achieve its goals and objectives. When a unit of government legally adopts a financial plan, the budget has secured the approval of the majority of the governing board and reflects

• public choices about which goods and services the unit of government will or will not provide,
• the prioritization of activities in which the unit of government will be involved,
• the relative influence of various participants and interest groups in the budget development process, and
• the governmental unit’s plan for acquiring and using its resources.

In an educational environment, budgeting is an invaluable tool for both planning and evaluation. Budgeting provides a vehicle for translating educational goals and programs into financial resource plans-that is, developing an instructional plan to meet student performance goals should be directly linked to determining budgetary allocations. The link between instructional goals and financial planning is critical to effective budgeting and enhances the evaluation of budgetary and educational accountability.