This document is one of five manuals designed to improve management practices in Ohio two-year colleges. Chapter I is introductory and discusses the role of program budgeting in higher education, its objectives, management, and development. Chapter II presents the steps to be taken in developing a program budget--identifying goals and objectives, identifying programs, selecting appropriate output indicators, calculating resource requirements, comparing required resources to available resources and setting priorities, allocating resources, and managing and evaluating the program. Chapter III discusses the administrative organization of program budgeting. Chapter IV concerns the human, financial, and material resources required for program budgeting. Chapter V discusses the characteristics of a program budget plan and suggests sources of data for program budget development. Guidelines for developing goals and objectives, examples of output indicators, sample program budgets, sample forms used to develop a program budget for a college, a brief discussion of some of the analytical services and tools available, budget preparation models, a bibliography, and a comprehensive glossary of budgeting terms used in higher education are appended. (DC)