Education is a productive investment in human capital. It is a basic human right asrnwell as a basic component of social and economic development. It is an expensive investment.rnThe basic problem all governments facing is how to allocate scarce resources betweenrncompeting ends. This study was, therefore, designed to assess the resource bases, allocationrnand utilization of educational budget in the Amhara National Regional State in 1994/95 -rn1999/2000 fiscal years.rnThis study was conducted in four zones and fifteen woredas that were selectedrnrandomly. Based on this, forty-five woreda education officers, ninety four school principals,rnfour zonal educational department heads and three regional bureau heads were taken usingrnpurposive sampling teclmique as actual sources of information. The information was collectedrnthrough questionnaire, interview and from the documents. The data obtained were analyzedrnmainly using percentage. In some parts, especially for interview results, a purely qualitativerndiscussion was employed.rnThe results of this study indicate that even though the education sector takes thernlargest chunk of the annual budget of the region, there is still shortage of budget for thernexpansion of basic education and improvement of its quality control. In this region, educationrnis mainly a government investment. No method is devised to bring additional resources, evenrnfor schools. The schools which are the basic units of the education sector are not allowed torncollect registration fee even from those parents who are economically capable. There is nornclear guideline on this issue. On the other hand, there is no direct budgetary loperational costlrnsupport for schools. Many schools get their annual operational budget in the form of material,rnwhich is purchased by WEO. This makes schools unable to utilize their scarce operationalrnbudgets flexibly and effectively. In the process of budget construction there is no strongrnbondage between schools and WEOs. On behalf of schools management, it is the WEO,rnwhich proposes the annual budget request to finance office. On the other hand; the Finance,rnPlanning and Economic Development bureaus do not have predetermined and standardizedrnfixed formula to guide their decision or approval on educational budget. Sometimes,rnespecially in the capital budget they try to consider ESDP as a guide. Otherwise, theyrndetermine the amount of budget to the education sector by understanding and negotiation. Thernother point is that even though there is scarcity of resources in the education sector, everyrnyear, the inadequately allocated budget is not utilized all in all.rnIn light of these findings, it is necessary to give due attention and make great effort tornbroaden the income resource base of education. Schools should have their own income, suchrnas collecting registration fee from economically capable parents both in primary andrnsecondary schools. In addition, budget planning should follow bottom up planning, there mustrnbe active participation of educational managers in the planning and budget making processesrnaccompanied with capacity building through training. The planning and finance bureausrnshould have fixed foitnula of pre-determined standard to guide their budgdary decision forrnthe education sector. Besides, to utilize the budget effectively and efficiently, problems likerndelay in approval, announcement and release of the annual budget, bureaucratic procedures inrnbidding, contracting and procurement processes should be improved through relevant rulesrnand regulations