Anthony Wagner, the controller in the Division of Transportation for the state, recognizes the importance of the budgetary process for planning, control, and motivation purposes. He believes that a proper!) implemented participative budgeting process for planning purposes and a management by exception reporting procedure based on that budget will motivate his subordinates to improve productivity within their particular departments. Based on this philosophy. Wagner has implemented the following budget procedures. An appropriation target figure is given to each department manager. This amount is the maximum funding the each department can expect to reccive in the next fiscal year. Department managers develop their individual budgets within the follow ing spending constraint as directed by the controller's staff. Expenditure requests cannot exceed the appropriation target. All fixed expenditures should be included in the budget: these should include items such as contracts and salaries at current levels. All government projects directed by higher authority should be included in the budget in their entirety. The controller consolidates the departmental budget requests from the various departments into one budget that is to be submitted for the entire division. Upon final budget approval by the legislature, the controller's staff allocates the appropriation to the various departments on instructions from the division manager However a specified percentage of each department's appropriation is held back in anticipation of potential budget cuts and special funding needs. The amount and use of this contingency fund arc left to the discretion of the division manager. Each department is allowed to adjus. its budge, when necessary to operate within the reduced appropriation evel. However as stated in the original directive. specVfic projects authorized by higher authority must remain intact. P J . The final budget is used as the basis of control for a management by exception form of reporting. Excessive expenditures by account for each depanmcn, are h ghl gh.Zn a monthly basis. Department