Government Capitation and Financial Prudence of Secondary Schools in Busia County, Kenya

Financial prudence is the practice of effectively, efficiently and properly utilizing and managing financial resources wisely, while focusing on long-term stability over short-term gains. It involves careful budgeting, controlled spending, and strategic saving or investing, minimizing debt and risks. Financially prudent individuals or organizations prioritize sustainability and resilience, preparing for future uncertainties with a balanced responsible approach. Globally, most governments have invested heavily in education as a means of transformation towards sustainable development. It raises people’s abilities to change their visions into reality. Most States strive for quality education for sustainable development. The study was conducted to establish the influence of government grants on financial prudence of secondary schools in Busia County, Kenya. It also examined the influence of Operational grant, Tuition grant, Infrastructure grant and Maintenance & Improvement grant on financial prudence and assess the moderating influence of school size on the relationship between government capitation and financial prudence of secondary schools in Busia County, Kenya. The study was guided by public expenditure, Stakeholder’s, New Public Management and Keynesian theories. The study adopted a descriptive survey design to establish the association between the predictor variables and financial prudence. The target population comprised of 276 respondents comprising of 92 school principals, 92 accounts clerk/ accountants and 92 HODs all derived from 92 public schools in Busia County. A sample size of 276 respondents was determined using census technique. Self-administered questionnaires were issued to respondents. Pilot study was done in secondary schools in Bungoma County. The study used Cronbach – α) model to test the internal consistency with the alpha coefficient of above 0.7 being considered reliable. Analysis of data was by both descriptive and inferential statistics techniques namely mean, median and standard deviation. Multiple regression and Pearson correlation were used for inferential statistics. The data was then scrutinized and cross-checked for completeness and clarity.  The findings were analyzed and presented using tables. The p-value of operational grant was .001 which is less than the alpha value of .05. Hence, the null hypothesis that operational grant has no significant effect on Financial Prudence of secondary schools in Busia County was rejected and the study concluded that operational grant has significant effect on Financial Prudence of secondary schools in Busia County. The p-value of Tuition grant was .011 which is less than the alpha value of .05. Hence, the null hypothesis that tuition grant has no significant effect on Financial Prudence of secondary schools in Busia County was rejected and the study concluded that tuition grant has significant effect on Financial Prudence of secondary schools in Busia County. The p-value of Infrastructure grant was .008 which is less than the alpha value of .05. Hence, the null hypothesis that Infrastructure grant has no significant effect on Financial Prudence of secondary schools in Busia County was rejected and the study concluded that Infrastructure grant has significant effect on Financial Prudence of secondary schools in Busia County. The p-value of Maintenance & Improvement grant was .009 which is less than the alpha value of .05. Hence, the null hypothesis that Maintenance & Improvement grant has no significant effect on Financial Prudence of secondary schools in Busia County was rejected and the study concluded that Maintenance & Improvement grant has significant effect on Financial Prudence of secondary schools in Busia County.