International Journal of Education and Social Science (IJESS)

Financial management in education is the most vital realm, the effective dealing of which ensures the promotion of education quality achieved by the provision of resources. Educational expenditures are considered as investment, which forms one of the tangible inputs. Proper ratio of expenditures can be maintained by keeping a balance between spending on teachers and instructional processes as well as expenditures on management and pupils. Effective supervision of these ensure control over both overspending and money lapsing. More than 50% of total education expenditure was allocated to staff salaries. In developing countries even more than 80% are spent on staff salaries and in Pakistan it is more than 96%. Spending high proportion on salaries will stop hiring additional teachers and provision of facilities, which will have negative impact on internal efficiency. Developed countries spent approximately12-16% of their GDP on education as compared to less-developed countries, which was 6-7%. School efficiency is affected by financial management skills of principals to receive, allocate and control financial resources. The efficient and timely utilization of such resources will require the principal to be knowledgeable about such skills, which are significant in trend-setting schools. The estimation and execution of fiscal resources are dependent on effective management of resources, which promote internal efficiency of schools.