Fiscal Responsibility in Public Administration

A note for our readers: the views reflected by the authors do not reflect the views of ASPA.

By Jeffrey Zimmerman

Fiscal responsibility in public administration is an important and sensitive topic in conversations across the country and all levels of the government. Our nation is still attempting to get the economy back from the recession levels of a few years ago, and the economy is putting more pressures on public administrators to be fiscally responsible.

Public administrators face the many challenges of appropriating funds for myriad public services every day. Public administrators must create ways of distributing funds for these public services in a manner that will benefit both the public entity and the citizens who receive the public services. These public administrators have to consider all of the services that are provided to citizens and determine a hierarchy in order to appropriate funds to the services or programs that are the most important.

Public administrators have a multitude of ways to get their agency operating under an acceptable level of fiscal responsibility. Some of the methods include but are not limited to:

• Privatization of public services.
• Increasing taxes.
• Reducing or cutting programs.
• Reducing or cutting employee benefits.

These are a few strategies that public administrators can employ when striding toward a fiscally responsible government. Governments on all levels in the United States and throughout the world have begun to privatize many of their public services in order to streamline these services and reduce the costs incurred by the government entity. According to Mildred E. Warner in a 2010 Public Administration Review article titled “The Future of Local Government: 21st-century Challenges,” research shows that privatization alone does not result in governments saving money. One reason for this result is the difference in philosophy between the public and private sector organizations. Private sector companies are “for profit” in that their goal is to increase revenue and reduce expenditures, whereas the public sector agencies goals are for the public good.

Increasing taxes is a sore subject for the majority of taxpayers because of the thought that taxpayers pay too much money in taxes already. Increasing or decreasing taxes based on analysis of the economy and appropriate timing can be largely responsible for governments going from a deficit to a surplus. There are a few examples of public administrators in several states across the country that have turned deficits into surpluses on the state level; Florida, Wisconsin and Ohio are three that come to mind. The public administrators in these states have made tough decisions regarding issues such as public employee unions, benefits, and pay so that the state could be more fiscally functional. We can point out the states that continue to have deficits such as California and New York. We can look at the federal debt as it grows close to $18 trillion and see the importance of government being run in a fiscally responsible manner.

Reducing public services or programs and employee benefits and pay are two issues that will be contested for the near future for a few reasons. First this could happen because the recipients of the programs, as well as the employees, will continue to argue for as many services and benefits that they can get from the government. These arguments will force public administrators to make tough decisions in order to keep their government entity from going bankrupt. Public administrators must consider many variables when deciding to reduce or cut a public program that has been in place for any amount of time. The costs associated to the program are many; dollar signs and the benefit they provide to the community, the impact of reducing or removing the program, and the impact on other programs that might have to take on an increased workload to supplement the program that was cut or reduced. When considering cutting a program, the public administrator must consider whether the program has had any impact on criminal activity within the community. If this program has had an impact on crime, cutting or reducing the program may result in an increase of criminal activity. This is just one of many considerations administrators think about when deciding to reduce or cut public services or community programs.

Public administrators have an obligation to inform the citizens about any possible reductions or cuts to programs or services that could significantly impact them, as well as any tax increases to generate revenue to continue supporting these services or programs. Public administrators can engage the citizens of the community into the governance process so that they recognize the value of the programs or services being discussed and to understand the need for revenue generation to support these programs or services. Administrators who can get the community engaged in the governing process can yield the benefits of this action by educating and informing the citizens about the fiscal responsibilities of governing. The citizens can see that in order to continue receiving certain services or programs there might be a need to increase taxes slightly to cover the expenses incurred.

One method that could prove successful in assuring fiscal responsibility for public administrators is to adopt business models from the private sector and combine them with existing public sector models. Incorporating some fiscal models from the private sector can aid administrators in operating their government in a fiscally responsible manner. As mentioned previously, the main difference between the public and private sector is that the private sector operates on the concept of making profits by increasing revenues and reducing expenses and costs. The public sector could adopt this principle and apply it to certain services or programs to attain a fiscally responsible level of operation.

I understand that the public sector cannot completely operate under the “for profit” concept for a few reasons. First many services or programs would not be available to the citizens who truly need them but could not pay for them as in the private sector model. Second there would be other costs and risks associated with employing a “for profit” theory for certain services and programs that would lead to other issues. The “for profit” notion is only one idea or principle that public administrators can consider in future administrations to ensure a fiscally responsible government that provides services and programs in the most effective, efficient and fiscally responsible manner.

Author: Jeffrey R Zimmerman is a public policy and administration doctoral candidate at Walden University. He is currently working on his dissertation titled, “The Impact of Supervisor-Subordinate Exchange on State Government Employees.” Zimmerman is also a state employee with the North Carolina License & Theft Bureau where he is currently assigned to the training section. He can be reached via email at [email protected] or [email protected].

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