Week 2: Politics and Dynamics of Public Budgeting Budgeting: political or technical? The “baseline” Rubin’s model of budgetary decision making p.30 Actors in the budget process Mini-case Budget process--goals, culture, characteristics Student issues from readings Preview week 3

Public Administration “Dichotomy” Debate Classical Public Administration: 1880’s ’s Focus on efficiency of large organizations Search for scientific principles of administration Expertise, not politics Left out concern for politics, values, ethics Behavorial: 1940s s Dichotomy questioned From efficiency to effectiveness Human element, behavior, decision making in organizations Led to new kind of science of administration Continued to ignore politics

Public Administration “Dichotomy” Debate (cont.) The New Public Administration: 1970s - No dichotomy Try to bring managerial and political values together Two branches –Public policy looked at politics in policy but not in administration PA moved to Business Schools –Political management the governance function of public administration define the role of public managers in political system

Budgeting as Political Budget (document)  scope of government  redistribution of wealth  priorities  reflects relative power  reflects public consensus  accountability to public Budgeting (process)  preparing and defending requests  strategy--what to reveal, what to conceal  roles in process--who has power

Budgeting as Technical?  estimating revenues  estimating costs (benchmarks)  knowing all rules and constraints  spending limitations -- legal  spending requirements  limits on borrowing  need for public referenda (spending and revenues)  different funds  presenting information  accounting/allocating (baseline, one-time)

Budget Management: political or technical? Internal allocation –how much is needed? –aligning incentives Staying within budget Reallocation Determining and using reserves Publication -- how much to reveal Transfers among funds Year end strategies

Political v Technical Budget as a Document ___% technical ___% political Budgeting as a Process ___% technical ___% political Budget Management ___% technical ___% political

The “Baseline” Budget How to compute it:  Current year initial budget  Current year revised budget  Current year expenditures  Current services level adjusted forward (inflation, caseload)  Current law  Current year budget less one-time  CSUS case study: Program of Dance

Rubin’s Model of Budgetary Decision Making –Environment –Process –Strategies –Outcomes

Rubin’s Model of Budgetary Decision Making Environment –Affects outcomes directly –Affects strategies –Affects process Process –Affects outcomes directly –Affects strategies Strategies –Affects outcomes directly –Affects process

Actors in Public Budgeting Chief Executive Executive branch chiefs Control agencies –executive –legislative Legislators Interest groups Public

Mini-Case -- Indian Health Program What is the committee chair trying to accomplish? Why is the Bureau Chief in a difficult position? What power does the committee chair have over the Assistant Secretary and the Bureau Chief? What power does the Assistant Secretary have over the Bureau Chief? Did the Assistant Secretary do a good job of responding? Did the Bureau Chief do a good job of responding?

Budget Process Designed to meet organizational goals Reflects organizational culture Variables –players –rules/procedures/documents/timelines –balance of executive/legislative power –degree of centralization/coordination –top-down/bottom-up –openness to internal members –openness to external community

Design a Budget Process for a School District Units: 4 elementary schools 2 middle schools 1 high school Players: superintendent/staff school board 7 principals 7 PTAs Process Variables: roles of various players authority/balance of power rules/procedure documents/timelines executive v legis power degree of centralization top down/bottom up openness to internal openness to external

Preview of Week 3 Lots of different, but short, readings –Congressional Budget Office –Legislative Analysts Office –Department of Finance Think about: –Differences between State and Federal Processes –Different roles of LAO, Finance –In four sample LAO analyses, think about what they are trying to accomplish Guest Speaker from Corrections, LAO, DOF (current) Remember first weekly assignment (sample on web)