In "Public Budgeting in 2020" Joyce and Pattison urge the need to address large budget deficits created by high demands for government services.
To address this deficit effectively, it is required reforms at both ends: revenue and spending. In the revenue side there are i) income ii) sales ii) property taxes. In the spending side i) health care ii) education iii) entitlement iv) infrastructure v) staff vi) transparency and accountability.
The defining characteristic of public budgeting is that it is a continual struggle between the demands placed on government to respond to societal problems and the desires of citizens and the capacity of governments to finance those responses.
In the revenue side, the four big problems of of income tax are i) vulnerability to economic downturns ii) large number of exclusions iii) complexity and obscurity iv) tax on all incomes disencouraging savings and investment. Solutions would be the creation of a structure i) less prone to cyclical variation ii) broader base iii) easier to comply with iv) encourage savings and investment.
The two main problems with sales tax are i) regressive - lower income people pay higher percentages of their income in tax than higher-income people. This problem is somewhat mitigated by the exclusion of some necessities from tax base like food and drug prescription ii) sales transaction over the Internet (use tax). An important solution ro address "use tax" is the Streamlined Sales Tax Project which makes state sales tax administration more uniform and thus easier for remore sellers to comply with.
The two main problems about property tax are i) doing accurate and equitable assessments and ii) tax limitation.
In the spendings side, the government address aging infrastructure with Private-Public Partnerships and other creative financial arrangements. All spending factors should be assessed by Performance Management (PM).
PM focuses on organization's resources and efforts toward achieving specific results that make the most difference to citizens, It also builds a culture of continuous improvement through which organizations are motivated to find and apply interventions that offer the best results for the least amount of money.
PM also relies on communication to be effective. Credible information produced and made available in a usable form help establish accountability throughout the organization and provide improved results to the public.
Budget-decision making requires data collection, organization, interpretation, and access to be improved. Also, it is necessary centralized financial control and staff with "big picture" perspective to determine where to cut services.
New staff need to be critical thinkers and analysts, have knowledge in financial & performance & accounting & auditing & contracts & negotiation as more privatization and outsourcing will occur and there will be more leaner budget offices.
sexta-feira, 8 de abril de 2011
The Limits of Performance Budgeting
In "NOAA's Resurrection of Program Budgeting" West, Lindquist, and Mosher-Howe explain the limits of performance assessment as a means of reallocating resources and responsibilities across organization boundaries.
Before rationalizing performance, it is necessary to rationalize structure. The steps to do so are i) creating new norms and routines ii) ensuring adequate resources iii) carry out a comprehensive rational analysis to assess whether costs outweigh benefits in terms of better decisions.
Other problems with Planning, Programming, and Budgeting System (PPBS) are i) organizational commitmment ii) conflicting incentives iii) control of cross-cutting lines iv) accountability v) its complexity which end up reinforcing bureacratic inertia and vi) lack of political support.
Cross-cutting lines of accountability was a type of matrix management popular during 1970s and 1980s. Individuals who belonged to functional divisions were assigned to temporary teams in accordance with the needs of particular projects.
Although budgeting i) allows planning ii) hold officials accountable iii) identify redundancies iv) compare marginal utility of spending on different activities with similar goals, perfomance budgeting is not always the best solution to reinforce these positive aspects of budgeting.
Before rationalizing performance, it is necessary to rationalize structure. The steps to do so are i) creating new norms and routines ii) ensuring adequate resources iii) carry out a comprehensive rational analysis to assess whether costs outweigh benefits in terms of better decisions.
Other problems with Planning, Programming, and Budgeting System (PPBS) are i) organizational commitmment ii) conflicting incentives iii) control of cross-cutting lines iv) accountability v) its complexity which end up reinforcing bureacratic inertia and vi) lack of political support.
Cross-cutting lines of accountability was a type of matrix management popular during 1970s and 1980s. Individuals who belonged to functional divisions were assigned to temporary teams in accordance with the needs of particular projects.
Although budgeting i) allows planning ii) hold officials accountable iii) identify redundancies iv) compare marginal utility of spending on different activities with similar goals, perfomance budgeting is not always the best solution to reinforce these positive aspects of budgeting.
Performance Budgeting
In "Performance Budgeting" Yi Lu examines the perspective and the role of state agencies on perfomance budgeting. This concept is defined as the integration of performance with budgeting.
Tha main findings of Lu's research were i) agencies play an important role in this process ii) the need of elevating managerial capability iii) the use of performance information iii) improvement of measurement quality and iv) this is a collaborative process.
Tha main findings of Lu's research were i) agencies play an important role in this process ii) the need of elevating managerial capability iii) the use of performance information iii) improvement of measurement quality and iv) this is a collaborative process.
Education in Singapore
Tan and Gopinatha in "Education Reform in Singapore: Towards Greater Creativity and Innovation" talk about how the country's educational system is moving into the 21st century.
Singaporean schools have the mandate to foster creativity and innovation to enhance national economic competitiveness in the global economy. This is essential to help the country transition to a knowledge economy.
The three educational policy initiatives are i) Thinking Schools ii) Learning Nations and iii) Masterplan for Information Technology in Education.
Creativity and innovation are fostered by growing marketizantion of education through increased school autonomy and interschool competition.
Independet schools enjoy autonomy and flexibility for i) recruitment ii) deployment iii) reward iv) finance v) management and vi) the curriculum. The problem of these schools are high costs.
"Autonomous schools" were created to deal with the problem of high costs of independent schools. Although these schools enjoy less operating autonomy, the government also requires high quality at affordable fees from these schools' principals.
The policy "Thinkg Schools, Learning Nations" aim to i) explicitly teach critical and creative thinking skills ii) reduce subject content iii) revise assessment modes iv) put greater emphasis on process instead of on outcomes when appraising schools.
The problems of these policies are i) the government controls national examinations, and so set the indicators to assess performance ii) principals from independent schools have not moved from subject to research design currriculum because of the criteria of national exams iii) independent and autonomy schools are actually controlled by the government ideology of order and harmony and competition is not truly free iv) competition leads to schools focusing on outcomes that are relevant for public ranking.
http://www.apecknowledgebank.org/resources/downloads/SingaporeCurriculumReformCreativity.pdf
Singaporean schools have the mandate to foster creativity and innovation to enhance national economic competitiveness in the global economy. This is essential to help the country transition to a knowledge economy.
The three educational policy initiatives are i) Thinking Schools ii) Learning Nations and iii) Masterplan for Information Technology in Education.
Creativity and innovation are fostered by growing marketizantion of education through increased school autonomy and interschool competition.
Independet schools enjoy autonomy and flexibility for i) recruitment ii) deployment iii) reward iv) finance v) management and vi) the curriculum. The problem of these schools are high costs.
"Autonomous schools" were created to deal with the problem of high costs of independent schools. Although these schools enjoy less operating autonomy, the government also requires high quality at affordable fees from these schools' principals.
The policy "Thinkg Schools, Learning Nations" aim to i) explicitly teach critical and creative thinking skills ii) reduce subject content iii) revise assessment modes iv) put greater emphasis on process instead of on outcomes when appraising schools.
The problems of these policies are i) the government controls national examinations, and so set the indicators to assess performance ii) principals from independent schools have not moved from subject to research design currriculum because of the criteria of national exams iii) independent and autonomy schools are actually controlled by the government ideology of order and harmony and competition is not truly free iv) competition leads to schools focusing on outcomes that are relevant for public ranking.
http://www.apecknowledgebank.org/resources/downloads/SingaporeCurriculumReformCreativity.pdf
Government Reform
"In a duty to modernize: Reforming the French civil service" it is outlined the challenges of large scale government reform.
The driving force behind this change is the motto: "do better with less". This change requires structural reforms.
The objectives are i) modernize government ii) improve services for citizens & companies iii) ensure greater recognition for the civil servants iv) promote a culture of results.
Some structural reform initiatives are i) merger agencies ii) implementation of a performance-based funding system for universities iii) acceleration of naturalization process iv) improvements in IT and human resources.
The reason for success are i) commitment of the highest level of the government ii) civil servants understand that in order to truly serve, their duty now is to modernize iii) straightfoward communication to indicate performance iv) visible results quickly v) leveraging communication "champions".
The visions of this reform are i) agile administration ii) resolutely oriented toward citizens and put them at the heart of the administration iii) putting resources into core services - rather than functions iv) better work environment for civil servants v) greater balance between public and private sector skills.
The main difficulties are i) inertia deriving from scope of the program, number of workers, and strength habits and routines ii) communication - limited number of internal channels iii) lack of multidimensional skills - to take initiative, responsibility, and risks.
http://www.mckinseyquarterly.com/Public_Sector/Government_Regulation/A_duty_to_modernize_Reforming_the_French_civil_service_2780
The driving force behind this change is the motto: "do better with less". This change requires structural reforms.
The objectives are i) modernize government ii) improve services for citizens & companies iii) ensure greater recognition for the civil servants iv) promote a culture of results.
Some structural reform initiatives are i) merger agencies ii) implementation of a performance-based funding system for universities iii) acceleration of naturalization process iv) improvements in IT and human resources.
The reason for success are i) commitment of the highest level of the government ii) civil servants understand that in order to truly serve, their duty now is to modernize iii) straightfoward communication to indicate performance iv) visible results quickly v) leveraging communication "champions".
The visions of this reform are i) agile administration ii) resolutely oriented toward citizens and put them at the heart of the administration iii) putting resources into core services - rather than functions iv) better work environment for civil servants v) greater balance between public and private sector skills.
The main difficulties are i) inertia deriving from scope of the program, number of workers, and strength habits and routines ii) communication - limited number of internal channels iii) lack of multidimensional skills - to take initiative, responsibility, and risks.
http://www.mckinseyquarterly.com/Public_Sector/Government_Regulation/A_duty_to_modernize_Reforming_the_French_civil_service_2780
Tax Increase or Exemption?
Hawaii's Senate Ways and Means Committee needs to generate new revenue to offset the projected deficit of $1.3 bi over the next two years.
The first option is 1% increase in GET. This initiative would raise about $500 to $600 mi per year. To protect poor and middle-income residents from the regressive, broad-base tax, there will be a $100 mi in tax credits.
The second alternative is temporarily suspending GET exemption on certain business activities and imposing a 4% GET on them. This adoption would bring in about $200 mi per year.
The governor and the House prefer the second option. The Senate leans toward the first. Chamber of Commerce of Hawaii and Hawaii Association of Realtors are against first alternative and are silent towards the second.
General Excise Tax in Hawaii has not been raised since 1965. Economists praise its broad application and relatively low 4% rate. Critics highlight the pyramid effects and regressive nature of GET.
Tax exemptions on GET aims to address pyramid effect on certain business activities - where tax is applied at more than one point along a chain of related economic transactions.
Tax Foundation of Hawaii claims that both initiatives - GET raise and tax exemption - would damage the economy. It recommends to move special fund revenue into state's general fund and scale back high technology and tax credits to help with deficits.
If exemptions are suspended, construction and aircraft industries, for example, will be highly affected. The extra cost of production will be eventually passed on to consumers and job positions will be lost.
Unions and liberals, however, argue that cuts on social service programs like drug treatment will end up costing government more in the long run. There will be higher costs with health care and criminal justice.
Democrats are in favor of GET increase. They argue that this raise is needed to generate revenue for the budget and a net tax savings will be provided for middle and low-income taxpayers through tax credits.
Republicans oppose new tax increases to balance budget.
http://www.staradvertiser.com/news/hawaiinews/20110407_Business_leaders_protest_tax_increase.html
The first option is 1% increase in GET. This initiative would raise about $500 to $600 mi per year. To protect poor and middle-income residents from the regressive, broad-base tax, there will be a $100 mi in tax credits.
The second alternative is temporarily suspending GET exemption on certain business activities and imposing a 4% GET on them. This adoption would bring in about $200 mi per year.
The governor and the House prefer the second option. The Senate leans toward the first. Chamber of Commerce of Hawaii and Hawaii Association of Realtors are against first alternative and are silent towards the second.
General Excise Tax in Hawaii has not been raised since 1965. Economists praise its broad application and relatively low 4% rate. Critics highlight the pyramid effects and regressive nature of GET.
Tax exemptions on GET aims to address pyramid effect on certain business activities - where tax is applied at more than one point along a chain of related economic transactions.
Tax Foundation of Hawaii claims that both initiatives - GET raise and tax exemption - would damage the economy. It recommends to move special fund revenue into state's general fund and scale back high technology and tax credits to help with deficits.
If exemptions are suspended, construction and aircraft industries, for example, will be highly affected. The extra cost of production will be eventually passed on to consumers and job positions will be lost.
Unions and liberals, however, argue that cuts on social service programs like drug treatment will end up costing government more in the long run. There will be higher costs with health care and criminal justice.
Democrats are in favor of GET increase. They argue that this raise is needed to generate revenue for the budget and a net tax savings will be provided for middle and low-income taxpayers through tax credits.
Republicans oppose new tax increases to balance budget.
http://www.staradvertiser.com/news/hawaiinews/20110407_Business_leaders_protest_tax_increase.html
quarta-feira, 6 de abril de 2011
In-house vs Outsourcing in Public Admnistration
The debate over “Is Privatization a Bad Deal for Cities and States?” highlights the factors that greatly influence the decision of keeping a public service in-house or contracting it out.
The first point to be considered is competition. The more competitive is the private market on the expected outsourced service, the higher are chances of reduced prices and better quality of service provision to taxpayers.
The second issue is measurement. Monitoring and enforcement may turn outsourced public services into more expensive than in-house ones; thus, it is essential to carry out a diligent financial analysis on the costs of keeping track of the advancements of partners.
The third aspect is complexity. Public services that are difficult to quantify and are highly sensitive to democratic values should be kept in-house. Public administrators struggle to guarantee predictability of contracts and check & balance systems when bottom-lines are barely quantifiable or ever-changing.
Competition, measurement, and complexity, therefore, are the three main factors discussed in this the New York Times forum. All of them are directly tied to the final costs of in-house and outsourced public services.
http://www.nytimes.com/roomfordebate/2011/04/03/is-privatization-a-bad-deal-for-cities-and-states?hp
The first point to be considered is competition. The more competitive is the private market on the expected outsourced service, the higher are chances of reduced prices and better quality of service provision to taxpayers.
The second issue is measurement. Monitoring and enforcement may turn outsourced public services into more expensive than in-house ones; thus, it is essential to carry out a diligent financial analysis on the costs of keeping track of the advancements of partners.
The third aspect is complexity. Public services that are difficult to quantify and are highly sensitive to democratic values should be kept in-house. Public administrators struggle to guarantee predictability of contracts and check & balance systems when bottom-lines are barely quantifiable or ever-changing.
Competition, measurement, and complexity, therefore, are the three main factors discussed in this the New York Times forum. All of them are directly tied to the final costs of in-house and outsourced public services.
http://www.nytimes.com/roomfordebate/2011/04/03/is-privatization-a-bad-deal-for-cities-and-states?hp
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