Introduction

Budgeting is the heart of administrative management. It serves as a powerful tool of co-

ordination and negatively an effective device of eliminating duplication and the wastage. These
are served by devices such as justification of estimates, supervision of the use of appropriate
funds, timing of the rate of expenditure and the like. Every organization has predetermined set of
goals and objectives which are attainable only with the help of proper planning and execution of
plans economically. The plans are in the form of statements called budgets. Every organization
prepare budget for its functioning. Budget expresses the plan of hospital in health organization to
provide optimum care at a reasonable cost in financial terms. It expresses quantitatively the plans
of hospital, evaluate the performance of finances as per plan and control cost, the budget needs to
be planned well. In order to smooth functioning of the organization, a budgetary process is
followed.

Meaning:
‘Budget’ word was first coined by the British Kings in early days from the word ‘Bougette’
which means leather bag or pouch that held the seal of the medieval court Exchequer.

Definition:

A budget may be a simple plan of ones personal finances, or it may be a complex

document used by large organization.

According to TN Chhabra ―a budget is an estimation of future needs arranged

according to orderly basis covering some or all activities of an enterprise for a definite period of
time‖

According to Dimock ―Budget is a balance estimated expenditure and receipts for a

given period of time. In the hands of the administrator the budget is the record of the past
performance, a method of current control and projection of future pans‖.

The budget is classified into 3 heads as 1. Revenue 2. Expenditure 3. Capital

1. Revenue: It includes assets, fixed deposits, investments, loan, advances and income
2. Expenditure: It includes capital, recurring annual mandatory and non recurring

PURPOSES OF BUDGET:
 Budget as a tool of financial control; it is exercised at various stages.
 Budget is an instrument of organization as policy, fiscal policy. It is device whereby
plans and policies are put into action.
 Budget is a tool of administration. When planning, co-ordination, control, evaluation,
reporting and review are combined in a budgetary system it becomes effective tool of
administration management.
 Budget is also a tool of accountability.
 It has informative roles as it contains valuable information for various activities.
 Budget is forecast of income and expenditure (and thereby profitability).
Principles of Budget

 Budget is an operational plan for a definite period, usually a year, expressed in financial
terms and based on expected income and expenditure.

 Budget should provide sound financial management by focusing on requirement of the

organization

 Budget should focus on objectives and policies of the organization. It must flow from
objectives and give realistic expression to the way of realizing such objectives.

 Budget should ensure the most effective use of scarce financial and non financial
resources.

 Budget requires that programme activities planned in advance

 Budgetary process requires consistent delegation for which fixed duties and
responsibilities are required to be allocated to managers at different level for framing and
executing budget.

 Budgeting should include coordinating efforts of various departments establishing frame

of reference for managerial decisions, and providing a criterion for evaluating managerial
performance.

 Setting budget target requires an adequate checks and balance against the adoption of too
high or too low estimate. Utmost care is a must for fixing targets.

 Budget period must be appropriate to the nature of business or service and to the type of
budget.

 Budget is prepared under the direction and supervision of the administrator or finance
officer.

 Budget is to be prepared and interpreted consistently throughout the organization in the

communication of planning process.

 Budget necessitates a review of the performance of the previous year and an evaluation of
its adequacy both in quantity and quality.

 While developing a budget, the provision should be made for its flexibility.

Characteristics of budget:
 It is a plan or programme, framed on the basis of past experience
 Budget is a scheme for action
 It should estimate revenues and expenditures as accurately as possible
 It is comprehensive plan of action
 There is generally annual plan.
Feature of budget

 The budget should be flexible.

 It should be synthesis of past, present and future
 Budget should be the product of joint venture or participation of executive at different
levels
 It should be clearly defined
 It should be in the form of statistical standard laid down in specific numerical terms
 The budget should represent expected revenue as compared with anticipated expenses
 It should be based on specific concepts of financial management
 The budget should facilitate goal achievement.

Importance of budget

Budget is a numerical description of expected income and planned expenditure for an

organization for a specified period of time. It is a concrete, picture of the total operation of an
enterprise/ organization/ institution in monetary term, i.e., finance

The following point serves the importance of budget:

 Budget is needed for planning for future course of action and to have a control over all
activities in the organization

 Budget facilities co coordinating operation of various departments and sections for

realizing organizational objectives.
 Budget serves as a guide for action in the organization

 Budget helps one to weigh the values and to make decision when necessary on whether
one is of a greater value in the programme than the other
STEPS IN BUDGETING:

COLLECTION OF PAST DATA

ASSESS SUCCESS AND FAILURES OF PAST

SETTING OBJECTIVES FOR FORECAST YEAR

OBJECTIVES ARRANGED IN TERMS OF INDICATED UNITS

PREPARATION OF REPORTS ON EXPENSES

PREPARATION OF BUDGET REPORT

REVIEW OF BUDGET REPORT

EVALUATION FOR MODIFICATION OR CHANGES

FINAL PRESENATION BEFORE BOARD OF TRUSTEES FOR DECISION

NURSING BUDGET:
Nursing budget is a plan for allocation of resources based on preconceived needs for a proposed
series of programs to deliver patient care during one fiscal year.
A nursing budget is a systematic plan that is an informed best estimate by nurse administrators of
revenues and nursing expenses. Nursing budget projects how revenues will meet expenses and it
projects a return on equity that is profit.
ADVANTAGES OF NURSING BUDGETING:
 Budgeting can be strong support for developing written objectives for the nursing
divisions and for each of its units.
 It provides motivation for effective planning and standard by which to evaluate the
performance of nurse managers.
 Managing the financial end of nursing through an operational budget obviously can
create a new sense of involvement for nurses.
 Effective planning provides for contingencies by indicating which progress or activities
can be reduced or eliminated if budget goals are not met.
 Nursing budget plan ensure that clients receive the nursing services from satisfied nursing
staff.

STEPS OF NURSING BUDGETING:

There are 8 main steps in nursing budgeting:
1) Determine the productivity goals. The director of nursing service and the nurse manager
determine the unit’s productivity goal for the coming fiscal year.
2) Forecast the workload the number of patient days expected on each nursing unit for the
coming fiscal year is calculated.
3) Budget patient care hours the expected number of hours devoted to patient care for the
forecasted patient days is calculated.
4) Budget patient care hours and the staffing schedules. The budgeted patient care hours are
reflected in recommended staffing schedule by shift and by day of the week.
5) Plan non-productive hours and productive hours are budgeted for the coming year.
6) To aid in the planning process, a graph is used to show nurses and the level of forecasted
patient days and therefore the staff requirement are expected to increase or decrease
during the year, considering educational activities.
 7) Estimate costs and supplies and services. The supplies and services to be purchased for
the

year are budgeted.

8) Anticipate capital expenses. The expected capital investment for the coming year is
included in the budget.

These 8 steps results in a proposed budget that goes to the nursing administration for review.
After preliminary acceptance, the budget is sent to the accounting department, where the
forecasted patient days are translated into expected revenue. The budget productive and non-
productive time are converted into money, as are the costs for supplies, services and other
operating expenses that will be allocated to a given unit for the coming year.
STEPS IN PREPARING THE NURSING DEPARTMENT BUDGET
Generating and controlling a divisional budget is a major responsibility of the nurse
executive. The budget is a major operating document of the nursing division. The budget request
for nursing department should be a co-operative activity of nursing superintendent associated
with the supervisors. This is prepared under direction and supervision of administrator or
financial officers. The administrator usually supplies special form of guide to the director of
nursing in formulating the budget request. A budget request may be broken down to different
unit of salary, supplies, equipment, purchasing and repairs.
The following steps illustrate how the nurse executive can prepare the nursing division budget:
 Step one: Review past performance:
As a starting point, the nurse executive will require to review the following
a. The financial records from prior financial periods as a basis for planning.
b. The present activities of the nursing division.
c. The activities that the division plans to institute during the projected financial period.
d. Those activities the division plans to delete during the projected period.

 Step two: Review the organization's goals and projections:

- The nurse executive has to study the organization's goals and financial projections
thoroughly. - Items in the major budgetary report that affect the nursing department
should be determined
Example of hospital goals and projections:
"This division is going to lose 4 beds from February to November and then gain 12
additional beds after that. A gerontologist and clinical specialist in gerontology have been
added to the staff. This division will then admit older and sicker patients. If the shortage
of nurses continues, nursing service will have to consider alternative staffing pattern to
deal with this situation".
 Step three: Review of the variances with higher levels of management :
- Once the goal statement is finished, it, (together with the actual versus budget analysis
done earlier), should be reviewed with higher level management.
- The departmental goals proposed should be carefully considered; as well as the
variances, their causes, and proposed corrective actions should be reviewed.
- Once the final statement for the department is in place, the new budgeting process can
begin in earnest.
  Step four: Actual preparation of the budget:
-Prepare a summary of present need both personal and material with data to support the
request.

- The actual preparation of a new budget can be done based on a previous budgetary plan,
or newly proposed plan (if a newly developed or modified service).
- To complete the budget, a budget worksheet is essential. Worksheet is "a tool used by
managers to prepare their budget". It includes a number of columns including information
about:
a) Historic information with old budget. b) Actual numbers with comments explaining
the variances. c) Revenue and costs.
o Preparation of budget report: A budget report will be prepared.
o Review of budget report
The members of the budget committee will analyze the statistical details
available in their department and according ly formulate their departmental budget
estimates
o If any changes are to be made, it should be one before submission to the governing board.

o The finance officer/ chairman will prepare the final budget and is discussed and in the
budget committee for consensus and approval, obtaining signature of every member as a
token of accent.
o Preparation of the budget before the governing board with full deliberation and decision
of the budget committee.
o Communicating the finally approved budget to all the heads of the departments and unit
head and to all the members of the budget committee.
Thus, the budget request with the supporting data is presented to the administrator for a view
for taking decision and finally incorporated into the master budget prepared for the bostal.
The budget committee periodic reports should be furnished to the nursing director above the
control of expenditure.
Preparation of the budget depends on the following factors:
-Needs of the department.
-Types of patients for whom services are rendered-a particular hospital like paediatric, maternity
hospital, casualty department.
-A number of nurses and other personnel.
-A size of the hospital and the bed strength of the hospital.
-The physical layout of the hospital like general ward, private ward.

BUDGETARY STATEMENT IN NURSING EDUCATION PROGRAMME

The nurse administrator as head of a budgetary unit is responsible for the
preparation of the annual budget of the school of nursing. Both the school/college and hospital
should have separate budget. The budget for the school or college is annually planned by the
nursing director, principal and general manager and approved by the managing director. In
conference with the president and other budgetary unit heads, the administrator gets an overall
view of the budget of the college, the needs and aspirations of faculty and the available finances.
The administrator of the nursing unit is chiefly concerned with controlling expenditures of her
unit; however she should also understand how to estimate income from the nursing unit so that
she can furnish data to the finance officer who is responsible for estimating the income of the
school.The administrator of the nursing unit has certain specific functions in the preparation of
the request for the program planning, estimating costs, and justification of request and for
administering the budget of the nursing unit.
o The administrator is invited by the president of the finance officer to submit a budget for
the nursing unit.

o The administrator participates in estimating the income. The administrator consults with
the faculty in estimating enrolment for the following year. She estimates the number of
admissions and enrolls in the nursing program, thereby estimating the income from
student fees. She also estimates any income from laboratory or other fees, sales scraps or
endowments. Estimation of the income of the college is the responsibility of the chief
finance officer, subject to review by the president and the budget committee. The
administrator is responsible for keeping informed on current legislation.
o The basis of information gained from consultation with the faculty, the administrator
determines the budget request for the ensuing year. The administrator requests sufficient
funds to support a sound program. The budget should represent the goals of the nursing
program. It should therefore, take into account the finance to support proposal for
curriculum.
o The administrator submits a budget request and a justification for the proposed
expenditures. The administrator must defend her budget so that the nursing unit will have
enough money to conduct its program effectively. The administrator must defend each
item requested. A justification of all requests should accompany the budget request.
o The administrator submits nursing unit budget for approval in time to select and recruit
new faculty members before the start of the new academic year. The administrator
secures approval of the annual budget for school of nursing.

The recurring annual mandatory expenditure includes:

- University Administration Fees
- Affliation Fees
- Inspection Fees
- State council -every year for recognition.
- INC recognition fees
- INC inspection or affliation fees
- Re-inspection fees
- Affliation fees to other institution.

The recurring monthly expenditure also include

- Rent
- Salary
- Stationary items
- Contingency
- Guest relation
- House keeping indent
- Pharmacy indent
- AV aids
- Journals
- Books
- Maintenance: Repair, Replacement, Electricity, Phone, Drinking Water, Sewage Disposal.

Non recurring expenditure includes: .

- Security fixed deposit
- University endowment
The administrator submits nursing unit budget for approval in time to select and recruit
new faculty members before the start of the new academic year. The administrator secures
approval of the annual budget for school of nursing.
Annual auditing is done to plan for the next year budget and to evaluate the current year budget.

RESPONSIBILITIES OF THE NURSE ADMINISTRATOR IN BUDGETING

Budget of nursing unit is an expressive tool, i.e. expression of what to do within a given
time. The administration of nursing unit has certain specific functions in the preparation of
budget request for programmed planning, estimating the cost, justification of request and for
administration of budget in nursing unit.
The responsibilities are also follows:
1. Participation in planning budget.
2. Consult and take assistance of his/her subordinates in determining the needs of the unit
for ensuring year on the basis of information received.
3. Request sufficient funds to suggest a sound programme such as to provide for
developing programme provision, expansion of programme, to attract and hold
qualified staff to provide for expansion of physical facilities, supplies, equipment, for
improving instruction and also to carry out adequate functions of the institute.
4. Submit budget request with justification with proposed expenditure. The administrator
defines his/her budget so that nursing unit will have enough money to conduct program
effectively. Money must be available to allow experimentation also.
5. When the budget is allotted, the administrator should support the budget. He/she should
interpret the subordinates, any changes that may affect instruction services for the
adopted budget. She/he secures for the adapted budget. Once the budget is adapted, it is
the responsibility of the administrator to see that expenditure should not exceed the
appropriation made.
6. Since the Nurse administrator also is responsible for budget, he/she should cover the
routine budget control.
CONCLUSION

Budgeting is one of the most important aspects in management, whether it be hospital or

an educational institute. Without a proper budget we can never run an organization effectively.
There are many types of budget and depending on our needs and the time we should choose the
most effective budgeting system and follows the principles and plan our budget. Fiscal planning
is important but often neglected part of planning. It is an increasingly critical to nursing
managers because of increased emphasis on finance and the business side of health care. So, a
nurse manager should understand fiscal terminology for maintaining a cost-effective unit
BIBLIOGRAPHY:
 Basavanthapa BT Nursing administration. 2nd Ed. Jaypee brothers publications, New Delhi,
2009. Page no.: 306-317

 Vati Jogindra. Principles & practice of nursing management and administration. 1st Ed.
Jaypee Brothers Medical publisher, New Delhi. Page no.: 580-582

 Deepak K. A comprehensive Text book on Nursing Management Emmess publication.

Page no: 512-516

Net reference

 Nursing budget planning[online]. [cited on 12th September 2016]. Available from:

www.kms.in
 NIGHTINGALE INSTITUTE OF NURSING, NOIDA

ASSIGNMENT
ON
LAYOUT PLANNING IN COLLEGE, HOSPITAL AND COMMUNITY
(SUBJECT: NURSING MANAGEMENT)

SUBMITTED TO SUBMITTED BY
Ms. Ann Gladis Sunny Rupobala Yumkhaibam
ASS. Professor M.Scs. (N).2ND YEAR
NIN, NOIDA NIN, NOIDA

SUBMITTED ON
29-08-2019
 NIGHTINGALE INSTITUTE OF NURSING, NOIDA

ASSIGNMENT
ON
NURSING BUDGET
(SUBJECT: NURSING MANAGEMENT)

SUBMITTED TO SUBMITTED BY
Ms. Th. Kapeelta Devi Ms. Rupobala Yumkhaibam
Associate. Professor M.Scs. (N).2ND YEAR
NIN, NOIDA NIN, NOIDA

SUBMITTED ON
29-08-2019