The purpose of this study was to assess the practices and challenges ofrnplanning and budgeting in government primary school in Bale Zone. To carryrnout the study questionnaires and interviews were used as instrument dotingrncollection. The study was conducted in 25 primary schools randomly selectedrnfrom 5 worsted in the zone. A total of 45 principals 64 KETB and 56 PTArnmembers were involved in the study. The data gathered were analyze d u singrnFrequency, percentage, and mean and standard deviation. The findings madernit clear that there was low community involvement in the process of schoolrnplanningÂ· and budgeting. The school plan was regularly done by thernprincipals. As the majority of respondents reported, having prepared theirrnplan, the schools sent them to WEO for approval. Although the plan for somernactivities could be approved at school level, for major activities and mainly thernplan of annual budget was approved by WEO. Thus, a s principals revealed,rnsometimes the schools were forced to adjust their budget plan to WEO budgetrnceiling. .In this case, though the decentralization systems were said to bernpracticed in schools, except management, other activities like budgeting wasrnhighly centralized to worsted. The budget distributed to schools wasrndetermined by the WEO cabinets without the involvement of thernrepresentatives of the schools. The schools w e re unsatisfied on the way thernbudget was allocated to them, which was maillot in finds . This is because,rnaccording to most of the respondents, the male rials distributed to schoolsrnwere poor both in quantity and quality. Since the budget a located to schoolsrnwas inadequate to cover the expense of the schools, problems such asrnshortage of educational materials were very common. In order to solve thernproblems mentioned above, the study recommends the community has to berninitiated to participate actively in their schools planning and budgetingrnprocess. Similarly, the WEO has to allocate budgets according to the manualrnof the MOE which states the number of students as a criterion to allocaternbudgets for schools.