University of Maryland
School of Public Policy
Fall Semester 2014
Executive Program
PUAF 670
PUBLIC FINANCE
Monday 4:00 – 7:00p.m.
Instructor
Jerry G. Bridges, MBA, CPA
Phone 703-759-0176
Cell: 703-405-0755
Fax: 703-759-9272
Email: bridgesjg@aol.com
Course Description:
Finance (PUAF 670) is a survey of topics in public finance, including key concepts linking
public finance and public policy as well as analytical techniques commonly used in public as
well as corporate and personal finance. The course moves from theoretical underpinnings to
practical applications.
PUAF 670 also introduces the key aspects of capital investment, including valuation over time
and under uncertainty; net present value analysis; internal rate of return; risk analysis; changing
financial markets; debt issuance; and valuation of securities, leasing, and cash management.
Course Objectives:
Upon completion of this course the student should be able to:
1. Describe, define and apply several computational techniques for valuing capital
expenditures and capital acquisition
2. Identify and describe the basic standards of tax policy in the United States
3. Define and discuss the pros and cons of the various types of tax applied in the United
States
4. Define and describe the differences in operating and capital budgets, and explain why
these differences are important.
5. Discuss various borrowing methods and strategies.
6. Define and describe investment challenges and strategies for public investors.
7. Explain the relationship between economic development and public finance.
Prerequisites:
In order to enroll in this course, students must have graduate level standing in the University of
Maryland. Having some familiarity with college level algebra and economics would be helpful.
Texts:
Mikesell, John L., Fiscal Administration: Analysis and Applications for the Public Sector,
9th Edition, Wadsworth Publishing, 2014. (Required)
PUAF 670 – Public Sector Finance (Fiscal Management), Spring 2014 – Reading Packet.
(Required)
Schick, Allen, The Federal Budget, Politics, Policy, Progress, 4th Edition, The Brookings
Institution Press, 2007. (Optional)
USE OF BUSINESS CALCULATORS:
This course involves some manipulation of certain mathematical formulas and functions which
are pre-programmed into such business calculators as the HP 10B, 12C, and 17B and the TI BA
35, BA II Plus, etc. (A tutorial on-line for BA II Plus Texas Instruments calculators can be accessed at:
http://www.tvmcalcs.com/calculators/baiiplus/baiiplus_page1.) Use of these types of calculators for
solving homework and test problems is encouraged in the interest of time and on the basis that
such calculators are used extensively in almost every financial job setting. However, the student
will be expected to understand and use the math underlying every concept and problem solution
covered in this course. The calculation algorithms are also contained in Excel programs.
COURSE REQUIREMENTS
1. Examinations: There will be an Out-of-class examination and an In-class
examination. The examinations will consist of questions, and problems similar to those
found in the text. Students missing an exam will receive a grade of zero unless they
have been excused in advance by the instructor or have written evidence of a
legitimate emergency.
2. Article Review: Find an article in the Wall Street Journal, or other business or
government periodical, which pertains to the topics covered in the class. Prepare a 5
page (double spaced) report on the article explaining: (a) Why you chose the article; (b)
How the article specifically relates to a topic covered in the class; and, (c) What you
learned from the article. This article review will be done at individual level and is due
December 1 (Class 12).
3. Selected Problems: The course schedule, below, identifies problems as d as “For
Discussion” and “Homework Due.” “Discussion” problems may (or may not) be
discussed as part of the presentation of the current assignment. Students should be
prepared to present their solution to these problems to the class, but they need not be
turned in. Problems identified as “Homework Due” relate only to previous Week’s
Mikesell’s reading material, and are to be handed in, in readable form, for grading.
There may be grade deductions for late assignments. In the event of absences homework
may be emailed to the instructor,
4. Participation: You are expected to participate actively in this class, by volunteering
problems solutions, posing questions, and offering answers to the instructor’s questions.
Grading: Grades will be determined, as follows
Exams
Paper
Homework Problems
Total
35% each
20%
10%
100%
Letter grades are determined as follows:
93 – 100
90 – 92
87 – 89
83 – 86
80 – 82
77 – 79
73 – 76
70 – 72
60 – 70
Below 60
A
AB+
B
BC+
C
CD
F
Note: There will be no assignments for extra credit to improve grades
A brief word on academic integrity:
Please note the university policy on academic honesty.
“The University of Maryland, College Park has a nationally recognized Code of Academic
Integrity, administered by the Student Honor Council. This Code sets standards for academic
integrity at Maryland for all undergraduate and graduate students. As a student you are
responsible for upholding these standards for this course. It is very important for you to be
aware of the consequences of cheating, fabrication, facilitation, and plagiarism. For more
information on the Code of Academic Integrity or the Student Honor Council, please visit
http://www.shc.umd.edu.”
If you have any questions about what constitutes proper citation vs. plagiarism, please go to:
http://www.lib.umd.edu/UES/plag_stud_what.html
PUAF 670
Fall 2014
Class Schedule
Class Date
01
Sep.
8
Topic (s)
Introduction: Fundamental
Principles of Public Finance
02
Sep.
15
The Logic of the Budget Process
(Executive and Legislative
Branches)
03
Sep.
22
Federal Budget Structures and
Institutions
State and Local Budgets
04
Sep.
29
Budget Methods and Practices
Introduction to Present Value
Calculations (Handout Present
Value Problem Set)
05
Oct.
6
Budget Classifications Systems &
Reform: Trying to Make Better
Choices
06
Oct.
20
07
Oct.
27
Capital Budgeting, Time Value of
Money, and Cost-Benefit
Analysis: Process, Structure and
Basic Tools
First Exam (Out-of-Class)
Taxation: Criteria for Evaluating
Revenue Options
Major Tax Structures: Income
Taxes
Assignment
Read: Mikesell Chapter 1 & Reading
Packet (Class 1)
For Discussion: Case 1-1
Read: Mikesell Chapter 2 & Reading
Packet (Class 2)
For Discussion: Case 2-1
Homework Due: Problem 1 (pg. 35)
Read: Mikesell Chapters 3 & 4,
including Appendices 3-1 & 4-1, &
Reading Packet (Class 3)
For Discussion: Case 3-1
Homework Due: Problems 2 & 3 (pgs
84-85)
Read: Mikesell Chapter 5 and OMB
Circular A-11, Sections 22, 25 and 51
(www.whitehouse.gov/omb/circulars)
For Discussion: Appendix 5-1
Homework Due: Problem 2 (pg. 143)
Read: Mikesell Chapter 6, including
Appendix 6-1
For Discussion: Case 6-1 & Reading
Packet (Class 5)
Homework Due: Problem 2 (pg. 220)
and Case 5-1
Read: Mikesell Chapter 7 & Reading
Packet (Class 6)
For Discussion: Case 7-1 and Handout
Homework Due: Present Value
Problem Set
Read: Mikesell Chapters 8 and 9
For Discussion: Cases 8-1 and 9-1
08
Nov.
3
Major Tax Structures:
Taxes on Goods and Services
Property Taxes
First Exam Due
9
Nov.
10
Revenue from User Fees, User
Charges, and Sales by Public
Monopolies
Collecting Taxes
10
Nov.
17
Revenue Forecasts, Revenue
Estimates, and Tax Expenditure
Budgets
11
Nov.
24
Intergovernmental Fiscal
Relations: Diversity and
Coordination
12
Dec.
1
Debt Administration
Article Review Due
13
Dec.
8
Managing Public Funds: Cash
Management, Employee
Retirement, and Sovereign Wealth
14
Dec
15
In-Class Examination
Read: Mikesell Chapters 10 and 11
For Discussion: Problem 11 (pg. 533
& Cases 10-1 & 11-2
Homework Due: Problems 2 (pg.
385), 3 (pg. 434) & 7 (pg 435)
Read: Mikesell Chapter 12 & Reading
Packet (Class 9)
For Discussion: Case 12-2, and
Readings Questions 3 and 4
Homework Due: Problems 4 & 7 (pg.
482, 3 (pg. 529), 5 & 6 (pg. 530)
Read: Mikesell Chapter 1313 and
Reading Packet (Class 10)
For Discussion: Appendix 13-1
Homework Due: Problems 2 & 3
(pgs. 562-563)
Read: Mikesell Chapters 14
For Discussion: Cases 14-1 and 14-2
Homework Due: Problems 3 & 4 (pg.
595)
Read: Mikesell Chapter 15 & Reading
Packet (Class 12)
For Discussion: Appendix 15-1
Homework Due: Problem 3 (pg. 631)
Read: Reading Packet (Class 13)
( Mikesell 8th Edition Chapter 15)
For Discussion: Managing Public
Funds(Chapter 15) Problems 1, 3, 4, 5
& 6 (pg. 694) and Cases 15-1 & 15-2
Homework Due: Problems 3 (pg. 675)
and 6 (pg. 676)