Let me start by saying I don't agree that volunteers should be expected to eat budget overages. There are two different kinds of projects that we typically reimburse for: expense-only projects like Landscaping, and income-generating projects like Ice Cream Social.
For expense-only projects - Your committee chair should be able to manage her plans and spending to not exceed the budget provided to her. If she wants to do something that exceeds her budget, she should have enough time to come to the board with a proposal and to receive approval to go ahead.
For income-generating projects, it's a bit trickier. How many gallons of ice cream should be purchased? How many cans of topping? How much should we charge? Should we have games with prizes or not?? How many people can we expect? These decisions all affect the profitability of your project. If your PTO has produced this event before, AND your committee has excellent records, MAYBE your chair has the information she needs to stay within budget. Unfortunately, it's been my experience, at least, that the project file never contains as much detail as I'd like.
As long as your committee chair understands that she has a budget, what the parameters of the event are (no catered food, no live band, etc.), and is not reckeless with the PTO's budget, I don't see how we can hold our VOLUNTEERS liable. Just my opinion, since we haven't had a huge problem in our PTO.
You are right. You cannot foresee all of what might happen. As long as the person hasn't spent frivilously, sometimes you need to up the budget for that event. We did have one mom go all out on her events one year and overspent by a lot. The PTO did cover the expenses but put tighter reigns on the next year.
Our new PTA president stated at the last meeting that any chairperson who goes over their alotted line item will have to "eat" the expense. She has never chaired an event or project before. I have chaired many events and projects, and will chair 4 this year. Most all of the chairpeople strive very hard to be within their budget or under. No one has ever gone way over. However I will admit you cannot forsee all expenses. For instance, the popcorn machine needing to be repaired, or a vendor raising their prices from the following year. To me the budget is more of a a "guide line" to try and follow as close as possible. Hopefully we will make more in income than expected, and spend less in expenses than expected. It is HARD enough to get someone to chair something without such a negative comment from the start. What is everyone elses response?