Public Financial Management & Budgeting Public Administration PPD 541 Summer 2011 Tim Gage (916) 457-4003 gillgage@pacbell.net Course Objectives This course is intended to provide public administration graduates an overview of public agency budgeting and financial management. Public agency budgets are the means by which public resources are allocated and, as such, are central to the role of government. The course will provide an overview of the budget process, including the players and the strategies they employ, as well as provide students with the practical skills involved in understanding, analyzing and preparing budgets. The goals of the course are to: Achieve an understanding of the central role that budgets play in the state, local and federal systems of government. Develop the skills needed to be an effective participant in the budget process, including cost analysis, revenue and expenditure estimation and preparation of budget justification. Familiarize students with several other important financial management activities including cash management, investing, capital budgeting and public sector borrowing. Introduce some of the issues particular to budgeting in a nonprofit organization. Discussion of these issues will include the historical context, legal issues and economic theories underlying current practices. The course is intended to provide you with a broad understanding of public finance issues. We will also spend time addressing budget issues in your work situations. In doing so, the goal is to develop a better understanding of the critical factors involved in budget decision making and improve your ability to communicate effectively in this arena. This will be achieved through the required readings, class discussion, in-class exercises, brief papers, a cost analysis and a budget justification. 1 Required Reading The text for the class is Fiscal Administration: Analysis and Applications for the Public Sector by John L. Mikesell (Wadsworth Publishing, 7th Edition, 2007). (Note that an 8th edition of the text has been published recently and you are welcome to use it, but the page references for the text in this syllabus are to the 7th edition.) In addition you will be required to read Memos to the Governor: An Introduction to State Budgeting by Dall W. Forsythe (Georgetown University Press, 2nd Edition, 2004) and California In The Balance: Why Budgets Matter by John Decker (UC Berkeley Public Policy Press, 2009). Additional required readings intended to round out your understanding of the topics covered by the course will be available in the form of a class reader. Class lectures and discussions will use the required readings as a jumping off point for discussion. For this reason, it is essential that you come to class having read the assigned readings. In addition, you are expected to be familiar with current events, such as the status of the state budget. Good sources for current budget and state and local government information are the Rough & Tumble website (www.rtumble.com), the Los Angeles Times and the Wall Street Journal. Course Assignments Your grade for the course will be based on class participation (10%), a brief paper and revision (10%), a cost analysis (20%), a budget justification (25%) and a final exam (35%). Class Participation (10%): Your participation in class is essential to your success in this course. In addition to demonstrating your understanding of the material covered, collaboration in the form of verbal give and take is critical to developing creative solutions in the work environment. We will use issues and problems from your work settings to apply what you are learning in the class. In addition, we will briefly discuss several current public finance issues at the start of each class session. Please come prepared to discuss a public fiscal or budget issue from Rough and Tumble or another news source at the first class. Brief Paper (10%): You will be asked to prepare a brief paper (no more than three pages double-spaced, 11 or 12-point type ) arguing a position on an issue related to one of the readings for the first weekend’s classes (as noted in the Course Schedule). Please pick a topic about which there is likely some difference of opinion (for example, why the state is in its current fiscal situation, the extent to which the federal deficit is a problem, the role of conflict in budgeting, etc.) rather than a simply technical or descriptive reading. The papers should briefly summarize the major argument or points the author makes and lay out whether you agree or disagree with author’s argument and why. 2 Spelling and grammar count! This paper is due (via email to gillgage@pacbell.net) as a Word document prior to the first class on Thursday, July 7th. These papers will be returned to you with questions and comments, and you will be asked to revise them. Cost Analysis (20%): A cost analysis relating to a typical public budgeting problem will be handed out at the end of the first intensive weekend and is due July 25th. This exercise is designed to demonstrate your command of basic costing skills. The exercise assumes that you are already somewhat proficient with Excel or will acquire that proficiency in the course of doing the exercise. Students unfamiliar with using a spreadsheet are encouraged to contact me for suggestions regarding introductory materials. In addition, ungraded, in-class exercises will be used throughout the course. Budget Justification (25%): You will be required to prepare a budget request in the form of a Budget Change Proposal (BCP) of approximately 6 - 8 pages in length. These budget justifications are due the first day of class of the 2nd weekend (August 4th) and will also be presented in class for discussion during the Thursday, Friday and Saturday classes of the second weekend. Details of this assignment will be made available at the end of the first weekend of classes. Final Exam (35%): The final exam will be conducted during the last class session. Course Schedule Readings are listed for each class consistent with the flow of the topics that will be covered. Where I indicate that material should be skimmed, I really do mean skim! Weekend 1 (July 7-10) Thursday Overview and Introduction to Public Budgeting and the Budget Process Required Reading: Fiscal Administration, Chapters 1 & 2 (except pp. 54-60) Memos to the Governor (all) California in the Balance (all) “Understanding the Role of Conflict in Budgeting” by Rubin “The Dance of the Dollars: Classical Budgeting” by Wildavsky & Caiden Short paper on an issue related to one of the first weekend’s readings due prior to the beginning of class. Friday What is a Budget, How are Budget Decisions Made, Analyzing Costs, and the Structure of California’s Budget 3 Required Reading: Fiscal Administration, pp. 141 – 161 & 192 – 201 “Preparing Agency Budgets” by Rogers & Brown (Skim) “How to Read a Budget” by Hayes Saturday Taxation, Estimating Revenues, and Revenue Sources Required Reading: Fiscal Administration, Chapters 7, 11, & 13. Skim Chapters 8, 9 & 10 “State and Local Government Budgeting: Coping with the Business Cycle” by Wolkoff Sunday Local Government Budgets and the Federal Budget Process Required Reading: Fiscal Administration, Chapter 3 “The Rhetoric and Reality of Balancing Budgets” by Caiden “Sustained Budget Deficits: Longer-Run U.S. Economic Performance and the Risk of Financial and Fiscal Disarray” by Rubin, Orszag & Sinai “How Congress Controls Expenditures” by Ellwood “What You Should Know About Your Local Government's Finances” by the Governmental Accounting Standards Board Cost Analysis due July 25 Weekend 2 (August 4-7) Thursday Budget History, Budget Reform, Performance Improvement, and Program Evaluation, Student Presentations of Budget Justification Required Reading: Fiscal Administration, pp. 54 – 56; 161-170 & 201 – 232 Chapters 4-6 from A Budgeting Guide for Local Government, by Robert Bland (in the class reader) “Why Measure Performance? Different Purposes Require Different Measures” by Behn “Managing for Results in State Government: Evaluating a Decade of Reform” by Moynihan” All Budget Justifications due at the beginning of class. 4 Friday Cash Management and Investing, Introduction to Capital Budgeting, Student Presentations of Budget Justification Required Reading: Fiscal Administration, pp. 56-61; 161-167 & Chapters 6 & 16 Investing Public Funds by Girard Miller, Skim Chapters 1 through 5 “Beyond Total Return” by Finkelstein & Landerman Saturday Capital Budgeting and Financing, Other Types of Financing, Student Presentations of Budget Justification Required Reading: Fiscal Administration, Chapter 15 California Debt Issuance Primer, Preface & Chapters 1 & 7 (http://www.treasurer.ca.gov/cdiac/debtpubs/primer.pdf) “Budgeting for Capital Improvements” by Bland & Clark (Skim) Sunday Fiscal Management Issues in Nonprofits, Course Wrap Up, Final Exam Required Reading: “Program Budgeting Works in Nonprofit Institutions” by Macleod 5
