Zero-based budgeting - American Education

A system of planning annual spending that disregards previous spending levels and creates each year’s new budget from a base of zero. Developed at Texas Instruments Inc. in the 1960s and adopted by many corporations and government agencies as a cost-cutting measure, the process has found widespread use in many school districts. As in business, zero-based budgeting forces administrators to justify and rejustify each item of spending every year, thus eliminating the inertia that allows automatic reapproval of budget items that might well be eliminated or reduced. Zero-based budgeting has proved especially effective in cutting the cost of noninstructional services, where careful annual reconsideration often results in subcontracting of such services to private firms at reduced cost. Zero-based budgeting can, to some extent, reduce instructional costs by forcing annual reevaluation of the cost per student of each course and staff member.