Importance The issue of methodology formation for program-based expenditures at the regional level in the context of choosing adequate mechanisms and instruments of fiscal activities by government authorities is still understudied. State jobs that are developed for subordinate authorities are not the instruments for program implementation and, in fact, they do not comply with the principle of payment for actually provided services; in reality, it is the estimate-based funding. Objectives The purpose of the study is to develop methodological support to the transformation of the system of public (municipal) finance management through creating the mechanisms and instruments of program-based budgeting of the region. Methods Using econometric methods, we analyzed budget expenditure and the planned volume of budgetary allocations to implement programs in the Kursk oblast for 2011–2015. Results The paper presents a systems approach to the program-based principle of budget formation of a constituent entity of the Russian Federation. We developed methodological framework for program expenditure formation at the regional level, and offered a program-based budget expenditure classification of the principal manager of budgetary funds. Conclusions and Relevance The budget classification of the program-based budget should be linked to organizational structure and functions of the key spending units. In the system of public finance, it should ensure the integration and systematization of information about the condition of budgetary target programs. A program-based budget formation provides transparency of the budget process, thus contributing to effective performance of public authorities in achieving strategic goals of socio-economic development.
Keywords: program-based budget, program costs, program-based budgeting models
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