Southern Review of Public Administration, Article Review Example

Thai, K.V. & Taylor, G.T., Jr. (1982). Toward a Paradigm for Public Budgeting and Financial

Management. Southern Review of Public Administration, 6(3), 272-281.

Article Summary

Khi V. Thai and G. Thomas Taylor, Jr., authors of the article entitled, Toward a Paradigm for Public Budgeting and Financial Management, give a thorough analysis of the recent (at the time of publication) role of public budgeting and financial management (PBFM) as a significant area of the field of public administration, based on a study labeling PBFM as the least required area in public administration programs. Thai and Taylor (1982) advocate for PBFM recognition and cite, as justification, “resource constraints and fiscal crises” (p. 272) and a 1981 survey as revealing that PBFM’s significance is advancing above that of personnel management. The introduction outlines the purpose of the article by stating, “This article proposes a paradigm for the scope of PBFM and suggests a model curriculum for PBFM education” (p. 272). With this, the article eludes to a possible consensus that, though ambiguous, PBFM has the capability to reach an advanced state and prove substantial in the area of public administration. The argument includes the notion that PBFM, in an advanced state, will likely present as unpredictable. However, it is still necessary to explore a possible paradigm to get an understanding about the basic concepts of PBFM.

The Paradigm

Thai and Taylor (1982) use a diagram to illustrate the relationship that public budgeting has with public financial management and government accounting and financial reporting. The diagram shows how these relate to each other and to auditing and evaluation as it correlates to how it all impacts the three different phases of the PBFM process. The three phases that Thai and Taylor (1982) refer to is the “process perspective” and are labeled as 1) Phase I – Budgeting Decisions, 2) Implementation or Execution, and 3) Auditing. (p. 273). This is the paradigm.

It is noted in the article that the implementation/execution phase of PBFM is routinely left out of public administration programs. The argument here is that there is artificial splitting of this phase into a financial management area and an accounting area, and this is not necessary because financial management and accounting go hand-in-hand.

Environmental Influences

The PBFM process is heavily influenced by whatever happens with the national economy as it relates to public budgeting. The article explains that budgeting revenues and expenditures are significant at local, state and regional levels which are all influenced, environmentally, by current economic conditions. This, in turn, can have an affect on taxes and revenues which have an impact on public budgeting decisions made on items such as governmental wage and salary rates, public assistance funding, unemployment insurance and other government programs.

Thai and Taylor (1982) outline why it is essential for PBFM professionals to understand environmental influences that apply to how their fields function.

Political Influences

Thai and Taylor (1982) go on to explain that politics has a significant impact on public budgeting decisions and financial management, based on how citizens, political leaders and interest groups view various issues. For example, public citizens can put pressure on decision-making officials by the nature of their behavior. Consumer behavior is often influenced by politics, and can also influence politics, in return.

Market Influences

Another environmental influence for PBFM, outlined in the article, is the state of the money market at any given time. It is noted that public sector borrowing depends on various factors such as “tailoring of debt maturities, the extent and character of all provisions, the amount of the bond issue, the security against default, and the timing of sales” (p. 275). This basically means that market behavior is just as influential as consumer behavior when it concerns PBFM.

Collective Bargaining Influences

The concept of collective bargaining is outlined in the article and includes negotiation agreements between employees and corporations regarding common trade union interest factors such as pay scales, overtime, working hours, company policies, fringe benefits, employees’ rights and OSHA requirements. The article by Thai and Taylor (1982) points out that collective bargaining is, yet, another environmental factor that influences PBFM.

Budgeting Decisions

Another area outlined in the article deals with budget decisions, and it is noted that budgets are a necessary part of agency and government responsibilities. This is the area of PBFM mentioned above that is a somewhat neglected aspect of PBFM, because of the separation of financial administration and accounting. It is noted, that although these two aspects of PBFM are separated into two channels, the two channels each have their own usefulness. Consequently, as it relates to usefulness, the article points out the importance of public financial professionals’ ability to understand the basics about both of these areas when making budgeting decisions.

Smith & Lynch (2004) point out that this is especially true when it comes to capital budgets, because they are major governmental expenditures, and are usually for long-term government projects like infrastructure upgrades and building new roads.

Auditing

Thai & Taylor (1982) touch on the fact that PBFM initiatives are subject to government auditing, particularly because of the current size of the U.S. government. It is important that the practices of public sector revenues and expenditures reporting are carefully monitored in order to provide accurate reports about the handling of tax monies, as mandated by compliance laws and regulations. Focus is also on whether or not governmental programs are being economically run. Audits are in place in PBFM to make sure there is compliance and to catch any inequalities (Smith & Lynch, 2004).

PBFM Curriculum Model

In this section of the article, Thai & Taylor (2004) discuss accounting course requirements for a Master’s of Public Administration (MPA) curriculum. The consensus is that it should be required and should “comprehensively cover accounting, budgeting, and financial management” (p. 278). This is based on the paradigm for PBFM, as referred to in this article.

Thai & Taylor (1982) report that the suggested curriculum, without a chosen specialization, should include courses on a) budgeting decisions, budgetary processes, political processes, and the economic environment, b) financial management, debt and cash management, c) accounting and financial reporting, and d) auditing (p. 279).

For a PBFM curriculum with a specialization, the authors offer contingencies to the above. The authors also outline sample subjects that should be covered under budgeting, financial management, and governmental accounting spoken about above.

Wrap Up of Article

The basic premise of this article focuses on public budgeting and financial management (PBFM) as a paradigm consisting of Budgeting Decisions, Implementation or Execution, and Auditing. Also, focus is placed on requiring all agency, government officials and public budgeting professionals to be well-trained in the areas of public budgeting. This includes requiring strict PBFM curriculums for students studying to enter the industry.

Smith & Lynch (2004) discuss governmental risk management as a way to prevent errors in the public budgeting arena. This includes employing loss prevention and recovery plans to increase security measures and help control risk, such as the implementation of a risk funding account to cover any losses that may occur.

Reflections

The dominant purpose of this article appears to be advocating for the public budgeting and financial management (PBFM) aspect of public administration to be more significant. There is also a push toward recognition of the importance of PBFM in public financial management and government accounting and financial reporting. This concept is referred to as a paradigm that breaks the PBFM process up into three phases, which pertain to making budgeting decisions, implementing and executing those decisions, and then conducting pertinent auditing sessions to ensure regulatory compliance, uniformity and security.

Additionally, the importance of ensuring a PBFM curriculum standard is in place to properly teach, coach and train new students coming into the industry is emphasized.

It is this reviewer’s personal assessment that, based on the findings in this article, anyone interested in becoming a PBFM professional should definitely have access to a complete curriculum that will prepare him or her to handle the responsibilities and pressures of being in the public budgeting sector. It is incumbent on those holding professional positions to take it upon themselves to remain well-informed and up-to-date on industry requirements and standards, as well as continuing education. Best practices should be a priority for these professionals and it is good that appropriate monitoring and auditing practices are in place to make sure this is done.

Public budgeting is a discipline under the field of public administration and complete academic study focuses on preparedness, so that when issues arise, appropriate steps can be taken to remedy those issues. This article maintains that public budgeting can influence financial control and is also often dependent on economic trends.

The article deals with the question of whether or not public budgeting and financial management should be required for the Master’s of Public Administration (MPA) degree, and argues in favor of this.

I tend to agree with this notion. Any Master’s level curriculum should include the most complete and well-rounded course available. PBFM is a significant area of study, but the article points out its ambiguity. However, I feel this should just mean that the study of PBFM should be broken down into various categories and possibly each category being a different class course.

I thought it interesting that the authors attribute PBFM to a paradigm that connects different concepts of the PBFM area of study together. Showing that the paradigm is basically from a process perspective gives a more focused view about how it is done. It starts with budgeting decisions, and then execution of decisions, and then the process is audited. Without this type of organized structure and check and balance, public budgeting would see too many inaccuracies and possibly more instances of fraud.

Thai and Taylor (2004) make reference to the process perspective being advantageous because it is both reality and concept, and that this is the basis for analysis in the budgeting process.

I totally agree with the authors’ view on the importance of PBFM being split into two separate areas, which are financial management administration and accounting. Accounting is needed for financial analyses and financial management is needed to uphold standards for auditing and other regulatory compliance requirements.

Public budgeting and financial management knowledge is necessary for administrators, agency officials, government officials and other public budgeting decision makers to do their best job possible.

At the conclusion of the article, the authors report on a survey completed by academicians that responded to whether or not the PBFM field should have a Master’s degree program. The findings showed that only about 6% of the responses were in favor of this idea. Thai & Taylor (2004) suggest that this implies that future education in the area of PBFM for the private sector may suffer, but they also suggest that Master’s level curriculum courses may be woven in with already existing MPA programs instead of having a specific Master’s degree program just for PBFM.

What do I think about this? I think it is a mistake not to implement a separate and specific Master’s degree program for public budgeting and financial management. We are living in an ever-changing and constantly growing economical and technological society, and budgeting in the private sector, as well as the public sector, are not going to go away. We need qualified, educated and well-trained professionals to handle all of the responsibilities put forth in the industry. At the very least, students should be able to make PBFM a specialized area of emphasis for their MPA. If those who are charged with making budgeting decisions understand everything there is to know about the budget process, or at least have access to information for research, then they can make better decisions.

Real Life Scenarios

How could the topic of this article apply to personal or professional life?

As far as public budgeting is concerned, it affects all of us in various ways. For instance, our property tax bills are influenced by the city budget. Also how our tax dollars are spent is also a part of budgeting decisions.

Additionally, citizens can get involved in many local and state budgeting decisions by attending town halls and responding to requests for opinions on how tax dollars and various city and state revenues should be spent by city and state officials.

I have often wondered about where the money from the state lottery profits go, even though we were told that it would go to help public interests like the free public library. However, I remember when the libraries were in danger of closing in my city because of lack of funding. Other monies collected by the City, besides lottery money, are miscellaneous taxes and fees such as parking fees. Grant funding is also a source of revenue for cities and states. The federal government sometimes gives grants to cities or states, and sometimes charitable foundations issue grants to cities or states.

As citizens, it is our right to know how our government is managing our tax dollars and if their budgets are efficient to manage finances in the right way. Public money is used to pay for public services and public facilities such as parks and recreational venues in the city. If a citizen notices that a park is not being kept up, for example, that person can contact the City Council to see about it. Government officials are interested in hearing what people have to say.

NNgov.com (2012) states that the main two sources of a city’s revenue are real estate taxes and property taxes. This is something that definitely affects citizens who are homeowners. Many people are also touched by the collection of these funds because they take advantage of social and human services, such as the food stamp program or state medical assistance programs. These are funded by grant programs which were funded by taxes. Other ways public budgeting affects people is through public transportation, infrastructure, new roads, or education assistance.
These are some of the reasons why it is so important for government officials, in decision-making positions about the budget, to be as knowledgeable as possible about the ins and outs of the budgeting process and PBFM.

How could it apply to an organization I have observed?

One particular organization I have observed to be heavily affected by public budgeting is the Census Bureau. I have worked there for several years and as with all government agencies, the Census Bureau is largely affected by the federal budget. Our raises, departmental operating budgets, overhead budgets, fringe benefits, overtime, and other areas depend on what the budget is each year.

Many city and state organizations are affected by public budgeting as well. This is why they sometimes adopt fiscal years that are not necessarily in line with the calendar year (NNgov.com, 2012). Additionally, NNgov.com, 2012 reports that spending decisions are based largely on requests, recommendations, information and preferences from the input of various local organizations and businesses that have vested interests in government funding. This is where organizations want to stay heavily involved in the process and progress of public budgeting decisions on the table for approval. NNgov.com (2012) states the entities that have vested interests in government funding decisions include special interest groups, elected officials, individual citizens and department heads of businesses. Involvement in the budgeting process also includes senior citizen representatives, public education and disabled persons representatives and various associations.

I feel this is necessary. As many diverse community representatives as possible should be attending meetings and town halls regarding how the city and state decides on what to put in the budget. It is necessary for the decisions to be influenced by those who will be affected by them. This is a way for private companies and organizations to have a say in various regulatory mandates and laws, and also it is a way for them to stay informed on funding opportunities or where expenditures are needed.

Conclusion

The article, Toward a Paradigm for Public Budgeting and Financial Management, gives a good insight into the field of PBFM and why it is a significant field of public administration. The article also gives a good argument as to why PBFM should be given more respect and attention in the academic arena, and advocates for PBFM to be a Master’s degree major. However, the article predicts that this will not happen and PBFM may just be an add-on to existing Master’s of Public Administration curriculums.

Either way, public budgeting will continue to be a significant part of local, state and federal administration programs.

References

Smith, R., & Lynch, T. (2004). Public budgeting in America (5th ed.). Upper Saddle River, NJ: Prentice Hall

Thai, K.V. & Taylor, G.T., Jr. (1982). Toward a Paradigm for Public Budgeting and Financial Management. Southern Review of Public Administration, 6(3), 272-281.

The Budget Process: A Guide for Citizens. (2012). Newport News. Retrieved from http://www.nngov.com/budget-and-evaluation/resources/budget-process