PSCI 505 Public Budgeting and Finance

MASTERS OF PUBLIC ADMINISTRATION PROGRAM

Online Version

Semester: Summer 2012 / Professor: Jeffrey Greene / Telephone: 243-6181

Office: LA 356 / Office Hours: Mondays & Tuesdays,1:30 - 2 p.m. during the Summer II Session

This class is open to graduate students from any graduate program at the University of Montana. Undergraduates must have the consent of the instructor to take this course.

The online version of PSCI 505 begins on May 23 and ends July 25

UM now uses Moodle (rather than Blackboard) for online classes

Logon to Moodle

"A budget is a method of worrying before you spend instead of afterwards."

An Anonymous Quote

TEXTS: Public Budgeting Systems, 8/e by Lee, Johnson, and Joyce (Required)

Government Budgeting: Theory, Process, and Politics, 3/e edited by Hyde (Required)

The New Politics of the Budgetary Process, 5/e by Aaron Wildavsky and Naomi Caiden (Required)

COURSE DESCRIPTION

PSCI 505 is designed to allow graduate students to develop an understanding of public budgeting and financial management. A wide variety of topics will be covered including a survey of the major literature, theories of public finance, major figures, and the politics of budgeting. The class will include a survey of the historical development of budgeting in the United States, beginning with the classical period of PA through the contemporary era. A special emphasis will be given to comparing differences between public and private sector budgeting and financial management. The political context in which budgeting occurs will also receive special attention. Although PSCI 505 is a "survey course", the course will blend theory and practice. Students will be exposed to the dynamics of the budgetary process (i.e. budget development, budget execution, etc.) and will develop skills that can be taken directly to a job. The course requirements (described below) include analyzing a government budget. Please note that the focus of this class is NOT on writing budgets. The main textbook, Public Budgeting Systems, is an extensive text and a number of chapters are omitted for this class.

PSCI 505 seeks to achieve three primary objectives. The first objective is to provide students with a general understanding of public budgeting by reading and discussing classic and contemporary literature. Students will be exposed to the basic theories, concepts, and terms associated with the budgetary process. Students’ proficiency will be assessed via a comprehensive exam. The second objective is to enhance students’ ability to write concise reports about budget subjects. This objective will be accomplished by having students write article critiques. The final objective involves analyzing a real government budget, writing a report. Students’ proficiency will be assessed via the written report

Upon completion of PSCI 505, students should be able to:

1). Demonstrate knowledge of the history, evolution, and development of public budgeting in the United States

2). Demonstrate knowledge of the fundamental terms and concepts associated with public budgeting

3). Demonstrate proficiency at writing concise reports that deal with complex material

4). Demonstrate the ability to analyze a public budget

COURSE REQUIREMENTS

The general requirements include one exam, a research project, and participation (which includes the article summaries). The grade weights are specified below. All work is due July 25 -- the last day of class. The session officially ends July 27.

Research Project........ 60% (July 25) This grade is a written report that analyzes a public budget

Participation .............. 20% (Based on five, written Article Summaries) Due July 25

Discussion Board .......20% (This is based on your participation in the weekly Discussion Board. All students must respond to at least three questions)

Exam (There is not an exam in this version of PSCI 505)

Article Critique Guidelines

Each student must complete five (5) article critiques or summaries. They are due July 25. Click here for a sample article summary.

1. What is the major subject and theme of the article?

2. What is the major question the author addresses?

3. What techniques, tools of analysis, or methods are employed to answer the question?

4. What major points does the author make?

5. What does the author conclude? What suggestions are made?

6. What is the relevance of the article to theory or practice? (What does it mean?)

Budget Analysis Paper

This project involves selecting a budget and writing a 10-12-page analysis. The purpose of the project is to provide an opportunity for students to analyze a "real" government budget. Examples of past budget analysis papers can be placed on reserve in the library for students that are near Missoula. Students should select a government budget of personal interest and perform an analysis using some of the tools and methods covered in the class. Typically, papers contain an analysis of sources of funding (revenues) and expenditures. Additionally, papers often contain a description of the politics of the budget. Do not pick a budget that is too large. Often students select a single department of a city rather than the whole city budget because the budgets of cities the size of Missoula are simply too large to effectively analyze in such a short paper. The budget can be a nonprofit agency.

This year there is a sample budget paper from the last class to use as a sample. Click here to view the document, which is in Word. This is a sample paper from the last time PSCI 505 was taught online and is not intended to be template that everyone has to follow. In the traditional version of this class, there is also a budget presentation where students typically use PowerPoint or similar software for a 30-minute presentation. The purpose of this project is to produce a document that you would present to a city council, city manager, etc. With the online version, we do not have a presentation; just the written document.

There is also one of my own papers that I do each year on the Montana state budget for a roundtable at the Annual Meeting of the Western Political Science Association. You will note that it is short and covers a whole state. For those of you looking for a "model" or "format" to follow, click the link below. Please note that this is NOT the only format and it may not be applicable to the budget that you select.

http://www.cas.umt.edu/polsci/faculty/greene/psc364/MTBudget.pdf

If you have questions about this project, feel free to contact me. For some additional basic guidelines that might help you with he paper click here.

READING ASSIGNMENTS and CLASS OUTLINE

Please note that the day of the week selected for PSCI 505 is Wednesday. That is, work is assigned on Wednesday, May 23 and is not due until the following Wednesday, May 30. The Discussion Board will always be due on Wednesdays. Typically, I read the Discussion Board on Thursdays or Fridays and make comments.

Session 1 Introduction: The Context of Public Budgeting and Theoretical Issues (May 23; work is due May 30)

Lee, Johnson, and Joyce: Chapters 1, 2

Hyde: (Read the Introduction for Part I)

"Evolution of the Budget Idea" by Cleveland (#1)

"The Lack of a Budgetary Theory" by Key (#3)

"Political Implications of Budgetary Reform" by Wildavsky (#5)

"Budget Theory and Budget Practice" by Rubin (#8)

"Processes, Policies, and Power: Budget Reform," by Naomi Caiden (#9)

Session 2 Budget Cycles and Budget Issues (May 30; work is due June 6)

Lee, Johnson, and Joyce: Chapter 3

Hyde:

"Strategic Budgeting," by Meyers (#10)

"What Program Budgeting Is and Is Not" by Novick (#35)

"Planning and Budgeting: Who's on First?" by Howard (#36)

"Introduction to Zero-Based Budgeting" by Taylor (#37)

"Organizational Decline and Cutback Management," by Levine (#38)

"The Executive Budget -- An Idea..." by Pitsvada (#17)

"Implementing PBB: Conflicting Views of Success," by Willoughby and Melkers (#41)

Session 3 Budget Preparation: The Revenue Side (June 6; work is due June 13)

Lee, Johnson, and Joyce: Chapter 4, 5

No articles assigned.

Session 4 Budget Preparation: The Expenditure Side (June 13; work is due June 20)

Lee, Johnson, and Joyce: Chapter 6

Hyde:

"Why the Government Budget is Too Small in a Democracy" by Downs (#22)

"Why Does Government Grow" by Buchanan (#23)

"Participatory Democracy and Budgeting: The Effects of Proposition 13" by McCaffery and Bowman (#24)

"The Growing Fiscal and Economic Importance of State and Local Governments" by Bahl (#27)

"Lesson for the Future," by Gold (#28)

Session 5 Budget Preparation: The Decision Process and Policy and Program Analysis (June 20; work is due June 27)

Lee, Johnson, and Joyce: Chapter 7

No articles assigned.

Session 6 Budget Approval: The Role of the Legislature / Budget Approval at the Federal Level (June 27 work is due July 4 – since July 4 is a holiday, the work will be due July 5)

Lee, Johnson, and Joyce: Chapter 9

Hyde:

Hyde: "Using Performance Measures for Federal Budgeting: Proposals and Prospects" by Joyce (#40)

"The Power of the Purse" by Ippolito (#13)

"The First Decade of the Congressional Budget Act: Legislative Imitation and...." by Kamlet and Mowery (#14)

"Deficit Politics and Constitutional Government: The Impact of Gramm-Rudman-Hollings" by LeLoup, Graham, and Barwick (#15 )

"Courts and Public Purse Strings: Have the Portraits of Public Budgeting Missed Something?" by Straussman (#16)

"Mission-Driven, Results-Oriented Budgeting: Fiscal Administration and New Public Management," by Thompson (#18)

"Biennial Budgeting in the Federal Government," by Fisher (#19)

"The Federal Budget as a Second Language," by Collender (Appendix A)

"The Evolution of Federal Budgeting: From Surplus to Deficit...." by Schick and LoStracco (#11)

"The Long Term Budget Outlook for the United States," by the Congressional Budget Office (Appendix B)

http://www.publicagenda.org/files/pdf/americans_deliberate_our_nations_finances.pdf

http://www.publicagenda.org/citizen/issueguides/federal-budget (More information about the federal budget)

To examine the 2011 federal budget, the Wall Street Journal has always provided a great analysis for decades; long before we had the Internet. The link below shows the $3.8 trillion, 2011 federal budget. This is the largest federal budget in our history but the budget was never passed by Congress.

http://online.wsj.com/article/SB10001424052748704107204575038733246595218.html

For a good overview of the federal budget, visit this website by the National Council for Community and Educational Partnerships.

http://www.edpartnerships.org/Content/NavigationMenu/Policy_and_Advocacy/Educate_to_Legislate/Understanding_the_Process/Federal_Appropriations/Federal_Apps.htm

The U.S. Senate also provides an excellent website about the federal budget.

http://www.senate.gov/reference/reference_index_subjects/Budget_vrd.htm

Details about government spending, including the federal budget for various years, is provided at the following website.

http://www.usgovernmentspending.com/

Session 7 Budget Execution and An Overview of Financial Management, Capital Budgets, and Debt (July 4; work is due July 11)

Lee, Johnson, and Joyce: Chapter 10

Lee, Johnson, and Joyce: Chapter 12 (Read Chapter 11 if you are interested in government accounting. In this section, we will leave debits, credits, and t-accounts for accounting classes)

Hyde:

"Government Financial Management at the Crossroads" by Bowsher (#39)

Session 8 The Budget, Fiscal Policy, and the Economy (July 11; work is due July 18)

Lee, Johnson, and Joyce, Chapter 15

Hyde:

"The Growing Fiscal and Economic Importance of State and Local Governments," by Bahl (#27)

"Debunking the Conventional Wisdom in Economic Policy," by Eisner (#32)

Session 9 Discussion of The New Politics of the Budgetary Process (July 18; due July 25) Note that ALL work is due July 25. This is the LAST session for PSCI 505.

Wildavsky and Caiden, The New Politics of the Budgetary Process

Session 10 There is not a Session 10 in this version of PSCI 505. The Summer Sessions officially end on July 27.

Papers will be returned within one week. You can turn your paper and article summaries in at any time during the term.

Study Guide
Budget Terms
Additional Budget Terms
Link to the Office of Management and Budget
Link to Montana State Legislative Fiscal Division (Budget Reports and Analysis)
Link to History of Federal Budgeting (This is on the U. S. Senate's website)
Tax Foundation (This site contains information about taxes and revenues)
Tax Sites (This site contains links to numerous sites about taxation and budgeting)

Inflation Converter (This link contains an inflation conversion tool that allows one to convert dollars from any year into constant dollars. This link was working as of 3/25/2010). The actual link is http://www.westegg.com/inflation/

The National Debt and some important statistics

One of the most widely discussed topics in government budgeting and finance is the size of the national federal debt, which was $15.5 trillion (December 2011). For a comparison, the debt of the nation -- public and private -- is shown below. Please note that the size of the private sector's debt is much larger than the national public debt. There is a national public debt clock that shows updated figures at http://www.brillig.com/debt_clock

The TOTAL debt of the nation (public and private) is roughly $55 trillion (January 2011); 80 percent of the debt has been created since 1990. Recall that the 1990s were "boom years" but much of the boom was built on increased debt.

Public Sector Debt
Federal Government Sector debt - $15.5 Trillion (December 2011)
State & Local Government Sector debt - $3.2 Trillion

Private Sector Debt
Household Sector debt $13.8 Trillion
Business Sector debt - $10.5 Trillion
Financial Sector debt (domestic) - $15.5 Trillion

* The figures shown above exclude some types of debt. For many years Japan was the largest holder of U.S. debt and then China is became the largest holder of U.S. debt at $800 billion. But in December 2009, China reduced its holdings and Japan became the largest hold of U.S. debt again at nearly $800 billion in U.S. Treasury bonds. China remains the second largest holder of U.S. debt. However, most of the U.S. federal debt is held domestically.

The United States' Gross National Product ranks first among the nations of the world at roughly $15 trillion in 2010; the United States also ranks first using Gross Domestic Product (around $14.5 trillion). China ranks second with a GDP of $6 trillion; The European Union is the largest GDP (at nearly $19 trillion in 2010), but the EU is technically a block of countries rather than a single nation; Japan’s GDP is about $5.5 trillion.

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Syllabus for Summer Session 2012 / Online Version