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Adapting Budgeting To The Political Environment

To read Bertone’s previous article, click on the link below under ‘Related Articles.’

Thomas L. Bertone

In the June 28, 2010, Online PA TIMES, I recommend that each career government employee adapt her/his job to the political environment in which s/he works. Although I offer a six-step process to guide the adaptation, some readers may find one step (“…analyze what `maximizing efficiency, effectiveness, and economy` means in such a political grouping.”) too general to be easily used. If so, this article is meant to correct that condition by way of example. It outlines how budgeting can be adapted to the political environment: by matching the functions of budgeting to the prevailing combination of public administration model and political grouping.

In the article, I point out: that multiple models of public administration exist, e.g., the Bureaucratic, Entrepreneurial, Steward, and Iron Triangle Models; that four political groupings can be identified (Cultural Conservative, Economic Conservative, Conservative Democratic, and Liberal Democratic), each reflecting a political philosophy; and that each political grouping is most compatible with one public administration model.

In his famous article, “The Road to PPB: The Stages of Budget Reform,” Allen Schick identifies three functions present in every budgeting system: control, management, and planning; and opines that every budgeting system emphasizes one of the functions. He then argues that every budgetary system should be explicitly designed to ensure the presence of and proper priority for each of the three functions and concludes that: “In ideal form, PPB would centralized the planning function and delegate primary managerial and control responsibilities to the supervisory and operating levels respectively.” Forty-three years later, in his book Evolutions in Budgetary Practice, he reports that this pattern of responsibility is an emerging principle of New Public Management. (New Public Management is compatible with the Entrepreneurial Model.)

Be that as it may and regardless of the design of the system, political managers in every budgetary system determine how it is to be used and which part(s) of it is to be emphasized. The unique orientation of each of the political groupings is most compatible with one of the budgetary functions. In an established political regime based upon one of the groupings, it can be expected that the budgetary function most compatible with the grouping will be emphasized. (In actual situations, for various reasons, that which “can be expected” may or may not occur and, if it occurs, may occur in varying degrees. It is the fit between “that which can be expected” and that which actually occurs that should be analyzed.)

Cultural Conservative Budgeting Emphasizes Management. A Cultural Conservative regime is consistent with a traditional, evolutionary society and a government that is stable and predictable. As such, it favors budgeting that is incremental.

With few initiatives arising from government, the emphasis is upon good management, efficiency–achieving the same output with less input–and economy. Because governmental operations are based upon expertly designed systems and procedures, improving efficiency relies upon re-engineering established systems and procedures. To verify re-engineering success, performance statistics are incorporated within the budgeting system.

Assuming Schick’s pattern of responsibilities, emphasis is at the departmental level where re-engineering efforts are mandated, reporting systems are designed and implemented, and results are analyzed. The central budget office concentrates upon fiscal discipline and allocative efficiency; but, in a Cultural Conservative system, re-orientation seldom occurs. The chief executive and his central budget office ensure fiscal discipline, incrementalism, and increasing efficiency but do so in a routine manner.

Thus, the administration of a Cultural Conservative government resembles that of a mature business. As explained in the June 28 article, this is consistent with the Bureaucratic Model.

Economic Conservative Budgeting Emphasizes Programming. An Economic Conservative regime relies upon the market to solve most problems. A series of private think tanks will have grown up to determine on which problems the market needs governmental assistance and how the government can use the market to execute governmentally sponsored assistance. As a consequence, an Economic Conservative administration comes into office with an agenda already developed, a mandate for that agenda, and agenda programs already designed. The task is to phase implementation of the agenda in a fiscally responsible manner over the term of the administration and to ensure that programs are implemented as designed. To do so, the multi-year aspect of budgeting (programming) is emphasized and is the responsibility of the central budget office.

Staffing the departments with politically loyal personnel who will maintain program design in both internal and out-sourced program implementation is also emphasized. Secondarily, New Public Management is utilized for both internal and out-sourced program operations.

Thus, the administration of an Economic Conservative government resembles that of an entrepreneurial business and is consistent with the Entrepreneurial Model.

Conservative Democratic Budgeting Emphasizes Control. A Conservative Democratic regime is consistent with a society that fears governmental power, wishes to limit governmental power, and, where power is necessary, to keep it under control. In such a society, the legislature is key: agreements are negotiated among competing factions about what the executive will be allowed to do. Then, the legislature exercises strict control of the executive to ensure that the agreements are adhered to.

Agreements include authorizations of executive programs and an annual up-date of the agreements through the budgetary process. From a budgetary perspective, control is exercised by the legislature through use of appropriations that limit executive spending on classes of inputs (objects) to executive activities. Limiting executive activity, not providing service to the public, is the goal and; and control is, therefore, emphasized

Using Schick, if responsibility for control is assigned to the agencies, the legislature will exercise its control by close supervision of agency activity through the Iron Triangle mechanism. (It is in the legislature’s interest to separate an agency from chief executive influence.) The chief executive and his central budget office become administrators to ensure that the laws are faithfully executed–as they ensure fiscal discipline and allocative efficiency. Departments do what they can to improve management.

Thus, a Conservative Democratic government is consistent with the Iron Triangle Model.

Liberal Democratic Budgeting Emphasizes Planning. A Liberal Democratic regime is primarily political (and democratic) rather than service-providing, and its government seeks above all to be responsive and accountable to the body politic.

The legislature, as the branch closest to the public, identifies constituent interests and priorities and responds with broadly defined authorizing legislation to meet those interests and priorities. The executive is given discretion to turn that legislation into a long-range plan (usually informal) for accomplishing legislative intent and detailed programs capable of implementation

From a budgeting perspective, program planning conducted at the departmental level is emphasized; and input from the public is constantly sought. The central budget office is responsible for fiscal discipline and allocative efficiency to ensure balance and coordination among departments, and the agencies are responsible for budgetary control of their operating programs.

Again, a Liberal Democratic government is more political than administrative, which is consistent with the Stewardship Model.

What, then, does “maximizing effectiveness, efficiency, and economy” mean for budgetary staff in each political grouping?

  • Cultural Conservative: maximization is sought within the context of incrementalism and the re-engineering of procedures.
  • Economic Conservative: maximization is a subordinate objective, to be pursued with the techniques of New Public Management.
  • Conservative Democratic: maximization is of little concern, sacrificed to the needs of control; and
  • Liberal Democratic: maximization has no status except when the body politic desires it.

Thus, it is important for public administrators, particularly under Democratic regimes, to discuss with their political superiors the importance of maximizing effectiveness, efficiency, and economy. Otherwise, the administrators and the politicians may be operating at cross-purposes.

Thomas L. Bertone is retired president, Thomas L. Bertone and Associates (Management Consultants). Email: [email protected]

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About Thomas L. Bertone

DR. THOMAS L. BERTONEDr. Bertone is a retired independent management consultant. He had over thirty-five years experience as a consultant, manager, and professional in public administration at all levels of government. Dr. Bertone had assignments with the executive and legislative branches of government and with a gubernatorial political campaign. In 1983, the Institute of Management Consultants admitted Dr. Bertone as a Certified Management Consultant (CMC); in 1996, the Association of Government Accountants admitted him as a Certified Government Financial Manager (CGFM). In 2000, he was included in Who’s Who in America and, in 2001, Who’s Who in the World. A synopsis of his career follows.• President, Thomas L. Bertone and Associates. • Director of International Consulting, Grant Thornton. • Regional Director of State and Local Government Consulting, Coopers & Lybrand. • Acting Executive Director and Director of Budget Review, Office of Fiscal Affairs, New Jersey Legislature. • Finance and Management Advisor to Gubernatorial Candidate Jay Rockefeller. • Budget Analyst, Department of Fiscal Services, Maryland Legislature. • Project Manager, Booz-Allen & Hamilton. • Budget Examiner, U. S. Bureau of the Budget, Executive Office of the President. • Management Intern, U. S. Army Comptroller. Dr. Bertone received a Bachelor of Arts degree, cum laude, in Political Theory and Comparative Government from Harvard College (Cambridge, MA). He has a Master of Arts degree from Stanford University (Stanford, CA) in Political Science. He also holds a Doctorate in Public Administration from The George Washington University (Washington, D.C.) with American Political Thought as one of his fields of study. Dr. Bertone has successfully completed the Wharton (Business) School Executive Education Program in Strategic Management.

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