DCC5370: Public Finance and Budgeting Spring 2013

Transcription

1 Graduate School of International Relations International University of Japan 777 Kokusai-cho, Minami Uonuma-shi, Niigata Japan DCC5370: Public Finance and Budgeting Spring 2013 Instructor: Jungbu Kim, Ph.D. (Office: #307, TEL: #541) Teaching Assistant: Edy Setiawan Office Hours: Wednesdays/Thursdays 10:30am 11:30am Or by appointment Class Location: Classroom #103 Class hours: Mondays 2:40-5:50pm COURSE ESSENTIALS Public budget is the most distilled statement of what government does with its price tag attached. It is a policy document as well as a financial plan that serves control, management and planning purposes, linking considerations of raising resources from the economy and spending priorities setting. And, public budgeting is how the government decides on and executes its budgets, which is essentially a political process and also requires substantial understanding and skills in financial management. This course aims to improve students understanding of how government at different levels manages its purse, money from other people, for better results, equipping students with both theoretical perspectives and practical analytical skills. The topics covered include, but are not limited to, budgetary institutions and process, roles of key budget actors and decision-makers, budgetary constraints, budget systems and reform, key revenue sources and forecasting, capital budgeting, debt management, intergovernmental fiscal relations, and a diverse set of skills and tools in preparing and implementing budgets. Students will be given practical opportunities to evaluate a government s budget in reference to budgeting and financial management principles learned from the class. COURSE DESIGN Each week there will be two consecutive class sessions. The first one will be devoted to lecture and discussions about the required readings. The second session will be devoted to 1) discussion of empirical studies regarding key weekly learning points and 2) exercises of budget preparation and analysis using Excel spreadsheet. LEARNING OBJECTIVES By the end of the term, students are to be able to: Understand the political, economic, legal, organizational, and cultural dimensions of public budgeting; Describe key processes, institutions, and actors in the budget process; Understand the functions that public budget and budgeting serve; Appreciate differences in the orientation of alternative budget systems; 1

2 Identify and discuss major revenue sources and expenditure categories of public budget; Understand key concepts, practices and challenges in revenue forecasting, capital budgeting and debt management; Assess a government s actual budget practices according to the recommended set of budgeting standards; Appreciate the rationales and realities of intergovernmental fiscal relations in developing as well as developed countries; Analyze budget trends of public organizations; and Effectively use Microsoft Excel to manage and analyze budget data REQUIRED TEXTBOOKS John L. Mikesell Fiscal Administration: Analysis and Applications for the Public Sector. (9 th edition). Wadsworth. ISBN-13: Greg G. Chen, Dall W. Forsythe, Lynne A. Weikart, and Daniel W. Williams Budget Tools: Financial Methods in the Public Sector. CQ Press. ISBN-13: REFERENCES Richard M. Bird and Fraçois Vaillancourt (eds.) Perspectives on Fiscal Federalism. World Bank Institute.. ISBN-13: Aman Khan and W. Bartley Hildreth (eds.) Case Studies in Public Budgeting and Financial Management. 2 nd edition. CRC Press. ISBN-13: R. Mark Musell Understanding Government Budgets: A Practical Guide. Routledge. ISBN-13: STUDENT REQUIREMENTS 1. Examination There will be one in-class closed-book examination at the 10 th (June 10, 2013) of the term. The exam will cover the class readings and discussions, testing students overall understanding of financial management and budgetary issues in the public sector. The exam will require creative and imaginative thinking. 2. Class Exercises Quizzes: There are six quizzes to be administered at the beginning of the class meetings. The quizzes will cover the class reading for the class. Only five quizzes will be graded. Quiz answers will be provide, if necessary, by the end of the week. Article presentations: During the second session, two or three students will present journal articles or book chapters as indicated by * in the course schedule below. 3. Homework Assignments There will be three short homework assignments mainly from Mikesell (2013) and Chen et al. (2008) for getting familiar with key concepts and Excel spreadsheet. The assignments will be about presentation of budget data, revenues forecasting and life-cycle costing. 4. Budget Controversies Memo Each student will write a memo that describes a conflict over a budgetary or finance problem in the public sector and explains how the issue is (or is not being) resolved. The point here is 2

3 to let your reader [instructor] know about the politics regarding how to raise or spend public monies. For example, just think about the recent budget sequestration issue in the United States. There is no format for this assignment, but it should be no longer than 800 words, including tables and references. This assignment is due to the 4 th week s class. 5. Budget Trend Analysis Students in pairs will conduct a budget trend analysis. You must choose a government or an agency from government (local, provincial, or national) and analyze revenues/expenditures trends for the past 12 years ( ). Members of the same team will get the same score on this project. Instructions for the project will be provided in the 4 th week of the term. #1) Research plan: Submit the name of the governmental (or its agency/department) in whatever country and the names of the team members by the 5 th week of the class. After the due date, you cannot in principle change your choice. Before deciding on your government (or agency) for analysis, please make sure to check the availability of budget documents over the analysis period. #2) Final analysis report: Please bring a hard copy of the final paper to the 7 th class. The final paper should not exceed 4,000 words, including figures, tables and references. 6. Government Finance Officers Association (GFOA) Best Practices Assessment Each team of three or four students will choose ONE of four GFOA budget principles and assess a national or subnational government s current (FY2013) adopted budget and budgetary practices against the chosen principle. The GFOA Best Practices are available at: - Principle 1: Establish broad goals to guide government decision making (Needs, challenges, opportunities, and goals) - Principle 2: Develop approaches to achieve goals (Financial policies, policies on programmatic, operating, and capital budgets, and management strategies) - Principle 3: Develop a budget consistent with approaches to achieve goals (Budget process/preparation, financial options, financial overviews, forecast, expenditure projections, key policies descriptions, etc.) - Principle 4: Evaluate performance and make adjustments (Performance measures/monitoring and adjustments) Choice of the principle and team members is due on the 6 th week to the class. The instructions will be provided during the class in the 7 th week. STDUDENT ASSESSEMTN Final Exam: 30% Trend Analysis: 20% Best Practices: 15% Quizzes: 15% Controversy Memo: 5% Homework assignments 5% Presentations/Participation: 10% 3

4 GRADING SCALE A A B B B C <60 F POLICIES AND EXPECTATIONS 1. Class attendance: Students are REQUIRED to attend every class. If medical emergencies occur, please let the instructor know immediately through or phone. For everyone s benefits, please come to the class in time. The 15-minute quizzes begin on time. Missing a 1½ hour session will lead to a deduction of 1.5 points from participation points. THREE missed classes (6 sessions) will lead to an automatic F grade. 2. Cell phones: During the class, please TURN OFF your cell phones. 3. Readings: Reading is the most important part of the class. The amount of required readings is about pages per week, which should be manageable. Please come to the class prepared to discuss the issues in the readings. 4. Consultation with the instructor and the TA: Students are encouraged to consult with the instructor/ta if and whenever they have questions/issues with regard to the class, including, but not limited to, group projects, class attendance, and exams. 5. Academic honesty: This class follows the university guideline on plagiarism and cheating, which occurs in pages 16-7 of the CURRICULUM HANDBOOK for Students who enrolled in THE ACADEMIC YEAR Student is expected to give credit to the authors whose work she or he is relying upon. A simple rule is that if the student copies more than six consecutive words from the works by others, then she or he needs to make quotation marks on the copied portion and cite the source. If the student paraphrases the others work, then she or he needs to cite the sources. CLASS SCHEDULE AND READING ASSIGNMENTS Week 1: Introduction (Review of Syllabus) Public Finance and Budgeting: The Public Sector and its Budget Mikesell, Chapter 1 Week 2: Budget Process and Practices Mikesell, Chapters 2 & 5 Chen et al., Chapters 2&3 (pp.5-21) John L. Palmer and Rudolph G. Penner The hard road to fiscal responsibility, Public Budgeting & Finance, 32(3): * John L. Mikesell and Daniel R. Mullins Reforms for improved efficiency in public budgeting and finance: Improvements, disappointments, and work-in-progress, Public Budgeting & Finance, 31(4): * 4

5 Jay Eungha Ryu, Cynthia J. Bowling, Chung-Lae Cho, and Deil S. Wright Effects of administrators aspirations, political principal s priorities, and interest groups influence on state agency budget requests, Public Budgeting & Finance, 27(2): * Week 3: Budget Structures and Institutions Mikesell, Chapters 3&4 Chen et al., Chapter 6 Musell, Chapter 3 Jun Ma and Yilin Hou Budgeting for accountability: A comparative study of budget reforms in the United States during the Progressive Era and in contemporary China, Public Administration Review, 69(s1): S53-S59. * Carlos Santiso Banking on accountability? Strengthening budget oversight and public sector auditing in emerging economics, Public Budgeting & Finance, 26(2): * Week 4: Performance and Program Budgeting Mikesell, Chapter 6 Chen et al., Chapter 7 Musell, Chapters 6, 10 & 11 (pp , 81-92) Carolyn Bourdeaux Integrating performance information into legislative budget process, Public Performance & Management Review, 31(4): * Julia E. Melkers and Katherine G. Willoughby Budgeters views of state performance-budgeting: Distinctions across branches, Public Administration Review, 61(1): * Yi Lu Individual engagement to collective participation: The dynamics of participation pattern in performance budgeting, Public Finance & Budgeting, 31(2): * Budget Controversies Memo Due Week 5: Principles of Taxation Carol W. Lewis and W. Bartley Hildreth Budgeting: Politics and Power. Oxford University Press, Chapter 7 (pp ) 1 Mikesell, Chapters 9 &10 Kazuuki Ishida The growth and stability of the local tax revenue in Japan, Public Budgeting & Finance, 31(1): * Vito Tanzi and Howell H. Zee Tax Policy for Emerging Markets: Developing Countries. IMF Working Paper WP/00/35. Available at: * Exercise Due from Mikesell, Chapter 6. Budget Trend Analysis Target Organization and Team Members Choice Due Week 6: Revenue Forecasting Mikesell, Chapter 13 Chen et al., Chapter 4 1 AN ELECTRONIC COPY OF THIS CHAPTER WILL BE PROVIDED. 5

6 Fred Thompson and Bruce L. Gates Betting on the future with a cloudy crystal ball? How financial theory can improve revenue forecasting and budgets in the states, Public Administration Review, 67(5): Khan and Hildreth, Chapter 13 * Daniel W. Williams The politics of forecast bias: Forecaster effect and other effects in New York City revenues forecasting, Public Budgeting & Finance, 32(4): * Best Practices Principle and Team Members Choice Due Week 7: Capital Budgeting and Debt Management Mikesell, Chapters 7 & 15 Chen et al., Chapters 5 & 9 Musell, Chapter 6 Tatyana Guzman and Temirlan Moldogaziev Which bonds are more expensive? The cost differentials by debt issue purpose and the method of sale: An empirical analysis, Public Budgeting & Finance, 32(3): * Gao Liu Municipal bond insurance premium, credit rating, and underlying credit risk, Public Budgeting & Finance, 32(1): * Exercise Due from Chen et al., Chapter 4. Budget Trend Analysis Due to the Class Week 8: Intergovernmental Fiscal Relations Mikesell, Chapter 14 Richard M. Bird and Fraçois Vaillancourt (eds.) Perspectives on Fiscal Federalism. World Bank Institute. Chapters 2 (pp ). Blane Lewis Local government capital spending in Indonesia: Impact of intergovernmental fiscal transfers, Public Budgeting & Finance, 33(1): * James W. Douglas and Roger E. Hartley The fly ball effect: A theoretical framework for understanding the impacts of short-term seed grants, Public Budgeting & Finance, 31(4): * Exercise Due from Mikesell, Chapter 15. Week 9: Best Practices Assessment Presentation Best Practices Assessment Due to the Class Week 10 (June 10, 2013): Final Examination - On the dates with, the second session will be held at the Computer Lab # This syllabus may be subject to changes at the instructor s discretion if necessary. 6