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.

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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.

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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

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 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.

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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