FINANCE BUDGETING, POLICY FORMATION, AND IMPLEMENTATION, A PUBLIC ADMINISTRATOR’S APPROACH.

Portland Photographer

Written by Bernard Gbayee Goah
President, Operation We Care for Liberia

For the purpose of this paper, Finance, budgeting, policy formation, and implementation will be restricted topics. This paper discusses where I think it is most and least legitimate for a civil servant to play a constitutive role as opposed to an instrumental role. The first part of this paper gives a brief overview of administrative challenges faced by organizations as a whole and the difficulty in role selection a public administrator faces and how he or she must use his or her discretion depending on the situation at hand. The second part explains how it is impossible for anyone who engages in an enterprise not to play a constitutive role. It also looks at an instrumental role from an operational perspective on budget, and how public administrators usually do what someone (usually his or her boss) tells him or her to do. The third part explains where it is most and least legitimate for a civil servant to play a constitutive role as opposed to an instrumental role. The fourth part explains the level of awareness public Administrators are expected to adopt in order to comprehend the characteristic behaviors of public entrepreneurs as well as traditional public administrators and how important it is for administrators to fully understand the political system as well. This leads to the fifth part of this paper which attempts to explain Public administrators, as “citizen-administrators” and the importance of political education for a citizenry that needs more information in order to play important political and citizenship role. The last part explains the importance of revenue forecasting and the role of a Public administrator in both government and private sector.
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There are different levels and types of administrative challenges in every organization. Whether private or public, these challenges range from internal organizational and personnel issues to matters of strategic assessment and adaptation, inter-organizational networking, leadership, and community development down to budgeting and financial management, etc. Public administrators usually play both instrumental and constitutive roles during the course of these challenges.

However, depending on the type of challenge public Administrators face, they may either play instrumental or constitutive roles. The challenge of having to improve the efficiency and productivity of services they offer amidst frequent institutional changes and continuous technological evolution has become very demanding by the general public in contemporary times.
As such, knowing which of these roles (instrumental or constitutive) to play is very important as well as can be very tricky for a public administrator.
It is quite obvious that the public sector must play a significant role in the implementation of all strategy that has the propensity, for example, to fuel economic and social renewal considering that the public sector is in most cases if not all, the controlling wheel and to some extend principal force that drives economic growth.
A public administrator must be able to detect and decide which role (instrumental or constitutive) to play during a given situation (Cox, 2008)

From a Substantive perspective, as it relates to budget, there are many perspectives to look at in this regard. One such perspective is the operational perspective on the budget. From an operational perspective standpoint playing constitutive role changes the way, we do things.

Government and Politicians often play a constitutive role at times. For example, the way the government operates from time to time when it comes to the handling of the budget. It could be the way the government handles its budget, the values, and procedures that channel the budget including the timing and duration of such channel. For example, in the United States of America, there are special ways to handle the budget from state government to the Federal government. State governments have to balance their budget while Federal government does not have to balance its budget.
Also as always, it is actually impossible for anyone who engages in an enterprise not to play a constitutive role. They are usually used to the way they do things from time to time. Politicians also play a constitutive role all of the time. Let me give you a layman example: It is the tendency or tradition for us to eat turkey every Thanksgiving and we consider this tradition to be the right way to celebrate every Thanksgiving. Another example will be in the military. There are right and wrong ways to do things. The same happens within every government and enterprise as well. Under the operational perspective on budget, public administrators usually do what someone (usually a boss) tells them to do. If your boss says “I want the report done tomorrow”, you do it. In this case, public administrators play an instrumental role (Kass, 2008).

As with the individualist perspective when it comes to budget, pressure for direct expenditure to the individual is a key factor that drives everything ranging from tax expenditure, etc. For example, In the United States, Republicans want tax cut which will only benefit individuals. From an individualist perspective, the government should not take more than they need in order to put some money in individuals’ pocket (Kass, 2008).

From a communal perspective, pressure comes from the commonwealth expenditures. The word commonwealth, in this case, denotes the benefit of the entire community. While the bureaucratic perspective major pressure is to the improvement of the efficiency and effectiveness of the budget process. For example, the bureaucratic perspective holds at a very high level that the budget should be used for the intended purpose and in line with the policy set in place and nothing else. The political perspective supports the effective allocation of values among diverse interests extender and internal to jurisdiction as such there is always struggle in the budget. For example, some people want to increase and new GI bill, but how far it should go remains an issue. What will happen if more people leave the military just to get a GI bill (Kass, 2008)?

Again, although I have mentioned that public administrator should play both roles to some extent depending on the situation, Public Administrator best play instrumental role when they are entrepreneurs. The rise of the public-sector entrepreneur is most often found in the advent of tax limitation movements, declining federal grants to state and local governments, and the growing fiscal crises faced by governments at all levels of the federal system. Public administrators as entrepreneurs and agents of entrepreneurial states seek to find new sources of revenue, besides the more traditional taxes, to increase tax bases through economic development projects and to augment the number of private-sector entrepreneurs within their boundaries. Current attention paid to public-private partnerships as solutions to the fiscal and social problems of government symbolizes the importance attached to both private and public entrepreneurship (Morgan, 2008).

As public Administrators, we should be aware that the characteristic behaviors of public entrepreneurs as well as traditional public administrators, must be evaluated in terms of administrative responsibility if their actions are to be compatible with democratic values. Administrative responsibility can be viewed as simply following policies and direction of hierarchical superiors.
Anyone may argue that since this approach may lead to the Eichmann phenomenon, administrative responsibility must include certain democratic values when administrators are carrying out administrative directives.
This responsibility may be described as requiring the administrator to become an active agent of democratic education and reform as well. Administrators are urged to correct and departs from democratic principles formulated by politicians but understand what politic is. Public administrators should feel an obligation to democratic government as a whole, and act effectively to achieve policy ends (Morgan, 2008).

Public administrators, as “citizen-administrators” should be political educators for a citizenry that needs more information in order to play an important political and citizenship role. Having mentioned these two scenarios, it can be said that administrative responsibility assumes that the public administrator has responsibility for furthering democratic values in the political process in policy implementation and for developing better opportunities for citizenship. Better opportunities in my view will be coming up with sound finance, and budget strategies that achieve a specific budget target. Coming up with a strategy that will visibly demonstrate the seriousness of the problem or reason why the budget is necessary in the first place (Morgan, 2008).

A major key to budgeting is to be able to know how to spend the community’s money and this cannot occur without first identifying the revenue sources that can support it. Public officials must cultivate the willingness on the part of the citizenry to allow these sources to be used. The only exception will be for the federal government since most state and local governments in the United States cannot deficit spend. Like individuals, governments may borrow money, but they cannot do so without pledging a specific revenue source or arranging a payment schedule that ties the debt payment to the jurisdiction’s long term stream of un-obligated revenue. Public service organizations of all kinds must carefully balance existing and future monetary resources against existing and future expenditure needs (Morgan, 2008).

As public administrators, be aware that revenue identification and forecasting is the starting point for all plans for public expenditure. Private-sector revenues, government revenues, and major grant and endowment revenue to nonprofits are considered fixed in the short term. Jurisdictions and many nonprofits cannot easily make more sales or create new product lines to generate additional revenue.
As a result, accurate revenue forecasting is absolutely critical to maintaining the trust of public employees and the confidence of the taxpaying public. An underestimation of revenues leads to reduced spending that may fail to meet critical needs, while the overestimation of revenue leads to program cutbacks partway through the budget cycle. Either situation results in citizen and employee disenchantment with the organization. Developing and agreeing upon revenue estimates requires both political and technical skill on the part of the Public administrator (Morgan, 2008).

In government, basically, public budgeting separates the development of plans for program spending from the activity of revenue generation. This separation is especially evident at the federal level, where deficit spending is legally permissible. Congressional committee structure divides responsibility for government financing from budget development and appropriations spending, in part because the size and complexity of the federal budget make it impossible to do otherwise. In many local jurisdictions where deficit spending is illegal, separate departments frequently undertake the tasks of revenue forecasting and budget development. When this separation does not occur, a department that is funded by general fund (revenue reserve for any purpose authorized by law) dollars have little influence over revenue generation (Morgan, 2008).

In the government sector, the tendency of public administrators to treat budgeting separately from revenue generation and forecasting has also been challenged in recent years as jurisdictions have had to deal with the consequences of a declining economy and rising anti-tax sentiment. This situation has resulted in a national political movement that assumes local governments will face a permanent fiscal crisis. I was argued by leaders of these political movements that an entirely new approach is called for in developing strategies for public finance and expenditure (Osborne and Htchison 2004).

Building a budget in nonprofit and governmental organizations requires an assessment of community needs and program resources. More importantly, however, it is essential to know what financial resources are available to support needs. The budget provides an opportunity to adjust the levels of spending so that they will match available revenues. The idea that available revenue limits government spending stands in contradiction to the popular notion that by adjusting complex formulas, the government can arbitrarily raise the level of taxation to meet an ever-higher level of program spending(Morgan, 2008).

The notion that revenue levels set limits on government spending also contrasts with practices in the private commercial sector, where revenue can be adjusted to meet expenditure needs. If a private company projects revenues that are below anticipated expenditure levels, the first goal would be to generate more money through sales and advertising before resorting to laying people off or cutting budgets.
For the public sector, including many nonprofits, the opposite strategy is usually followed. Revenue estimates are developed first, which then serve as the basis for deciding the levels of expenditure and program service. Where the actual collection of revenues falls from the start of expectations, city councils, county commissions, state legislatures, and nonprofit boards must reconvene to adjust spending downward. This is always a serious and troubling occasion since it requires immediate program reductions and employee layoffs.

On the other hand, when economic conditions improve and revenue collections unexpectedly increase from the previous year, administrators and elected officials may face an uncomfortable windfall of resources, In this case, government administrators and elected officials are caught on the horns of a dilemma. Do they return funds to the taxpayers, admitting their failure to forecast accurately, or do the credibly demonstrated a valid reason for the use of extra revenues? As for nonprofit boards and executives they usually have greater flexibility to focus unexpected revenues on the seemingly endless needs of community health, social, and family service problem. It is always important for administrators to act constitutively and legally in cases such as the above mentioned (Morgan, 2008).

As public administrators, we must be able to “Negotiating without fear but fearing not to negotiate” with institutions such as unions. We must take additional steps if necessary to properly balance your budget you intend to submit.
A public administrator should be able to establish an outcome-based with a focused goal of ruling out a project that does not work from the budget. Make sure that all stakeholders involved in the project for which you are preparing the budget receive fair project potion but be ready to demonstrate that the project is feasible and would be easy to implement.

As public administration, after you have pointed out all of the advantages of the budget and the project, it is paramount as well to mention possible disadvantages. Public administrators should know that there will always be some disadvantage in anything they do especially when it comes to money matter. Never forget to mention the disadvantages involve in whatever project you may be carrying out, especially when you are playing with taxpayers’ money (Morgan, 2008).

As a public administrator, if you are using the revenue-based approach, and if you will require the local community import, always be sure to demonstrate that the project will provide a longer-term solution. This might encourage the local community to help with perhaps supplementary support through some kind of tax increase without any tough resistance. Say you intend to lobby the governor and legislature for more adequate funding for your district, you must be sure that all your responsibilities will be legal and in line with state laws. It is often helpful to demonstrate that your district will build coalitions with other stakeholders throughout the state in which your district is located.
Public administrators must always be sure to show the disadvantages as well. Know that because citizens experience their taxes as part of an integrated whole, this requires that government officials (Public administrators) coordinate the inter-jurisdictional interface at the local and state levels in order to develop and implement successful revenue and budget strategies for public agencies (Morgan, 2008).

As a public administrator, it is important to know that the stakes are very high on budgeting and finance issues are governed by numerous legal and technical requirements, which expand as well as limit the discretionary authority of public officials and administrators.
Therefore, the selection of a given combination of budget and finance strategies cannot be separated from other conditions necessary for realizing the additional long term goals of an organization.

One important thing for every public administrator to know at a fingertip is this: At all times, administrators and policymakers must work as a collaborative team in maintaining policy development and policy implementation. For it is impossible to draw a line between the two. This is because it is not possible to separate the forces that shape the private marketplace from the forces that shape the allocation of resources of the public sector. The two realms are mutually interdependent. This is why it is actually stupid for administrators to think that the market is able to regulate itself.

Public budgeting can be used as a governing tool to test political responsiveness meanly government responsiveness to community desires why budgeting process can be used to test responsiveness to a blend of community needs and donor priorities. Public budget can be used as financial accounts to ensure financial accountability. Public budgeting can be used to influence an entire economy as in taxation policies or public jurisdictions.
As public administrators, we should be mindful of multiple purpose public budgets as well because there are consequences thereof. In other to reduce conflict, the need for extensive analysis in the budget process is the norm of fair share and this should not be overlooked by Public Administrators.
Public administrators must be sensitive to role responsibility when budget decisions and products are expected to move from one actor to the next. We must build the agreement necessary to proceed through the next stage of the budget process. as Public administrators, we must remember that it is important to play both constitutive and instrumental roles depending on the timing of the situation but in accordance with the law at all times (Morgan, 2008).

References:

Cox, Christoper (2008). Reform of the Financial Regulatory System. U.S. Securities and Exchange Commission
Kass, Henry D. (2009). Instrumental role.
Kass, Henry D. (2009). The Substantive Perspective.
Kass, Henry D. (2009). Constitutive Role.
Morgan, Douglas F., Richard, Shinn, Craig W., & Robinson, Ken S. (2008).
Foundations of Public Service. New York; M.E. Sharpe.
Morgan, Douglas F., Richard, Shinn, Craig W., & Robinson, Ken S. (2008).
Foundations of Public Service. New York; M.E. Sharpe.
Morgan, Douglas F., Richard, Shinn, Craig W., & Robinson, Ken S. (2008).
Foundations of Public Service. New York; M.E. Sharpe.
Osborne, David and Hutchinson, Peter(2004). The Price of Government. Basic Books, NY,(2004)