Finance

@ Vinci Viveka. M.Ed 2012-13, SXCE

EDUCATIONAL FINANCE

@ Vinci Viveka. M.Ed 2012-13, SXCE

MEANING

It is concerned with the income and expenditure of authorities of educational institutions and with the adjustment of one (income) to the other (expenditure).

DEFINITION

Hornby (1974) defined FINANCE as the issue of the management of money or funds It involves planning for the procurement and effective utilization of funds made available for the implementation of programmes or projects.

@ Vinci Viveka. M.Ed 2012-13, SXCE

Ogbonnaya (2000) described EDUCATION FINANCE as the process by which tax revenues and other resources are derived for the establishment and operation of educational institutions as well as the process by which these resources are allocated to institutions in different geographical areas.

@ Vinci Viveka. M.Ed 2012-13, SXCE

NATURE OF EDUCATIONAL FINANCE

1. SUFFICIENCY- education cannot discharge its responsibility unless there is a provision for appropriate and adequate financial support for its need. The important criteria for sufficiency is that which is best for the future of the unique social – institution of education.

2. FAIRENESS- if democracy is to flourish in the true sense social justice must be there. The wide disparity of educational opportunities in the country must be wiped out.

3. FLEXIBILITY- Edu finance should be kept flexible and adaptable to changing conditions of progressive and pragmatic society.

4. FRUGALITY- edu finance requires efficient administration. Funds whether liberal or meagre , need wise and careful spending so that the outputs and inputs are reasonably balanced.

5. CO-OPERATION- Besides securing necessary funds the education administrator has to co-ordinate efforts of central govt, state govt and local people for quality education. Participation of teachers , parents and local people should be there in framing goals policies, budgets etc.

@ Vinci Viveka. M.Ed 2012-13, SXCE

Scope of Education Finance

The scope of education finance refers to the specific areas or of education finance. They include all of the following:(a) Financial concepts like interest, payment vouchers, finance investment, authority to incur expenditure, Bank statements, cash management imprest and financial control.(b) Taxation(c) Budget(d) Classification of government expenditure.(e) Types of cost analysis - current versus capital cost, recurrentand capital expenditure.(f) Role of government and non-government agencies in the funding of education.(g) Sources of funds and problems of funding educationalprogrammes in the country.

@ Vinci Viveka. M.Ed 2012-13, SXCE

1. Fund refers to a sum of money saved or made available for a particular purpose. It could be called money or financial resources. Fund can take any of the following forms: Physical cash, credit facilities that is trade credits, bank credits, etc, allowances or discounts received, etc.

2. Financial control involves the task of keeping expenditures in check and controlling the inflow of revenue, safe guarding the assets and ensuring that resources are sufficient to implement the plans and policies and generally ensuring values for money in terms of the organisation's resource management and application.

3. Payment vouchers are pieces of paper showing that money has been paid out or that the holder has the right to goods or services.

4. Authority to incur expenditure is the power given to an administrator or chief executive of an organization to spend money within the approved estimate.

5. An Imprest can simply be described as "earnest-money". It is money advanced to an organization for meeting its financial needs within a specified period. Usually, such fund helps in meeting incidental expenses or taking care of petty business of the organization. An imprest is normally retired at the end of the spending period

@ Vinci Viveka. M.Ed 2012-13, SXCE

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E6. Expenditure- a. Recurrent expenditure can simply be described as expenditure incurred on personnel in the organization, consumable supplies, repairs, and maintenance and refurbishing during the financial year.

b. Capital expenditure includes expenditure on buildings, school sites, equipment and machinery minus the cost of their repair and maintenance.

7. Bank statements are written facts on a paper or book about an individual, an organization or establishment’s account with a bank, The purpose is to enable finance officers in the organization to verify and reconcile the bank statements with the actual balance in their cash book.

@ Vinci Viveka. M.Ed 2012-13, SXCE

8. Auditing means the verification of records kept in theaccounting system of an educational institution. The primaryobjective of auditing in private organizations is to verify the records kept in their account departments in order to determine their profit or losses but here in educational management auditing is done to detect fraud and error in financial management.

9. Educational budget has been presented by authorities on the subject.Roe (1961: 81) has defined educational budget as:The translation of educational needs into a financial plan which is interpreted to the public in such a way that when formally adopted, it expresses the kind of educational programme, the community is willing to support financially and morally, for a on-year period.

@ Vinci Viveka. M.Ed 2012-13, SXCE

Morphel, Johns and Reller (1974) have on the other hand defined school budget as an educational plan with an estimate of the receipts and expenditures necessary to finance i t for a definite period of time. Adesina (1981) had defined a school budget broadly as an outline of the plan for financing the school programme for a given period.

From all the above definitions, we can deduce that the budget is the financial statement of the proposed expenditure and expected revenue of the government, public corporation, or educational institution for a particular period of time. The budget usually covers a period of one year. It shows clearly the expected income and proposed revenue of government or in our case, an educational institution for the coming year. In educational institutions, the budget is prepared by the bursary department or finance office as the case may be.

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10. TYPES OF GOVERNMENT GRANTS

Government grants constitute a principal source of funding education. Adesina (1981) stated that grants fall under two categories of capital and recurrent grants.

A . Capital grants refers to the bulk of payment to the schoolauthorities for erection of new buildings, major repairs of old ones and the purchase of hard ware school equipment, eg, the equipment of science laboratories or the erection of fine art laboratory.

B. Recurrent grants refers to the expenditure which occurs every year in the budget, such as staff salaries and allowances, purchase of equipment, maintenance of plant, traveling and transport expenses and expenditure on pupils meals and uniforms. Recurrent expenditure varies from time to time due to some factors such as the amount voted in for education, and the need for effective utilization.

@ Vinci Viveka. M.Ed 2012-13, SXCE

c. Government special grants enable the government to improve the quality of education in the self-help schools. Through government special grants,classroom blocks are set up, laboratory equipment are procured. These help in improving teaching and learning processes in schools. Government special grants help in encouraging other communities to embark on similar projects.

11. FUNDS BY NON –GOVT. AGENGIES-

1. School fees2. Proceeds from school.3. Community Efforts.4. Donations from Charitable Institutions or Individuals.5. Organizational endowment funds.6. Educational tax7. External Aids.

@ Vinci Viveka. M.Ed 2012-13, SXCE

Prepared by:Vinci VivekaM.ED. 2012-13, [email protected].

REFERENCES-•R.P. Bhatnagar and Vidya Aggarwal (2010),Educational Administration , Supervision and Finance,R.Lall Book Depot, Meerut.•Bugeting And Financial Management in Education. http://www.nou.edu.ng/noun/NOUN_OCL/pdf/pdf2/EDU%20718%20BUDGETING%20AND%20FINANCIAL%20MANAGEMENT%20IN%20EDUCATION.pdf

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