As a part of the process of developing and implementing an improved budgeting process for Adams County, a test implementation of a budgeting process will be effected for the county library system. The experiences with the test implementation involving the county library system will be used to develop a budgeting process for all elements of the Adams County government.
The advantages and disadvantages of several approaches to budgeting for public sector organizations are considered in this research. Further, a test budgeting process for the county library system is recommended as the conclusion to this consideration of the several approaches to budgeting.
The budgeting process encompasses both the actual budget through which the financial activities of an organization are planned, monitored, and controlled, and the forecasting of the requirements upon which a budget is based. A forecast is "an estimate of the level of demand for a product or for several products for some period of time in the future."1 To be meaningful, forecasts must project a variable in measurable units, such as demand in terms of measurable units of book borrowings for a specific period of a library's operations.
There are a number of procedures by which forecasts may be developed. Some, such as subjective opinion forecasts, are not suitable for use in contemporary county budgeting applications. A somewhat more sophisticated forecasting procedure is the index based forecast. Unfortunately, such forecasts are "as good or as bad as the index that serves as its foundation and the degree of correlation between the actual demand and the forecast based on the index."2 Thus, a large volume of highly reliable data must be available if a valid and reliable index is to be constructed. A very high correlation (in the range of 90 percent) is required between sets of data used in the construction of indexes to be used for forecasting. This high correlation r...