1. GOVERNMENT BUDGETING Seminar: Week 7

2. To Do List Catch-Up, Catch-Up There is no written assignment this week so use your time to complete missing assignments. Be sure to check the Gradebook to review which assignments you need to make-up. Group Project Budget $$ Please submit your group’s budget amount to DocSharing by the end of unit 8. Final Project Work on completing your Interview so that you can be sure to finish your Final Project on time.

3. What Is A Budget? Components: – A plan for how the government spends our money Needs, priorities, estimates – A plan for how the government will pay for its activities Estimates and impacts Central Question – Budgeting is a political process occurring in a political arena for political advantage, or – Budgeting as a rational means to provide for the efficient, effective, and equitable distribution of the nation’s wealth to achieve publicly desired purposes.

4. Budget Approaches Line-Item Budgeting – Presents the budget of a public agency on an object-of- expenditure basis – Goal is control expenditures while accounting for all money spent on public programs Performance Budgeting – Used cost and work measures to assess both the cost of resources and what was being done with them – Good at measuring efficiency, but not the effectiveness of public programs

5. Budget Approaches Planning-Programming-Budgeting (PPB) – Aimed at improving the planning process in advance of program development and before budgetary allocations were made – Made programs not agencies the central focus of budgets – Designed to incorporate rationality into the budget process – Never fully embraced by Congress, thus PPB never gained permanency as a budgetary practice at the federal level

6. Budget Approaches Zero-Base Budgeting (ZBB) – Identification of decision-units: staffs, branches, programs, functions, each individual appropriations items – Analysis of these units and formulation of decision- packages Based on estimates of agency output at various funding levels and assessing the cost effectiveness and efficiency of each unit Managers prepare several packages pertaining to the same set of activities to allow upper-level managers alternatives when weighing across units – Ranking of decision-packages from highest to lowest priority

7. The Process of Budget Making 1.Preparation – Call for estimates: OMB requests that agencies assemble and forward their projections as to the funding they will need for ongoing and new programs in that fiscal year – Budget examiners: hold hearings with agency representatives on programmatic, management and budget questions – Recommendations: the budget examiners offer recommendations to OMB based on their review of agencies estimates; agency budgets are then altered accordingly – President’s Draft Budget Message: all agency requests are assembled into a singular budget submitted to Congress

8. The Process of Budget Making 2.Authorization – Determination of maximum-spending levels (caps) for each program approved by the legislature – Responsibility lies with Standing committees in Congress who have subject-matter jurisdiction over certain agencies 3.Appropriations – Grants the money to spend or the power to incur financial obligations – Appropriations committees in both chambers of Congress are responsible for this stage

9. The Process of Budget Making 3.Appropriations, cont’d. – Several trends limit Congressional appropriations powers: Backdoor Financing is possible where an authorization sets a level of spending for an agency and mandates that the agency spend the funds for that purpose – Entitlements place no limit on budget authority because eligibility standards are set by law and the level of outlays are determined by the number of eligible persons who apply for the authorized benefits. 4.Execution – Process of spending the money appropriated by Congress – Agency administrators have considerable discretion; they are able to move funds from one account to another, reprogram funds, and defer funds to later quarters (building reserves)

10. The Process of Budget Making 5.Auditing – Involves several functions divided amongst several auditors, performed over varying time periods Informal audits: performed within agencies, generating fiscal data necessary to demonstrate proper spending of funds and agency effectiveness Formal audits: under the direction of agency auditors of the OMB and/or GAO Congressional oversight: ongoing, informal legislative audit, for both programmatic concerns as well as expenditure control – Focus of audits has shifted Originally audits focused on financial accuracy and propriety Now audits have included a managerial and performance focus to ensure program efficiency and effectiveness within agencies