What is the difference between Program Budgeting and line item budgeting?

Answer 1

Imagine a department that delivers 2 services - street cleaning and solid waste management.

Line-item budget would look like:

Director - 1000$

Cleaners - 5000$

Trucks - 3000$

Workshop - 6000$

Electricity - 500$

Total: 15500$

Programme budget will have all the costs apportioned:

Street cleaning (for 1 month, 2km of streets cleaned every day)

Director (50%) - 500$

Cleaners (100%) - 5000$

Electricity (20%) - 100$

Total street cleaning: 5600$

Solid waste management (for 1 month, 500kg solid waste processed every day)

Director (50%) - 500$

Trucks (100%) - 3000$

Workshop (100%) - 6000$

Electricity (80%) - 400$

Total solid waste management: 9900$

Line-item eventually is still retained by most public entities, because it is the first step in identifying costs, whether governments make a move to programme budget - depends on their needs.

Programme budget helps achieve performance evaluation, i.e. how much street cleaning costs, how much does it cost to clean 1 km of street, how is the current dpt performing against other similar units, and relate outputs to costs.

Line-item is simpler, helps in reviewing aggregate costs (i.e. how much did the electricity cost in a particular month) and only looks at inputs, does not relate outcomes to inputs and does not have efficiency and effectiveness as priority.