The concept of Zero-Base Budgeting (ZBB) is discussed in terms of its application, advantages, disadvantages, and implementation in an effective planning, management, and evaluation (PME) system. A ZBB system requires administrators to: review all programs and expenditures annually, set clear cut goals, and analyze all possible alternatives for developing programs. Advantages of ZBB include: programs and expenditures are reviewed annually; a cost-conscious staff is developed; new approaches are easier to add; professional development is increased; and a more confident justification of the budget is created. Disadvantages include: increased paperwork; increased staff time; difficulty in developing and ranking decision units and packages; and little motivation for staff. Implementation of a successful ZBB process entails developing a plan, defining the system, designing proper forms, educating the staff, using expert help, using the first time through as a trial, providing resources for cost estimates, and allowing proper time for implementation. Decision units and decision packages, which involve programs, activities, or cost centers, are considered as the basic elements of a ZBB system, and reasons why ZBB's fail are noted. Appendices contain a list of decision units, sample forms, and a bibliography. (MB)