The advantage of the program budget format is that it places costs on functions. People are able to see exactly what it costs to have a specific function performed. The performance budget format provides both supporters and opponents of specific or organizational functions with ammunition to either defend or oppose the performance of the function by an organization. The disadvantage of this budget format is that it makes no effort to state how specific functions will be carried out · just that they will be performed. This disadvantage makes it somewhat difficult to assess performance budgets in some instances, although they are easier to evaluate than are line-item budgets.
The zero-based budget (ZBB) format is not an incremental-type of budget. The ZBB name causes many people to think that the budgeting concept means a reduction of expenditures from current levels. What the name actually means, however, is that all budgeting units are required to start at zero budget levels each year and justify all costs as if the programs involved were being initiated for the first time.
Budgeting of one type or another, however, is a central focus of OCST 555. In OCST 555, budgeting is addressed in two contexts - operating budgets and capital budgeting. Each is an approach to revenue and expenditure control. A narrow view of revenue and expenditure control focuses on the processing of revenues, the management of revenues, and the application of revenues once collected. A broader view of revenue and expenditure control focuses on strategies designed to develop predictable revenue streams and to optimize the application of revenues.
A performance budget is an incremental budget. A performance budget, in contrast to the line-item budget, emphasizes the functions of the organization. It is these functions that are budgeted, as opposed to the items required to perform the functions, as is done in a line-item budget format. The functions of an organization are tied