Guide Budget Theory in the Public Sector

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Table of contents

Old budget theory might have suggested to a city manager that there was an optimal level of recreation services, road repair, and policing in a particular jurisdiction. The new budget theory would focus on whether the current levels of recreation, road repair, and policing in the city are consistent with mission, customer i.

Equally important, city managers and the elected representatives under whom they serve might ask if such services should be delivered by the public sector or by some alternative providers. In essence, the new theories of budgeting at the onset of the new millennium have a different fit and feel from their predecessors, and as will be seen below, have not yet been systematically articulated.

What you will learn in this course

And if there is a message from both academic and practitioner ranks, budget theory in our epoch is the theory of agency performance—how it is measured and enhanced over time. The first part of this chapter reviews what might be termed the classic or traditional budgetary theories that dominated discussion in this realm from the immediate post-World War II era to the s. In part two, the various strains of thought associated with what might be termed the Performance Measurement Revolution and related topics such as benchmarking and re-engineering are explored.

These approaches are contrasted and compared to see how and in what ways they overlap or differ from their predecessors. Perhaps more importantly, questions are raised regarding the study of performance measurement and its relation to methodological shortcomings inherent in public administration as a discipline. Lastly, some alternative approaches to the study of public budgeting are explored that might prove valuable to both practitioners and academics.

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Budget theory in local government: the process-outcome conundrum

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Bartley Hildreth, Gerald J. Miller, Jack Rabin, W. The goal is to identify and score relative performance based on goal attainment for specified outcomes. In other words, allocation of funds and resources is based on specific goals agreed upon by budget committees and agency heads of services.

Efficient Management of Public Sector Budgets and Services – What to Do and How to Do It

For instance, in schools teachers may earn bonuses or promotion based on aggregate test scores among their students, which is supposed to show a high degree of skill and effectiveness although this may not actually be the case always. All of these would have numerical targets attached to them. A performance budget would be developed accordingly to identify those target numbers and a method of evaluating performance.

Performance budgets often rely on quantifying otherwise qualitative or subjective factors so that they can be measured and accounted for. The advantages in the public sector are an increase in accountability of the local authorities to the taxpayers , communication to the public about priorities, and quantifying particular goals. Donors to these organizations also want to know what kind of "return" society is getting from their donations.

Budgetary Principles | SpringerLink

One prominent disadvantage of performance budgets is that by assigning target scores or numbers that an organization uses as its benchmark for achievement, the numbers can be gamed or become the sole focus of one's task. For instance, teachers looking to earn a certain score may only focus on the factors that comprise that score and overlook or ignore other factors that may be important to teaching but not for the performance budget. Automated Investing.

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