The area of higher education and science is the key area in growth and development of every society. „Products“ of higher education and science are experts and future leaders in all areas of life, scientists whose research and discoveries will build future development. Financing of higher education institutions in the world and Croatia has become one of the key issues. Given that each country has an important role in the financing of its higher education system, the share of GDP allocated for higher education is one of the key indicators. Higher education is carried out in the Republic of Croatia by higher education institutions. Higher education institutions are universities, faculties and the Art Academy as its constituent, polytechnics, and colleges of applied sciences. Higher education institutions carry out their activities as a public service. Most of the higher education institutions in the Republic of Croatia are public higher education institutions. Since public higher education institutions perform a public service, they are part of the public sector. The purpose and goal of the establishment and activities of public sector entities is not making profit, but rather providing services and delivering goods in order to meet general interests and common needs of the wider community. Financing of public needs is carried out through funds collected through taxes and other public duties to the state. Collected funds are distributed through the budget and budget beneficiaries to end users – citizens. The direction and goals of the national public sector are communicated through the government strategy and strategic plans of ministries and other government institutions. In the framework of strategic plans, budget beneficiaries need to define their goals and priorities and methods that will allow for achievement of the set goals in the future. A strategic plan is a framework for drafting a budget proposal for budget beneficiaries, thus enabling effective allocation of budget funds in line with strategic goals and priorities of the government. The subject of the research in this specialist thesis in a broader sense covers the planning process as a managerial function in the budget system. The research is focused on the planning process in the public higher education system where case studies are used to analyse applicative solutions arising from the legal framework and the set strategic goals of a higher education institution. Faculty management is legally responsible for drafting a proposal of a quality and proper financial plan in accordance with the set limits. The adopted financial plan represents the default spending framework and sets the limits of financial freedom; it is divided into programmes and activities in line with strategic goals and represents the purpose of the funds. The basic and auxilliary hypothesis have been set and confirmed in the framework of the described research subject: Quality planning and monitoring of the execution of plans provides the public sector management ensurance and proper management of material and financial preconditions for carrying out core activities as well as achieving their own and hierarchically superordinate strategic goals. A quality selection of financial and non-financial budget entity performance indicators enables management control over the achievement of the set goals, i.e. effectiveness of budget entity management.