Budget is an estimate of the amount of money to be received and the amount to be spent for various purposes in a given time. Budget deficit is therefore the amount by which an entity’s spending exceeds its income over a period of time. Budget deficit in educational institutions has been a big challenge world wide. In the US, several states including California and Dallas are threatened by budget deficit crisis. In South Africa, the global economic crisis led to a reduction in child grants creating budget deficit in the educational institutions. Despite the huge budgetary allocation of 20% of the overall national budget of Kenya, there still exits budget deficit in public universities, tertiary institutions, secondary and primary schools. This problem of budget deficit has led to inadequate provision of textbooks, library reference materials, laboratory equipments and boarding facilities. The overall objective of the study was to assess factors that cause budget deficits in public secondary schools in Kisumu City, Kenya.