Campbell, Rebecca and Geoffrey K. Turnball (2003).
On Government Structure and Spending: The Effects
of Management Form and Separation of Powers.
Urban Studies, Vol. 40, No. 1, 23-24.
Scott Stauffer
ECON 539, Winter 2009

The Question is “…how government form
affects spending.”



Professional versus Elected management
Municipal (city) and Regional (county) governance
Background: The Mixed Bag on Public Waste

The literature suggests “professional management
leads to lower per capita municipal spending”
(Broom 1966), while others suggest no spending
differences exist as elected management typically
oversees the professionals (Deno and Mahey 1987)

My MPP Connection:

Keeping State Policy Public: Accountability in
Commission Governance (Coming Spring 2009!)
 OTC Analysis, Corporate Observations, Call for Study

Public Leadership Models
 What are we doing?
 What are others doing?
 What should we be doing?

Government Accountability
 Time Management
 Agenda Setting

Lack of Literature = Need for Further Research

Data

Two Sample Groups: Cities and Counties
 Different By Design:
 Cities = Mayor-Council or City Manager
 Counties = Elected Executive, Council-Administrator, or
County Commission

Two Sample Years: 1982 and 1992
 1982 Data from Moody’s Municipal and Government Manual
(discontinued by 1992)
 50 largest Metropolitan Statistical Areas (MSAs)
 642 municipalities
 205 counties
 1992 Data from Census of Government
 347 municipalities (less than 1982)
 356 counties
Method: It’s All “Econ” To Me!


OLS and 2SLS regression analysis
The study used “…Hausman’s (1978) endogeneity
test to choose between the exogenous aid (OLS)
and endogenous aid (2SLS) versions of the
spending equations. The reported estimates are the
preferred OLS or 2SLS estimates as indicated by
the Hausman test.”

A.K.A. “Test for Identifying Restrictions”: Hausman’s test
evaluates the significance of one estimator versus another
estimator. (Wikipedia and economics.about.com)
Method: Two Empirical Models
CITY MODEL:


Dependent Variable: Log of Per Capita City
Spending on Core Functions (police, fire,
highways)
Explanatory Variables:
INCOME (per household)

TAXSHARE*AID (share of taxes received by the
city from state or federal governments)

TAXSHARE (share of tax base)

POPULATION (of the city)

DENSITY (population per square mile)

POVERTY (% of population below poverty line)

DEMOCRAT (% of pop. that voted D for pres.)

MANAGER
 1 = City Manager
 0 = Mayor-Council

MIDWEST

SOUTH

ATLANTIC
(median figures per household)

COUNTY MODEL:


Dependent Variable: Log of Per Capita
County Expenditures on Core Functions
(Police and Highways)
Explanatory Variables:








INCOME (same as city)
TAXSHARE*AID (same as city)
TAXSHARE (same as city)
POPULATION (same as city)
DENSITY (same as city)
POVERTY (same as city)
DEMOCRAT (same as city)
ADMINISTRATOR



1 = Council-Administrator
0 = Other
COMMISSION


1 = Commission
0 = Other
MIDWEST
SOUTH

ATLANTIC
(median figures per household)


Results: Two Empirical Models
CITY MODEL:
Table 3.
Pooled
Atlantic
Midwest
South
West
COUNTY MODEL:
Summary of municipal government
form effects on spending
1982
0.0006 (0.0311) 2SLS
0.119 (0.074) OLS
0.0006 (0.042) OLS
-0.032 (0.069) OLS
-0.035 (0.137) 2SLS
1992
-0.018 (0.041) 2SLS
0.097 (0.089) OLS
-0.005 (0.055) OLS
0.275** (0.093) OLS
0.146 (0.105) 2SLS
** indicates significant at the 5 per cent level.
Notes: The dependent variable is the log of per capita spending. White’s
heteroscedastic consistent standard errors in parenthesis.
Reported parameter estimates for MANAGER coefficient.
Other independent variables are those listed in Table 2,
excluding regional dummy variables.
Model Statistics:
R2
0.260 (1982)
F-Stat 21.464**
0.224 (1992)
10.070**
Table 6. Summary of county government form effects on spending
Pooled
ADMINISTRATOR
COMMISSION
Atlantic
ADMINISTRATOR
COMMISSION
Midwest
ADMINISTRATOR
COMMISSION
South
ADMINISTRATOR
COMMISSION
West
ADMINISTRATOR
COMMISSION
1982
1992
-0.365* (0.156) OLS -0.333* (0.160) OLS
-0.573* (0.193) OLS -0.439* (0.180) OLS
-0.018 (0.349) 2SLS -0.183 (0.347) OLS
-0.394 (0.459) 2SLS -0.279 (0.369) OLS
-0.181 (0.180) OLS
-0.267 (0.212) OLS
-0.058 (0.160) OLS
-0.156 (0.178) OLS
-0.592* (0.203) OLS -0.239 (0.224) 2SLS
-0.791* (0.201) OLS -0.394 (0.243) 2SLS
0.332 (0.198) OLS
0.097 (0.183) OLS
0.116 (0.189) OLS
-0.072 (0.202) OLS
* indicates significant at the 5 per cent level.
Notes: The dependent variable is the log of per capita spending. White’s
heteroskedastic consistent standard errors in parenthesis.
Reported parameter estimates for MANAGER coefficient.
Model Statistics:
R2
0.276 (1982)
F-Stat 7.484**
0.280 (1992)
11.113**
Results: City Conclusions

City Government Form does not Affect
Spending, Except…

Key Variable: MANAGER is insignificant in 1982 and 1992,
indicating no relationship between City Form and Spending.
 Except in 1992, Southern Cities had a significantly positive
coefficient (0.275 (0.093) OLS), indicating greater spending under
Council-Manager governments that Mayor-Council governments.

Differences in studies may depend on region and era, but
“these results also show no persistent government formspending pattern over all regions and time-periods.”
Results: County Conclusions

Professional or Elected does not Matter,
Except Separation of Powers Might…
Key Variables: ADMINISTRATOR and COMMISSION… “The coefficient
estimates for these variables reveals that in both 1982 and 1992 counciladministrator and commission governments spend less per capita” than
Elected Executive governments.
 Not clear which form causes this spending pattern, considering the mix of
professional-elected managers, and legislative-executive separation
 It’s not a Matter of Southern Professionalism, it appears to be about Separation
 The significantly negative COMMISSION coefficients (-0.552 in 1982 and
-0.440 in 1992) suggest that separated governments spend more than united
government
 F-Tests indicate the importance of regional differences that may not show in
Nationally Sampling

Results: Overall…

Management Form does not affect City or
County Spending in Most Regions




For Southern Counties, it might be about Separation of Powers


Except in Southern Cities in 1992 with Mayor-Councils spent more than City Managers
Other aspects of city and county government are obscuring management form-spending?
Supports the Hypothesis: professional managers and elected administrators do not spend
differently on the basis of being hired or elected
Separated Governments Spent More than Unified Governments in 1982
County and City Governments are not Consistent with Each Other


Fundamental differences in the type of government and how they function in general
Other studies support this Conclusion (Turnbull and Mitias 1999)
Public Policy Implications

The Myth of Big Spenders in Local Government: It’s Not True?



Rebuke of Progressive Era Movement for Professional Government?


Except down South, local governments were just as apt to spend money – or not –
regardless of professional management or popularly elected leadership
Obama’s Federal Stimulus Money will be Spent by All… or not?
Hired by Elected Leaders, or Elected by Voters, Doesn’t seem to Matter
Periodic Demand for Local Changes… Not So Much?


No difference in Spending with different Government Forms
Next Time Portland Makes a Big Stink about it’s City Charter…
 But, There May Be Other Concerns for Change:
 Representation in the Government (Council Districts versus At-Large City)
 City-County Government Consolidation (Mergers)