Week 5: Deficits, Budget Balancing, Reforms (cont.)Legislative Analyst’s Analytical ApproachDifferent Roles in Budget ProcessSummarizing KettlSummarizing Kettl -- continuedBalancing Budgets -- State and LocalBudget Balancing Strategies--State and LocalBudget ReallocationSlide 9Budget ProcessDesign a Budget Process for a School DistrictPreview of Week 6Week 5: Deficits, Budget Balancing, Reforms (cont.)•Review Leg. Analyst’s Recommendation on school reform•Summarize Kettl•Balancing budgets--state and local government•Budget balancing strategies•Budget reallocation•Budget processes–characteristics and goals–examples from students’ assignments–class exercise on school district budget process•Preview of week 6Legislative Analyst’s Analytical Approach•Cite research (relationship between time and achievement)•Accuracy and appropriateness of comparisons–instructional time v total time–core academic subjects v total time–other things not equal (quality of instruction)•More efficient means to same ends (better use of time)•More effective means to same ends (look at alternatives)•Equity (not all schools have same opportunity to participate)•Implementation (would not work as proposed)•Lacking detailDifferent Roles in Budget ProcessGovernor/Dept. of Finance•Vision/policy/leadership•Budget balance•Reserve/flexibility•Retain agency support•Maintain agenda control•Public support•Successfully defend Governor’s BudgetLegislative Analyst’s Office•Frame budget discussions•Recommend budget reductions•Preserve non-partisan reputation•Accurate analysis•Gain Legislative approval for recommendations (secondary)Summarizing Kettl•rationality fixes have failed to account for politics•process fixes are foiled by circumvention strategies:–snapshot projections and other game playing–with 70% exempt, huge incentives to avoid the axe•and by competition between branches and centralization of power within each branch–leads to personal (ad hoc) budgetary politics•Other foils:–costs of entitlements (interest group politics)–anti-tax sentiment-- hard to raise $$ for entitlements–divided party governmentSummarizing Kettl -- continued•Solution: political leadership–confront controversy–promote vision and values–promote citizenship and sense of fairness–define the public interest–other characteristics of effective political leadership?•Would a greater sense of fairness of tax and spending policies help?–disconnection between who pays and who benefits–should there be a closer connection?Balancing Budgets -- State and Local•Budget balancing requirement•More intense efforts to hide deficits•Fewer macroeconomic issues to consider•Greater influence of environment on balance/deficit•Deficits don’t accumulate--problems more tractable•Temporary, not structural deficits -- more fixes availableBudget Balancing Strategies--State and Local•Year-end balances–How much is politically acceptable?–Authorization to re-appropriate or carry over–“Pre-buy” from “budget year”–Spend budget year funds this year•Projected year-end deficits–Hiring and expenditure freeze–Across the board unallocated cuts•Budget year shortfalls–Across the board–Priority-based cuts (reallocation)Budget Reallocation•The value of reallocating resources–meeting changing priorities–differential growth rates among units–static budgets•Challenge of reallocation–political -- sense of fairness–requires analysis•Built-in constraints–entitlements–spending floors (Prop 98)–permanent positions and labor intensive organizationsAnalysis to Support Resource ReallocationHigh costLow alignment with programgoalsEliminateHigh costHigh alignment with programgoalsReduce costsLow costLow alignment with programgoalsEliminate or redesignLow costHigh alignment with programgoalsDesired resultBudget Process•Designed to meet organizational goals•Reflects organizational culture•Variables–players–rules/procedures/documents/timelines–balance of executive/legislative power–degree of centralization/coordination–top-down/bottom-up–openness to internal members–openness to external community•Examples from students’ memos on budget processDesign a Budget Process for a School DistrictUnits:•4 elementary schools•2 middle schools•1 high schoolPlayers:•elected school board•superintendent/staff•7 principals•7 PTAs•parents and communityProcess Variables:•roles of various players•authority/balance of power•rules/procedure•documents/timelines•executive v legis power•degree of centralization•top down/bottom up•openness to internal•openness to externalPreview of Week 6Begin Part II: Context of Public Finance•New Book: Brunori, on sales, income, property tax issues in state government•Rubin Chapter 2 on revenue politics•Guest speaker, Brad Williams, from LAO–state revenues and process for projecting–politics (and games) of revenue estimation–tax expenditures–current issues in state