The main forms of budgeting are a) institutional budgeting, b) line-item or functional budgeting, c) program budgeting, d) performance budgeting.

A. Institutional budgeting. In this form the budget is set according to where expense is incurred (hospital A, outpatient clinic, rural health post, etc). This type of budgeting is administratively easy to organize; however the way budgets are structured within the institution becomes a separate issue.

The typical MOH budget structure is an example of institutional budgeting, and looks like the following Table 1.

Table 1. Illustrative Institutional Budget (A. Green's "An introduction to health planning in developing countries").

	Hospital A	Hospital B	Rural clinic	Health inspectorate	HQ	Total
Salaries	150	300	80	30	40	600
Transport	20	30	20	10	20	100
Medical supplies	50	110	30	10	0	200
Equipment	15	30	5	5	5	60
Maintenance	8	15	5	2	0	30
Other	2	3	0	0	5	10
Total	245	488	140	57	70	1000

B. Line-item budgeting is the type of budgeting that organizes planned cost along the lines of input categories such as personnel requirements, expenditures on supplies, types of equipment needed, etc. Thus, the budget is organized according to the nature of expense (personnel, supplies, maintenance, etc). See, for example the Table 2. Certainly, in real life it includes more detailed subcategories than our example.

Table 2. Illustrative line-item budget (William A. Reinke "Health planning for effective management")

Line Item	Amount
Professional staff	$300.000
Non- professional staff	$240.000
Total personnel	$540.000
Expendables	$150.000
Fixed capital and equipment	$60.000
Total	$750.000

C. Program budgeting. This form of budgeting organizes inputs programmatically, according to the purpose of the expense - it allocates line-items costs among programs. Thus, it decentralizes budgets on the basis of activity rather than resources. The rationale behind this method is that any health service to achieve program objectives in terms of health status change. Therefore plans are set in programs terms, and the resources (staff, supplies, transport, etc) are just means to achieve the objectives. This type of budgeting allows for post-implementation economic analysis (output/input) since it relates resources (input) to program objectives (output). But it is necessary to bear in mind that this method is analytically useful but managerially inconvenient.

To give you an idea of how a program budget may look, let us suppose that Table 3 illustrates the budget of a pediatric unit engaged in two basic programs: (1) well-child care and (2) treatment of sick children. By allocating line-item costs among those two programs we will arrive at a program budget (Table 3).

Table 3. Illustrative program budget

Item	Illness-child care	Well-child care
Professional staff	$225.000	$75.000
Non- professional staff	$144.000	$96.000
Total personnel	$369.000	$171.000
Expendables	$105.000	$45.000
Fixed capital and equipment	$42.000	$18.000
Total	$516.000	$234.000

D. Performance budget
Despite the programmatic orientation of program budgets, they still focus on resource inputs. Relating them to intended outputs will convert the presentation to a performance budget. So, it is one step beyond a program budget. A performance budget contains information regarding inputs (on a program basis), estimated outputs, and budgeted cost per unit of output

To be illustrative let's go back to Table 3, and suppose that the illness-child-care budget presented there is based upon an expectation of 90,000 patient visits, and 75,000 well-child visits. Thus, the budgeted cost per unit of service is 516,000 : 90,000= $5,73 for illness care, and 234,000 : 75,000= $3,12 for well-child care. Additional information concerning output and budgeted cost per unit of output transforms the program budget into a performance budget.

Experts in the field have found that performance budgeting is the most useful in the process of planning, implementation, monitoring and evaluation.

Based on the difference between items of expenditure as well as timing of program expenditures it is helpful to separate capital and recurrent budgets, developmental and routine budgets.

a) Capital versus recurrent budgets
Capital budget (“one-off cost” or “one-time expenditure”' or “development cost”) usually includes one-off cost for onetime expenditures for building construction, purchasing of equipment, staff training cost.

It is necessary to say that while some items of expenditure can be easily considered as one-off (such as building construction), other items such us training, or furniture are less obvious. They are reoccurring, but at longer intervals than, for example, salary, or drugs. It becomes obvious also that even buildings eventually require replacement.

The items requiring replacement at intervals, usually less than a year, are considered as recurrent. Also there are small items of equipment (for example, stethoscopes) which may well last for several years but should be purchased from a recurrent equipment budget partially because of the value of the item and partially because throughout the year some of the items may need to be replaced.

At the same time it will be correct to say that there are no universal rules for the categorization between recurrent and capital budgets; different budgeting and accounting systems will have their own rules which need to be followed.

The need to make a distinction between capital and recurrent budgets is due to several reasons. One reason is that capital costs are an important budgetary concern at the time they are incurred, but amortized over several years, and thus become a relatively small items of annual cost. Inclusion of such one-off payments within budgets that deal with ongoing expenditure would distort projections of long term funding requirements, and therefore it is more correct to keep them separate. Also, one-off expenditures providing benefits in more than one year may be funded in a different way (such as through loans or aid) than those providing immediate benefits to the society.

Despite differences, it is important to remember that both of the budgets (capital as well as recurrent budgets) relate to planning, since both of them are the vehicles for altering directions, and making changes in the future (which is the role of planning). Capital and recurrent budgets should be fully and equally integrated into the overall planning process.

b) Development versus routine budgets
Development budgets are usually formulated in support of medium-term (usually five-year) plans, whereas routine budgets are prepared in connection with annual work plans. International donor agencies typically support capital expenditures and items included in development budgets.

c) Cash-limited versus volume budgeting
Some budgetary systems are based on agreed volume indicators i.e. the number of personnel and supplementary budgets for unexpected price-increase i.e. wage-increases during the financial year that are automatically approved. At the same time financial constraints have led to the adoption of cash-limited budgets, when a fixed budget is agreed upon and it is expected that it will be kept irrespective of any changes during the year. In such situations unanticipated changes in either prices i.e. because of inflation or in the level of activity i.e. because of an epidemic are expected to be included in compensatory reduction elsewhere in the level of activity and expenditure. It is true that in exceptional situations, supplementary budgets may be provided. Adoption of cash-limited budgets forces managers to be far more conscious of the financial implications of alterations in services.