The Executive Budget Process

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The Executive Budget Process

• Public Budgeting

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Public Budgeting Two Very Different Approaches

• Budgeting as a management tool
• Top-down emphasis
• Rational, analytic
• Focuses on
• Process
• Technique
• Budgeting as a political power struggle
• Bottom-up
• Incremental, political

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The Executive Budget Process

• A direct result of the late-19th century reform
  movement
• A bottom-up development
• Designed to improve accountability while
  respecting separated powers/checks balances

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The Executive Budget Process, cont.

• Today, there are many ways of doing it
• And more ways of describing it
• The description of the executive budget process
  on the following slides works,
• So do other schemes

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The Executive Budget Process

• Budgeting occurs during a four stage cycle
• Different actors are important in each stage
• Different processes take place at each stage
• Different issues lie at the heart of each stage

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So, What Are These Stages?

• Preparation submission
• Approval
• Execution
• Audit

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Preparation Submission What Who?

• Executive branch
• Call for requests
• From Chief Executive
• Initial preparation of requests
• By line managers (often at a relatively low level)

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Preparation Submission What Who, cont.

• Reviews
• Agency
• Central Budget Office
• Chief Executive

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Preparation Submission Key Issue

• How much to ask for?
• Executive needs prior legislative approval in
  financial matters
• Reform movement aimed at fixing accountability at
  the top levels of executive branch

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Preparation Submission Key Issue, cont.

• Considerations
• Efficiency, effectiveness, etc.
• Political considerations (especially those of
  elected chief executive)
• Past performance
• Expected future needs
• Inter-agency conflict

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Approval What Who?

• Legislature
• Committees
• Hearings
• Mark up
• Full body
• Conference
• Sometimes, not always
• Only in bicameral legislatures

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Approval What Who, cont.

• Executive branch agencies
• Testimony, etc. at hearings
• Depends on level of government
• Rules of the game are important
• Lobbying (often referred to by some other name
  when done by the executive branch)
• Chief executive

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Approval Key Issue

• How much to give them?
• A fundamental feature of American
  constitutionalism the legislature holds the
  purse strings
• Only the legislature may levy taxes
• Only the legislature may appropriate funds

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Approval Key Issue, cont.

• Considerations
• Boundary maintenance
• Legislators own political agendas
• Logrolling
• Efficiency, effectiveness, etc.

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Execution What Who?

• Spending the money
• Key actors are
• Line agencies
• All others

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Execution What Who, cont.

• Monitoring controlling that expenditure
• Executive branch control agencies
• Central Budget Office (BOB, OMB, etc.)
• Internal audit
• Legislature
• Oversight
• Legislative auditors

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Execution Key Issues

• Compliance
• With the will of the legislature
• Budget is a law (enforceable)
• Husbanding resources
• Preventing expenditure of an entire years
  appropriation in less than a year, often by means
  of an
• Allotment system

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Execution Key Issues, cont.

• Control
• Preventing over expenditure, unauthorized
  expenditure, theft, graft, etc. by
• A priori controls
• Creation of a paper trail (to facilitate a post
  audit)
• Internal auditors

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Audit What Who?

• Legislature
• Power of the purse strings
• They are reported to
• Executive branch agencies
• They are the ones audited

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Audit What Who?

• External auditor
• Independence from audited agencies is important,
  so as to
• Avoid undue influence (or appearance of such)
• May be accomplished by
• Independent election
• Location in legislative branch
• Higher level government may audit lower level
• Hiring private audit (CPA) firm

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Audit Key Issues

• Compliance
• Were monies expended per the approved budget?
• Are executive branchs end-of-year financial
  statements fair and accurate statements of the
  governments financial condition

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Audit Key Issues, cont.

• Efficiency
• Could less have been spent to accomplish same
  results?
• Effectiveness
• Did expenditures accomplish their intended
  results?

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Scrambled Budget Cycles

• Actually, government agencies are frequently in
  two, sometimes three, stages at once
• Execution preparation
• Execution audit
• Execution, preparation, audit

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