See attached for instructions.
The Basics of Public Budgeting and Financial Management
· Chapter 7: Financial Management, pgs. 187-211
(SEE ATTACHED .PDF)
Within the notes, you’ll find guiding questions, articles, and videos to help spark the conversations. To start the course off, let’s talk about the differences between public and private budgets. Let’s also explore the implications of federal budget differences on the general public.
Many of the halted services or were at risk of ending were programs aimed towards low-income families. These included services related to food stamps, WIC, TANF, and the Child Care Development Fund programs (Farmer, 2019). These funds impacted many people across all states, though some states were at risk of running out of funds sooner than later due to how they ran their programs (Farmer, 2019). Moreover, mass transit also took a hit as one-fifth of their budget was federally funded (Farmer, 2019).
Among the other items affected by the government shutdown, federal museums, and national park services were suspended until funding was received (Chokshi, 2019). Inspections of industrial production facilities by the EPA were also halted (Chokshi, 2019). Additionally, the FDA also had to stop their inspections, resulting in an increased risk of food contamination reaching the masses (Chokshi, 2019). Immigration courts were also shut down, pausing all related cases until funding was resumed (Chokshi, 2019). The IRS also had to go down to 12% manning, thus reducing all related services (Chokshi, 2019). Many other agencies affected had to make employees work without pay to maintain essential services (Chokshi, 2019).
The shutdown under Trump’s administration was due to a desire to have Congress provide five billion dollars to fund a border wall (Matthews, 2019). When Congress countered with only 1.6 billion dollars, Trump refused to approve the budget (Matthews, 2019). This ultimately sent the government into a partial shutdown and resulted in many services being halted (Matthews, 2019).
America has experienced many shutdowns in the past. It wasn’t until the 1980’s that disagreements on government funding led to government shutdowns or any alteration of its function (Matthews, 2019). Before 1980, shutdowns simply were disagreements that did not trickle down to any services. However, after Attorney General Benjamin Civiletti issued an opinion in 1980, it was determined that all funding gaps should halt services until Congress came to an agreement (Matthews, 2019). Shutdowns since then have had a number of reasons for occurring. Many had more to do with deficit concerns and simple disagreements of where to cut (Matthews, 2019).
Meanwhile, one disappointing occurrence happened under Ronald Regan when he and Congress decided to attend a social engagement instead of doing their jobs (Matthews, 2019). Other shutdowns occurred due to political issues such as abortion funding or Trump’s border wall (Matthews, 2019). One shutdown under Clinton negotiated the terms of what services would be affected by the shutdown by agreeing to fund the government at three-quarter funding to ensure most services could continue (Matthews, 2019).
These differences in shutdowns demonstrate the increasing politicization of the budgets. While once it was a simple question of balancing the budget, now we have seen more cases of politicians holding the government hostage for political gain. Therefore, administrators should be ready to go to reduced and possibly unpaid manning levels or stop services immediately. While unfortunate, the stopping of services does help to place a squeeze on policymakers to make valuable decisions promptly.
When the shutdown of 2018-2019 was in full swing, it impacted Maryland particularly hard as federal employees and contractors made up a significant portion of the state (Barker, Campbell, & Mirabella, 2019). This creates a considerable reduction in revenue as fewer people have the income to tax. Additionally, with fewer workers commuting, the Maryland Transit Administration saw an 18 percent reduction in revenue from monthly passes for their rail service (Barker et al., 2019). Moreover, these newly unemployed federal workers required unemployment and assistance for food and shelter, placing a further burden on the state (Barker et al., 2019). Finally, employees who were still forced to work without pay had a sudden need for childcare services and needed state assistance to afford it (Barker et al., 2019). As this shutdown lasted over a month, this certainly placed an unexpected burden on Maryland’s overall budget with this reduction in revenue overall.
Barker, J., Campbell, C., & Mirabella, L. (2019, January 23). Extended government shutdown taking toll on Maryland-based workers, the state – and even breweries. The Baltimore Sun. https://www.baltimoresun.com/politics/bs-md-government-shutdown-maryland-20190123-story.html
Chokshi, N. (2019, January 2). What is and isn’t affected by the government shutdown. The New York Times. Retrieved from https://www.nytimes.com/2019/01/02/us/whats-affected-government-shutdown.html
Farmer, L. (2019, January 2). The federal shutdown’s impact on states and localities. Governing. Retrieved from https://www.governing.com/topics/finance/gov-trump-2019-federal-government-shutdown-state-local.html
Matthews, D. (2019, January 12). All 20 previous government shutdowns, explained. Vox. Retrieved from https://www.vox.com/policy-and-politics/2018/1/19/16905584/government-shutdown-history-clinton-obama-explained
In this week’s assignment, we go over financial management, financial conditions, including the practices that impact the economic situation and operating budget. Per Menifield (2017), Financial and environmental factors are the two conditions that affect financial health. The following financial condition reports posted by the City of Cody (n.d.) use a risk indicator tool to highlight the high and low risks. In the analysis, the expenditures, future financial forecasting, and revenue were broken down into line items and described the conditions that are playing into the operating budget. Financial management comprehension is needed in this current course and the purpose of financial management to plan, organize, control, direct, and monitor the monetary resources in any organization. For this course, the expectation is to submit a budget as the final assignment. It would be difficult to complete this assignment without financial management understanding. Understanding the financial management component of how to control the budget once approved or monitoring the program outcomes is vital. In comparison, the Division of Local Government and School Accountability (n.d.) mentions an organization should periodically assess the financial conditions. Throughout the course weeks, I’ve said that performing the regular, financial analysis can provide valuable information on the current and future state of the organization’s finances.
Public vs. Private Budgets
There are two sectors we review, including private and public. At the same time, both areas use budgets as a tool to plan out the program needs. Private organizations use budgets to predict operating results. The public sector uses the budgets as a tool to balance out their finances, reviewing the mandatory expenditures, including assets and services that the public money uses, and can provide supporting documentation such as receipts for taxes and fees. Mentioned in the Division of Local Government and School Accountability (n.d.), poor budgeting and management will create fiscal problems even in a robust economic environment.
Financial Management Practices
Having sound financial management practices supports the organization to see any deficits, including any one time transfers/loans, reserved funding, and any deferred payments per Menifield (2017). Plair (2018) highlights what happens when a bogus budget and revenue aren’t captured, or the financial forecasting doesn’t include revisiting the past year. It also showed the financial variances compared to the original budget. At the beginning of this discussion, I stated that one analysis did an excellent job utilizing risk assessment. In my current position with my job, one of the things I have to do is analyze the program outcomes, including developing policies and procedures. When I first began with the agency, these things weren’t in place; I had to understand where the debt and issues were coming from before creating and implementing the new Policies and Procedures to improve the problems that caused the deficit.
Government Shutdown Impact
At the beginning of this course, we went over the Government shutdown that happened in 2018-2019. It became a hot topic, and understanding how politics play into this was huge. Until the constitution is updated and stops protecting the salaries of the president and congress, the governmental employees will continue to go through similar situations. Scott (2018) mentions, “Article II, Section 1 of the Constitution clearly states that “the President shall, at stated Times, receive for his Services, a Compensation, which shall neither be increased nor diminished during the Period for which he shall have been elected.” If Congress didn’t get paid during a shutdown, there’d be no shutdown, or it’d be fixed very quickly. Some governmental employees who are considered essential would become an exception and still get paid. However, not all of the services will stop, including receiving social security checks to the population. Essential personnel will have to work without pay, including law enforcement, DEA, customs, border patrol, TSA, weather services, and federal firefighters. During the shutdown, the military had to work. The military was protected during the shutdown because they had their checks already in hand when everything happened. The government furloughed workers at Commerce, NASA, National Park Services, Housing, and Urban Development. Federal transportation workers and IRS workers were also on the furlough list.
There have been other shutdowns in the U.S History; however, the shutdown that began in 2018 and rolled over into 2019 was the longest. The government shutdown affects everyone, including the economy. If a person isn’t getting paid, they spend less affecting the businesses in their local community. Also, expecting the personnel to work without pay is the fastest way to burn out the employees. Staff became stressed about finances, work, home, and the unknown. Burned out, employees are likely to not serve at their optimal performance level. Four factors contribute and influence the government’s decisions, including Political (Citizen) Involvement, Economic Influences, Social and Demographic Change, Legal and Intergovernmental Matters. During the shutdown, a few of my clients who just started to get a grasp on their finances were worried about the public services that they had, including EBT(food stamps). The fear of not knowing if they’d be able to provide the basic necessity for their families caused strain to their lives.
California State Immigration & Migration Budget
According to Hempstead (2001, p. 34), “State and local governments that are hosts to many recent immigrants have complained vociferously about the financial burden imposed by these new entrances.” The state begins to feel this burden and is unable to take care of its citizens, whether they are immigrants. In January, the Governor of California was looking to expand the funding, budget, spending, and programs for immigrants. When COVID 19 hit the states, reevaluating the budgets became even more prominent. According to Rivlin-Nadler (2020), “the governor announced that spending was no longer being considered. The state looks to tighten its belt during the worst economic downturn since the Great Depression.” Tightening up the belts and the budget for this population can place everyone at risk. Suppose the community doesn’t have accommodations to get health care. In that case, they won’t be able to get tested if they experience symptoms, uniquely since only California residents qualify to get Medi-cal. One recommendation that can be made is to have a free clinic for citizens who are in this state and moved here before COVID 19, so they can prove they are working and paying taxes. The funding for this program can come from FEMA since this is a state/nation emergency.
States Mishandling Funds
Since COVID 19 hit, a lot of the states are going through economic issues. Some people feel that they need more federal funds sent over to their states to help; however, if funding management is the main issue, increasing the available funds wouldn’t help. When States have to borrow money from Federal, it puts the U.S. into deeper debt since there are no savings that the Federal has. Milsap (2020) mentions, “The federal government is already set to borrow nearly $3 trillion (Links to an external site.) this quarter alone due to spending related to COVID-19.” Some days it feels like it’d be best if the government would just clear out the debt from Americans, provide them housing at an affordable rate, and start fresh. Since COVID 19 hit, some people that work in higher cost of living areas have moved out into a lower price to save money. In Sacramento, some companies have looked at keeping the employees working from home; but, at a lower salary. Although this may not feel like a big deal since the employees are moving to a lower cost, it truly is. The employees are trying to better themselves, including their financial status. The company is saving money because they don’t have to pay for office space. In my current position, if my company gave me an option to work from home, at a lower salary, I may take it in the beginning; but, it would seriously alter my budgets and more than likely move somewhere else. As a nation, debt is part of life, and we will always owe someone, even if we pay off our cars, student loans, and homes. We will end up still owing property taxes or our usual taxpayer fees. For example, when I first moved to California, we didn’t have to pay for grocery bags until a few months after. I say that these bag fees and collections should go back into our city, county, and state. The stores get to keep these bag fee collections to support the store in buying them.
As a public official, a request to review the budget, approve and provide recommendations based on the Fiscal year 2020-2021 for the County of San Diego was made. We will first review the funding and how it will affect the population in San Diego, including the quality of life for the communities. Since we want to improve the quality of life in San Diego for the communities, we first tackle the homelessness issues. When I first arrived to San Diego, we didn’t have the placement or funding available to support all the homeless clients in San Diego. Data continues to show many people end up homeless in San Diego because of the cost of living being so high. Another part that isn’t tackled is that other states send their homeless clients to California because it’s warm. Many feel that they can live on the beach. I experienced this in Virginia as well; however, it did become cold during the winter months, and many people became sick or died. If California became more affordable in general, maybe the homeless population wouldn’t be so high, including the clients who are at risk of losing their homes. There are not many homes in the market for people to purchase and survive. Californians spend at least 20 percent of their income in their living quarters. Although many people believe workers get a higher salary in California that’s not true. To be honest, I get paid less in California than Virginia, and the cost of living was cheaper in Virginia. People ask why haven’t you left then? It’s more comfortable to stay here than to go or even move to California; it becomes like a rabbit hole. Once you are in California, it’s challenging to leave; the weather helps my health, the schools are decent, and the healthcare system isn’t all that bad. There is potential for California; however, surviving in California with one income, no public assistance living in California, is very difficult and, at times, very scary! Monitoring my budget is vital, maximizing my investment earnings between my 401k and other personal investments to protect my children’s future. Having a grip on my budget is difficult now because I live in a beautiful area, pretty good schools, and my children go to school with classmates that have a two-income household. Some of the things that they may want take a little longer to get and, at times, impossible to get. We want our own place, and we have to be very diligent with our funds. Our household refuses to take out loans and only puts items on the credit card that can be paid off within a few days to increase our credit scores and make us more eligible to get our dream. I rarely take off and work hard in my job, making sure that income is coming into the bank. All of the items we end up getting or taking are included in our monthly budget. We cut costs that we don’t need at the time, for example, cable and internet were not a priority to our household prior to COVID 19. Once COVID 19 hit, the internet became a necessity; however, we do not spend money on entertainment that we originally would have used before COVID19. The redistribution of funds has helped with this month’s cost that we didn’t have before COVID 19. We also had to move a few times to get a more affordable apartment. Although it is still high, it’s not as high as when we first moved here, which was almost 3000 dollars a month, not including any utilities, internet, or cable. Often I find myself thinking about advancing, but, at this time, it’s just not the smartest choice. My oldest is getting ready to graduate in 8th grade, and my youngest will graduate in elementary school. Maybe in a year, we will be in a different situation, making it more affordable for my family and me to move into our place.
Beals, R. K. (2017, July 7). Illinois can’t shake junk-rating risk but does end a 2-year budget stalemate. MarketWatch. Retrieved August 9, 2020, from https://www.marketwatch.com/story/illinois-on-brink-of-becoming-first-state-rated-junk-if-budget-crisis-not-averted-2017-06-30 (Links to an external site.) (Links to an external site).
City of Cody. (n.d.). Cody, WY. Retrieved August 9, 2020, from https://www.cityofcody-wy.gov/DocumentCenter/ (Links to an external site.) (Links to an external site).
Division of Local Government and School Accountability. (n.d.). Office of the New York State Comptroller | Thomas P. DiNapoli. Office of the New York State Comptroller. Retrieved August 9, 2020, from https://www.osc.state.ny.us/ (Links to an external site.) (Links to an external site).
Hempstead, K. (2001). Immigration, Migration, and State Redistributive Expenditures. Growth and Change, 32(1), 23–42. Retrieved August 9, 2020, from https://doi.org/10.1111/0017-4815.00148 (Links to an external site.) (Links to an external site).
Millsap, A. (2020, May 11). More Federal Money To States Isn’t The Solution. Forbes. Retrieved August 9, 2020, from https://www.forbes.com/sites/adammillsap/2020/05/11/more-federal-money-to-states-isnt-the-solution/#13f98b2c677f (Links to an external site.) (Links to an external site).
Menifield, C. E. (2017). The Basics of Public Budgeting and Financial Management. [eCampus]. Retrieved August 9, 2020, from https://ecampus.vitalsource.com/#/books/9780761869764/ (Links to an external site.)
Plair, Z. (2018, November 24). City-operated at an $881K deficit in FY 2018. The Commercial Dispatch. Retrieved August 9, 2020, from https://www.cdispatch.com/news/article.asp?aid=70110 (Links to an external site.) (Links to an external site).
Rivlin-Nadler, M. (2020, May 16). California Budget Cuts Target Health Care For Immigrants. KPBS Public Media. Retrieved August 9, 2020, from https://www.kpbs.org/news/2020/may/15/california-budget-cuts-target-healthcare-immigrant/ (Links to an external site.) (Links to an external site).
Scott, B. (2018, January 19). Why do politicians and judges get paid during a government shutdown? National Constitution Center – Constitutioncenter.Org. Retrieved August 9, 2020, from https://constitutioncenter.org/blog/why-do-politicians-and-judges-get-paid-during-a-government-shutdown (Links to an external site.) (Links to an external site).
Consider how federal employees are impacted by a government shutdown. What services do these employees provide that will no longer be available?
This is a bit of a sore subject for me, as I was affected by the shutdowns in 2013, 2018 and 2019. In each instance, I was forced to work as an “essential worker” and not be paid in the process. While I was made whole in the long run, this is absolutely about the principle of it. In each instance my shop of 12 (myself included) were required to come to work and perform our daily mission while the vast majority of the base stayed home. There may be some that say “well at least you were paid after the fact”, that doesn’t tell the whole story. That is because while we were working without pay, the nearly 300 furloughed federal employees remained home only to be paid for that time. That’s right, not an hour of work “because they were furloughed and ordered to stay home”, but when the budget was passed, everyone was paid regardless. As for the services that affected us directly, we lost access to our commissary and base exchange. While this too may not seem like a big deal, I can promise you that it was. These services are not just a perk for military members, they are a way to save money and shop right on your base. Ultimately this meant an increase in all food items for our respective households all still while not getting paid. Let’s also not forget, all the “vice’s” in life by way of discounted alcohol and tobacco.
There have been other government shutdowns in the past. Discuss some of the differences in your response.
The biggest difference for me between the 2013 and then the 2018 and 2019 shutdowns was my position. In 2013 I was considered one of the workers and thus my responsibility was to worry about covering my 12-hour shifts and nearly nothing else. This meant that I just needed to know what days or nights I was scheduled to work and show up. As you can see this meant that the shutdown was more of an inconvenience than anything else. That was the opposite in 2018 and 2019 when I was in charge of the office. In these times, I was responsible for not only my schedule, but the 11 other Airmen that worked for me. Having to ensure that each of them understood that they were responsible to work without pay and with changes to the some of the office policies. This included a change to the previous sick day policy and only needing a doctor’s note after the third missed day, it was a doctor’s note for any day missed.
The 2019 federal government shutdown hit a historic timeline. Given the length of time and the widening impact, state and local governments experienced issues with providing services to their residents. Discuss the factors influencing the budget bottom line of a local or state government where the shutdown has influence.
In the state of Maine, the effects of the 2019 shutdown could be felt severely by those that relied on welfare. “The 180,000 Maine residents who rely on the Supplemental Nutrition Assistance Program received their February benefits this month. The Mills administration decided to allocate the monthly benefits early in case the shutdown lasts beyond February, after federal SNAP funds are no longer available” (Stone, 2019). This drove an increase in food bank usage and other assistance agencies saw a rise in requests as well. The plan also called for all federal employees that were furloughed to apply to allow their children to receive free school lunches. The panic was real, and it was felt across my population sparse state. The Governor vowed when the shutdown was over to work with our elected leaders to ensure that funds were always available to help those that are less fortunate. My only hope is that we never find ourselves in this situation again.
Menifield, C. E. (2017). The basics of public budgeting and financial management. [eCampus]. Retrieved from https://ecampus.vitalsource.com/#/books/9780761869764/
Stone, M. (2019). A running list of the shutdown’s effects in Maine. Bangor Daily News. bangordailynews.com. Retrieved from https://bangordailynews.com/2019/01/22/news/a-running-list-of-the-federal-governments-shutdowns-effects-in-maine/