PUBLIC BUDGETING AND FINANCE
PPA 230

Michael Semler

 

This course examines public sector budgeting from several perspectives: theories of budgeting, the people involved in the process, the politics, and as a means of organizational planning, management and control. Different budget formats will be reviewed as well as techniques used to analyze budgetary data, revenue forecasting, and the political/policy process intertwined in budgetary decisions. Budgeting in the public and private sector is a tool and provides a setting for resolving complex objectives and policy issues.

At the conclusion of this class, you should be able to understand the major issues facing government and non-profit agencies� budgets. Specific attention will be given to state and local government revenue sources and expenditures. Finally, even though it may not appear relevant when the State�s fiscal coffers are full, we will analyze a case when money is tight.

Texts:

Don Cozzetto and Mary and Robert Kweit, Public Budgeting, politics, institutions, and processes, 1995

John Peterson and Dennis Strachota, eds. Local Government Finance: Concepts and Practices, Government Finance Officers Association, 1991

Robert Young, A Review of Essentials of Accounting, (Sixth edition), Addison Wesley

Irene Rubin, The Politics of Public Budgeting, (Third edition), Chatham House

"Mayor Evan Sweeny�s Budget Cutback", from the Kennedy School of Government, Harvard University.

 

Class Organization and Expectations:

This seminar depends upon your active participation in classroom discussions which, in turn, requires you to read the materials prior to each class meeting. Students should be able to understand the relationship between the political and "mechanical" aspects of public budgeting � from accounting to intergovernmental relations to public acceptance and accountability.

There will be three individual written assignments and a group assignment based on an exercise (7.2) in the Cozzetto text. This group assignment, which will be undertaken in Session 4, involves reconstructing the police budget into a performance based budget. The budget is located in the text�s appendix. Groups will develop and present a 2-4 page summary with appropriate graphs and explanatory materials that can be used to explain the budget to the public at large.

Topics and Reading Assignments:

Session 1: History of Public Budgeting and Budgeting Theories

Budgeting in the public sector has a long history reflecting varied views of decision making, the public interest, and expertise. This introductory session will focus on this history and the relationship of the budget to the public�s wishes.

Cozzetto, Chapters 1, 2, and 7
Rubin, Chapter 1
Local Government Finance, Chapters 1, 2, and 4

Session 2: Understanding Financial Documents: Accounting Principles, Cash Management, and Budgetary Controls

This session is designed to provide a basic understanding of the terminology and concepts used in financial management. We will discuss particular aspects of federal, state and local budget documents, its relationship to the annual audit, and how governments use the budget as a management and control device.

Anthony, Chapters 1, 2, 3, 4, 5, and 11
Rubin, Chapter 2
Local Government Finance, Chapters 11, 12, and 13

Assignment: Bring to class a copy of your agency�s budget and a copy of the Agency�s Comprehensive Annual Audit

Writing Assignment: Using an example from your own organization or one which you are quite familiar, analyze how budgets are established. Use the terminology and concepts presented in the readings in Session 1 and our class discussion. Pay particular attention to the decision making process and ask the question: is the public served well by this process? I�m not interested in a gripe session nor comments about improvements. The paper should be 4 to 7 pages in length.

Session 3: The Budgeting Process: Actors, Rules, Timing; Intergovernmental Relations and Constitutional Constraints

The budget making process is complicated because we the public like it that way. Is this an accurate portrayal of what occurs. But if the process is too complicated how can the public ever influence how public funds are spent? We will spend considerable time looking at the budget cycle, the participants and the rules which limit their activities or options. In addition we will examine how different government or public agencies cooperate or compete in the budgeting process and the limits imposed by various constitutional rules.

Cozzetto, Chapters 3, 4, and 6
Rubin, Chapters 3, 4, 5, and 6
Local Government Finance, Chapters 6, 10, and 22

Writing Assignment: Now that you examined the theoretical aspects of budgeting in your organization, examine who gets involved, what are the rules and how other governmental policies or laws limit your agency�s options. Again, this is a 4 to 6 page paper.

Session 4: Capital Budgeting and Operational Budgeting: Techniques and Issues

Operational and capital budgets are dissimilar in terms of objectives, techniques and timing. We will discuss the factors involved in capital budgeting, the debt issuance process, the political, economic and social consequences of debt finance, and how governments begin to implement capital budgets.

Cozzetto, Chapter 8
Local Government Finance, Chapters 4, 5, 14, 15, and 20

Assignment: In class exercise on undertaking a performance based budget. The written materials used in this exercise will be evaluated by the instructor.

Session 5: Managing the Budget and the budget making process: The Public, Innovations, and the Impact on Organization

What happens when things don�t go as we expected, i.e. money runs out or unanticipated impediments materialize? We will discuss how the budget becomes an instrument which can translate public goals into action. What happens when the federal government has a deficit or a surplus? Why can�t other governments operate like the federal government? How do governments link implementation to outcomes to next year�s budget. What are the major issues facing the state and local governments over the next five to ten years? How do we reform the state and local governments� budget making process? Should we?

Case Study: Mayor Evan Sweeny�s Budget Cutback
Rubin, Chapters 7, 8, and 9
Local Government Finance, Chapters 16, 19, and 20

Writing Assignment: In a paper not longer than 2 pages, single-spaced, as an outside consultant provide advice to Mayor Sweeny so that an equitable, politically feasible and efficient solution can be achieved.

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