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POLI 370, Week 11

by: runnergal

POLI 370, Week 11 POLI 370 001


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About this Document

These notes cover what was discussed in class during the first lecture of the week.
Introduction to Public Administration
Dr. Xuhong Su
Class Notes
political science, Government
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This 4 page Class Notes was uploaded by runnergal on Saturday April 2, 2016. The Class Notes belongs to POLI 370 001 at University of South Carolina taught by Dr. Xuhong Su in Winter 2016. Since its upload, it has received 11 views. For similar materials see Introduction to Public Administration in Political Science at University of South Carolina.


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Date Created: 04/02/16
POLI 370 – Lecture 17  Federal Government Budget Formulation o It is an 18­month process. 1. January – April: The OMB A­11 circular goes out, which includes information  about the budget situation, i.e. information about inflation, revenue, salary  increases, etc. The highest costs in the budget are personnel costs. This circular  also explains how to request money and how employees are paid. 2. April – July: Departments submit their respective budget estimates to the OMB.  These budget estimates are created by lower employees submitting their estimates to their supervisors, and those supervisors then create their departments’ final  budget estimates. 3. July – October: Review stage; the OMB discusses budget estimates based on  presidential initiatives and revenue. The OMB reviews if the proposed budget  estimates are consistent with strategy initiatives. 4. November – December: Pass back; the departments revise their budgets based on  the OMB’s appropriations. 5. January – February: Finally assembly, culminating in the presidential budget  request. 6. February – November: Congress takes the president’s request and uses it to create the final budget. o Roles to Form Presidential Budget  Expenses: OMB collects budget estimates and prepares a total budget  estimate.  Revenues: Treasury Department estimates the total tax revenues.  Economic estimates: Council of economic advisors.  State Budget Formulation o This is a 12­month process. 1. July – September: Guidance. 2. September – December: Budget request. 3. December – March: Budget presentation and hearings. 4. March – July: Budget is discussed by the legislative body.  Employers Must Pay For: 1. Employees’ salaries. 2. Payroll tax. 3. Unemployment premiums. 4. Benefits. o The employees’ pay should be on par with private sector.  Executive Branch Budget Approaches 1. Line­item Budgeting: accounts for each presumed purchase, salary, etc. and  proposes budget based on those accounts. 2. Performance Budgeting: use performance measurement to make budget  decisions. Appropriations are tied to program outcomes. 1. Objectives: develop strategic achievement plans, i.e. missions or goals. 2. Performance Measures: specific, systematic measures of outcomes that  decide how well agencies meet their objectives. 3. Linkage: objective and performance measures are integral parts of the  budgetary process. This is where people figure out how to get their  preferred outcomes. 4. Accountability: result­oriented. o Reasons that Performance Budgeting is Important  Federal grants often require performance measurement in grant  applications.  Efficient use of resources is needed because local governments are  bringing in less money. o Planning­Programming Budgeting: focuses on programs, not departments. This form of budgeting intends to improve the planning part of the program process.  Reviews the efficiency of those operations as well as the program’s outcomes. o Zero­Base Budgeting: an entire department’s budget is reviewed at episodic  intervals, and they rationalize all programs and jobs.  Budgeting Process  Define the decision unit, i.e. cost, reduction, net, etc.  Create the decision packages concerning different levels of service  (minimal, reduced, current, or enhanced).  Rank the decision packages in terms of priority for the department.  Efforts to Balance the Budget o Gramm­Rudman­Hollings Act: Reagan, a Republican, wanted a stronger  defense program and tax cuts, while a Democratic Congress pushed to protect  domestic programs. As a compromise, they increased the defense program and  did have some tax cuts, but they did not cut domestic programs, resulting in very  large deficits. o Budget Enforcement Act of 1990 (BEA): Imposed sanctions on various  countries and limited spending growth, with the exception of defense, domestic  policy, and international affairs. Increases in those three categories must be offset  by cuts in those categories, and vice versa. o Budget Enforcement Act of 1997: extended the original BEA through 2002,  when it finally expired.  Top­Down Budget Making o Executives set broad spending and revenue goals.     Bottom­Up Budgeting o Based on incrementalism, which focuses on increase of budget compared to other  departments’ budgets and increasing departments’ programs’ budgets, as opposed  to a broad look at the entire department’s budget.     Terms o Black Budget: Department of Defense’s budget for secret projects. o Earmarks: pork barrel spending projects. o Continuing resolutions: combines all of the governments’ spending into one  package, making it (presumably) easier to pass in Congress. Continues to fund all  departments at their current levels.     Budgeting for State and Local Government o State and local governments must balance their budgets; however, they can have  operating budgets (proposed budgets) and capital budgets (actual money). o Operations shut down if a new budget is not passed by the start of the new fiscal  year. o Balanced budget requirements only apply to operating budgets, not capital  budgets or federal government grants. o Politicians evade balanced budget requirements by underfunding programs.     Budget Control Act of 2011 o Major Points: 1.   Established discretionary spending caps. 2.   Established a debt ceiling of $2.4 trillion. 3.   Established a Joint Select Committee on Deficit Reduction. 4.   Allowed the president and the Treasurer Secretary to raise the debt ceiling  with congressional approval. 5.   Proposed a constitutional amendment for a balanced budget.     Proposed Budget Reforms 1.   Use biennial budgets. 2.   Invent a capital budget: a budget for investments in the future, such as  infrastructure. 3.   Give the president a line­item veto, similar to governors’ line­item veto power. 4.   Ratify a constitutional amendment for a balanced budget. st st 5.   Move the fiscal year from July 1  up to October 1 . 6.   Create automatic continuing resolutions. o Benefits:  Government shutdowns cost a lot of money, weaken the economy, and  destroy the government’s public image. o Disadvantages:  Less accountability and more strategic maneuvers.  Automatic continuing resolutions could be an escape for legislators rather  than a solution.  The government should follow the flow of money in order to understand what occurs in  the government and how those processes can be more efficient.


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