Community Health Services uses what type of operational budget to justify and prioritize every department annually?

• A. Activity-based
• B. Zero-based
• C. Flexible
• D. Fixed

Answer: (B)

Zero-based budgeting starts from a clean slate each budget cycle. Every department must justify all expenditures as if starting from zero, rather than carrying over the prior year’s levels. This makes the annual process about evaluating which programs and services truly require funding and reallocating resources to the highest-priority health initiatives. By forcing explicit trade-offs and alignment with current goals, it ensures that funding decisions reflect what matters most for the organization’s priorities.

Activity-based budgeting assigns costs to activities that drive them but doesn’t require re-justifying all departments from zero each year. Flexible budgets adjust for volume changes, not necessarily for annual prioritization across departments. Fixed budgets remain the same regardless of shifting needs.