> we can't assume present returns will match future returns.

Funnily enough, after spending some time in public service albeit in another country, genereally budgeting for public agencies works almost inverse to this.

If you get allocated X budget but only spend 0.8 * X, then next time you will almost always get <X. This is in itself reasonable, you don't get more allocation than you need. In practice though this means you are incentivised to not save money from your allocation iff you expect to need more in the next period or do not want to lose your allocation (maybe a renovation or smth similiar has been pushed back due to external factors).

Yes, always felt this was ridiculous. There has to be a better way to solve this.