Effect of Budget Planning on the Financial Performance of Public Universities in the Mount Kenya Region, Kenya

Abstract

Public universities perform a vital role in providing higher education and contributing to the country's socioeconomic development. Notably, public higher education establishments in the Mount Kenya region, have successfully implemented budgetary control approaches to improve financial performance. That notwithstanding, most of them are ignorant of how budgets and budgetary control affect performance outcomes. The purpose of this study was to establish the effect of budget planning on the financial performance of public universities located in the Mount Kenya region, Kenya. The design used in the investigation was descriptive. The target population was 7 universities located in Mount Kenya Region. The respondents, enlisted using census method included 284 heads of departments in both academic and administration divisions of the universities included. Structured questionnaires were used to collect data for this study. Using the drop and pick method, the researcher issued and collected filled in questionnaires after 2 weeks. The data were analyzed using descriptive techniques like frequencies, percentage and mean, while the inferential statistics included correlations. The study conducted a pre-test study in Laikipia University, where 28 respondents were recruited using simple random method. Data was presented using tables and explanations. The findings indicated a noteworthy and optimistic correlation between budgetary planning and financial performance of public universities (r=0.817, p=0.000). The study concluded that most universities had budgets that guided them in a financial year. However, the main concern was declined revenue consistency to adequately fund the budget. The study recommended that budgetary control strategies such as incremental and activity-based budgets be introduced in public institutions. Further, public universities need to focus more on creating budgetary control through appropriate planning, monitoring, and budget implementation, as well as allowing employee engagement in the budget process in order to strengthen the budgetary control process.