State Finance Challenge Practice Test

Program budgeting focuses funding decisions on specific programs and the outcomes they are meant to achieve. Instead of assigning money by line items of input (like salaries or equipment) or simply rolling over the previous year, it groups resources by program areas and ties those funds to the expected results and performance measures. This makes it easier to compare how much is invested in different programs and to reallocate funds toward those that deliver the desired public outcomes. Line-item budgeting concentrates on inputs and costs by category, not on what those costs accomplish. Zero-based budgeting is about justifying every expense from zero, but it doesn’t inherently structure funding around programs and their outcomes. Incremental budgeting updates the prior year’s budget with small changes, which tends to maintain existing programs rather than focusing on achieving specific results.