Formula budgeting: The economics and analytics of fiscal policy under rules

The dramatic change in aggregate fiscal policy in recent years has contributed to a shift from process rules to allocation rules in federal budgeting. Although the allocation rules inherent in formula budgeting seem to offer fairness in times of fiscal constraint, they actually impose arbitrary program-level budgets that reflect the peculiarities of baselines, accounting conventions, and time horizons. Formula budgeting also changes the analytical environment, forcing policy analysts to pay greater attention to institutional arrangements.     

State budget periodicity: An analysis of the determinants and the effect on state spending

Much of the public budgeting literature focuses on the institutional rules of budgeting and how those rules affect process and outcomes. This study focuses on a particularly rudimentary rule of budgeting: the length of the budget period. State budgets are dictated (constitutionally or statutorily) to recur over one-or two-year intervals. Statistical analysis of the determinants of state budget periodicity shows that the more states spend, ceteris paribus, the more likely they are to budget annually. I hypothesize that budget periodicity has the opposite effect on spending: Biennial budget states spend more, ceteris paribus, than annual budget states spend. Ordinary least squares analysis does not support the hypothesis, but with instrumental variable methods, biennial budgeting exhibits a positive and statistically significant effect on state spending.     

Bias in the formulation of local government budget problems

Government budgets are premised on forecasts of revenues and expenditures. These forecasts are subject to both stochastic error and strategic manipulation. Circumstantial evidence in the budgeting literature and in the popular media suggest that government officials routinely bias the forecasts underlying budgets. The research reported here asked three primary questions: To what extent are budget forecasts systematically biased? Why? (Are fiscal and electoral variables systematically related to the magnitude and direction of the biases?) What political and ethical difference do the biases make? From the literature and an analysis of the incentives facing politicians and bureaucrats, we developed hypotheses about budget biases. These hypotheses were tested using time series data for the City of Pittsburgh, Pennsylvania (1941–1983); the City of San Diego, California (1950–1982); and the Pittsburgh (Pennsylvania) School District (1946–1983). In these locales over the periods examined, budgets were systematically pessimistic; revenues were underestimated and expenditures were overestimated. The fiscal and electoral factors hypothesized to account for this pessimism are, however, very mixed in their ability to explain the biases.     

Video Games and Violence: Legislating on the ‘Politics of Confusion’

This article explores the way that politicians and legislators have responded to concerns over the link between videogames and violence in the UK, particularly in terms of ensuring that inappropriate content remains inaccessible to minors. It explores the recent changes to the regulatory framework centred on videogames, arguing that the move to a universal statutory framework has implications that are more symbolic than real‐policy is still underpinned by the ‘precautionary principle’ and the framework remains equally likely to be undermined by the actions of parents who ignore ratings and purchase age‐inappropriate games for their children. Perhaps predictably, the political establishment has been unwilling to engage with this parental neglect, attributing it to ‘ignorance’ and ‘the need for a simplification of the ratings system’. This paper argues that such responses are essentially a smokescreen used by governments which are understandably unwilling to take prosecutions into the home and retail space.     

Budgeting for Contracting in Local Government

While the amount of contracting out seems to be leveling off, the number of larger, long‐term contracts seems to be increasing. Such contracts are generally not well described in local budgets. Recent efforts in some cities to shift to more outcome‐oriented performance budgeting should push toward more clarity in reporting on major contracts in the budget. This article examines how a handful of major cities handle contracts in their budgets—in some cities contracts are omitted from the budget or all merged into one budget line—and makes some suggestions for improvements.     

Budget-maximizing governmental agencies: An empirical test

Niskanen's theory of government budgeting, involving powerful agencies interested in maximizing their budgets through bargaining with a weak, poorly informed governmental ‘Sponsor’, has received wide recognition. This paper presents the first direct empirical tests of Niskanen's ideas. One implication of Niskanen's model of budgeting is that the demand for public services will appear to be elastic. Niskanen's model also implies restrictions on the elasticity of the derived demand for labor in the public sector. Neither set of predictions is supported by existing empirical research on government activity.     

Examining the Nature and Magnitude of Intradistrict Resource Disparities in Mid‐Size School Districts

While a growing research base has examined resource disparities across schools within large school districts, the literature has largely overlooked resource allocation in the mid‐size school districts that a large portion of the nation's children attend. In this paper, we measure disparities in teacher resources within four New York State districts and conclude that intradistrict equity is not just a big city problem. We also explore the budgeting processes and mechanisms leading to these disparities, including fund‐based budgeting, grant‐based allocation rules, class size formulae, and ad‐hoc mechanisms. We conclude with policy implications and recommendations for improving intradistrict resource equity.     

Political Partisanship and Welfare Service Privatization: Ideological Attitudes among Local Politicians in Sweden

This article ties in with a growing international literature examining the link between party politics and welfare service privatization in modern welfare states. In recent decades, a central aspect of policy change in Sweden is that private actors have come to produce publicly financed welfare services on a more regular basis. This overall privatization trend is furthermore characterized by substantial geographical variation across Sweden's 290 municipalities. The ideological attitudes of local politicians have been recognized as particularly important for understanding this development. This article examines the extent to which local politicians’ ideological attitudes regarding welfare service privatization are best explained with a partisan approach emphasizing between‐party polarization as opposed to a critical perspective that points to the proclaimed significance of ideological consensus between left and right parties in certain municipal contexts. Using multilevel modelling and survey data collected from elected politicians in municipal governments, the empirical findings show substantial differences in attitudes between Conservatives and Social Democrats, irrespective of municipal characteristics – most notably the degree of welfare service privatization. Hence, the results strongly indicate that the partisan approach is much more fruitful compared to the consensus approach as a general explanation for local politicians’ attitudes towards welfare service privatization in Sweden. Accordingly, a conclusion is that comparisons at the subnational level within countries are important as a complement to country‐comparative studies when attempting to understand the link between political partisanship and welfare service privatization in modern welfare states.     

Performance Budgeting: The Perspective of State Agencies

Although performance‐based budgeting requirements are pervasive, what remains a challenge is how to gain the support from all stakeholders in the budget process that are essential to the integration of performance information with budgeting. This study examines the perspective and role of state agencies on performance budgeting. The finding indicates that for agencies to conduct performance‐informed budgeting, the focus needs to be on elevating managerial capacity to use performance information, and improving measurement quality. Moreover, it is crucial to recognize that performance budgeting is a collaborative process in which each participant plays a valuable role.     

Human Rights,Public Budgets,and Epistemic Challenges

Ideally, governing institutions would be designed so that they would produce and implement with certainty ‘human rights-compatible budgets’, i.e. budgets that adequately reflect the obligations enshrined in human rights. However, there are various reasons why a government may ultimately fail to produce such budgets. This article focuses on under-examined challenges for budgeting for human rights: epistemically oriented challenges. More specifically, the article engages in ‘horizon scanning’, and it maps key underlying factors that can be conducive to epistemically oriented challenges to produce and implement human rights-compatible budgets. In addition, the article considers the road ahead from the perspective of institutional design.     

Punctuations and agendas: A new look at local government budget expenditures

Punctuated equilibrium theory (PET) is an agenda‐based theory that offers a theoretical foundation for large budget shifts. PET emphasizes that the static, incremental nature of agendas is occasionally interrupted by punctuations. These punctuations indicate shifts in priority among the agenda items, and with those agenda shifts come trade‐offs. This article expands the discussion of punctuated budgets to the level of local government by determining that local government expenditures have the characteristics espoused by the punctuated equilibrium theory. The article also determines the frequency of punctuations and the probability for future punctuations. The findings show that some budget functions and policy types are more prone to punctuations and, therefore, have a less stable agenda. The practical significance of extending PET to local government budgeting is the implication on planning, forecasting, and the agenda‐setting process. © 2003 by the Association for Public Policy Analysis and Management.     

The EU,UKIP and the Politics of Immigration in Britain

Immigration politics in Britain have been transformed by high levels of immigration, the effects of EU free movement, strong anti‐immigration sentiment and UKIP's rise. All are compounded by a more general discontent with politics and politicians. In face of claims that something must be done, politicians seek tougher controls on immigration and free movement, but these may be difficult to attain because of entanglement with EU rules, while failure to achieve stated objectives can further compound the disconnect that fuels support for UKIP.     

The Third Force? Independent Regulatory Agencies and Elected Politicians in Europe

Governments and legislatures in Europe have created or greatly strengthened independent regulatory agencies (IRAs). Yet they also retain many formal controls over those agencies. The article analyzes whether elected politicians have used their powers to create IRAs in their own image and kept IRAs under tight control or whether they have allowed IRAs to become a distinct set of actors, hence a "third force" in regulation. Principal–agent (PA) theories, largely based on U.S. experience, emphasize the importance of certain formal controls for elected politicians to limit "agency losses." However, an analysis of four European nations between 1990 and 2001 shows that elected politicians did not use their powers to appoint party politicians, force the early departures of IRA members, reverse IRA decisions, or reduce IRA budgets and powers. Using PA theory, two interpretations of this apparent puzzle are offered, each with differing implications for agency autonomy. One is that elected politicians used alternative methods of control, hence they suffered low "agency losses" and IRAs in practice had little autonomy. The other is that elected politicians found that the benefits of IRA autonomy in practice and the costs of applying their formal control outweighed agency losses, and hence accepted agency autonomy.     

Who controls the machine,III: accountability in the results‐based revolution

Following up on two previous analyses of the efforts of Member States to solve the problems of command and control in the United Nations and its organisations, the article focuses on the latest effort, the institution of results‐based budgeting. The approach as applied to assessed budgets is critical for the maintenance of support of major contributors to the United Nations and other international organisations. After reviewing the problems inherent in previous efforts at using programme planning to control the organisation and make it accountable, the article focuses on the use of monitoring and evaluation as means of holding organisations accountable for producing results and on the conditions necessary for this to be effective. It argues that refocusing the work of the Committee for Programme and Coordination and the Office of Internal Oversight Services as its independent secretariat could make the results‐based revolution work and Member States finally to control the machine. Copyright © 2004 John Wiley & Sons, Ltd.     

What Can Performance Information Do to Legislators? A Budget‐Decision Experiment with Legislators

Studies on the influence of performance information on budgeting decisions have produced contradictory findings. This article offers a framework of the parliamentary context that links performance information to legislators’ budgeting decisions. The framework suggests that the impact on politicians’ allocations will differ depending on whether performance information is reflected in the budget proposal, whether the allocation issue concerns a politically difficult trade‐off for the decision maker, and whether information falls into a receptive partisan mind. The experimental study uses 57 actual legislators. The results show that the introduction of performance information into legislators’ deliberation process leads to stronger deviations from the status quo allocation. This difference occurs because performance information highlights more clearly the expected consequences of budgetary changes and allows for more pronounced reactions. More informed decisions, however, might make compromise among legislators more difficult because individual positions will become more polarized.     

Boom and Bust Budgeting: Repetitive Budgetary Processes in Nigeria, Kenya and Ghana

One of the least studied topics in comparative budgeting is how governments budget during economic and boom and bust cycles. Theory and past evidence suggest that national budgets of poorer countries are made and remade continuously over these periods. Case material from Nigeria as well as supplemental information from Ghana and Kenya illustrate the principal features of the persistence, types, and sequence of such repetitive budgeting. The experience of the three countries in boom and bust budgeting has considerable implications both for a theory of comparative budgeting and for national budget management and policy in Subsaharan Africa specifically.     

Testing Rival Decision–Making Theories on Budget Outputs: Theories and Comparative Evidence

This study demonstrates the link between the degree of economic rationality and budgetary decision–making outputs for Canada, the United Kingdom, and the United States. Three empirical models are derived with low, intermediate, and high degrees of economic rationality, namely, "garbage can," incrementalism, and rational choice budgeting, respectively. The methods used are time series analyses on real disaggregated national government budget outputs for the post–World War II period for Canada, the United States, and the United Kingdom. There was some support found for budgetary incrementalism, and the most consistent support for rational choice budgeting. There was no support for garbage can budgeting.     

California Budget Simulation

The California Budget Challenge produced by Next10 provides a useful and intuitive tool for instructors to introduce students to public budgeting. Students will reason through a series of budgeting decisions using information provided on the fiscal and practical implications of their choices. The Challenge is updated with each budget cycle, so it provides an up-to-date simulation that incorporates the effects of current broader economic forces on state budgets. Therefore, the California Budget Challenge allows instructors to reinforce theoretical material on budgeting with an engaging “real life” application.