MPA511 PUBLIC BUDGETING AND FINANCIAL MANAGEMENT

Responses needed! Please review the attached documents and respond as needed.

MPA511 REQUIRED READ:

The Basics of Public Budgeting and Financial Management

· Chapter 3: Personnel Services & Operating Budgets, pgs. 63-87

The first module gave you an introduction to public budgeting from a practical standpoint as well as introduced you to some of the theoretical concepts that are associated with the practice. Although this information is very valuable, it is important to be aware of the human element that heavily influences the budgeting process. In this module, we will discuss the main actors that are associated with the budget process and how different groups can influence budget decisions and policy making. In addition, we will discuss the budget cycles and timeframes associated with budget development and how this relates to the larger budget “game.”

Read and respond to the conclusions drawn by at least three of your classmates (approximately 250 words each). See attached .pdf MPA511 M3D1 for this assignment instruction

PEER ONE: (SCOTT)

Part I

In the article concerning the near government shutdown in New Jersey, it seems the opposition of the judge’s and staff’s raises were not so upset about the pay increase, but in the manner in which it was approved, seemingly behind closed doors and in a secretive manner  (Pugliese, 2018).  I was born and raised in NJ and a tax increase is about as common as rain in Seattle.  Don’t forget, they are still paying tolls in the NJ Parkway and NJ Turnpike to build it, even though both roads were completed in the 50s.  In the case of the NY lawmakers, not receiving a pay rise since 1999 seems a bit outdated, and could not reflect proper adjustment with inflation or cost of living (Lovett, 2018).  In NJ, right across the bay, my parents have seen an increase in their property tax of nearly $4,000 in the past 20 years.  Menifield discussed the affects of a poor economy on any level of government’s budget and pension plan, citing different means to acquire funds in order to financially support these programs and budgets (Menifield, 2017, p. 29).  The obvious impact of salary increases of local and state politicians is the funding.  Not to go as far as the Sun Tzu’s Moral Law, but we all must remember these are the people we elected, and we must follow their decisions, or, we have the right to voice our opinions, act, and then boot them out when their time comes.  With salary increases come either cuts to the budget, preplanned revenue laid aside, or an increase in revenue through taxes, fees, penalties, or volunteer financial contributions.  On May 25th, Illinois lawmakers approved a $1,800 pay raise for themselves, yep, even with more than 1 million Illinoisans out of work, and here’s how they did it on the sly (Berg, 2020).  Back in good ol 2014, when all of us were inundated with Frozen and Let it Go, the Illinois lawmakers passed a bill with continuation of appropriations terms, stating they would receive a raise every year, come corona virus or murder hornets, unless the lawmakers themselves vote against it, putting the pay raises on autopilot.  Fast forward 6 years, and yes a Frozen II that wasn’t quite as good as the first one, and here we have over 18 million people receiving unemployment benefits, with over 1 million living in Illinois, and these lawmakers are receiving automatic pay raises  (Lambert, 2020).  Where will the money come from for the raises?  The people of Illinois. 

Part II

I took a different approach and focused on the swath of the corona virus affecting a local ice cream scooping chain in Seattle, Washington (Cerullo, 2020).  I also spoke to a couple of local business owners in the town we live, and was surprised about their main concerns with layoffs, citing their priority of wanting to hire and provide income to locals in order to be a productive member of the community.  In the case of Molly Moon’s Homemade Ice Cream in Seattle, Washington, the local ice cream stores initially laid off 75 people, having to totally change the way they did business.  First, they cut hours from 11-11 to 2-9, placing managers on eight hour shifts and taking a 20% pay cut.  The executive team took a 50% pay cut.  The second wave of layoffs took the company from 120 workers to 12, citing social distancing and revenue as the two major driving forces.  The ice cream stores shifted focus to providing grocery stores with their product, having only $450 dollars in the corporate account even though they did $7.9 million in sales last year.  The owner of the company has no income, cannot pay the rent, and has applied for, what it appears, every means of government aid available, and is currently living off of money her husband took out of the stock market when President Trump was elected (not such a smart move as our stocks have done just fine).  The ice cream industry will not go belly up if Molly Moon’s Homemade Ice Cream tanks, but the local community will lose a local business, along with local jobs and the boost to the local economy, and have to seek out Vegan Coconut Chunk, Yeti, and Honey Lavender ice cream somewhere else, three flavors that seem absolutely out of my butter pecan comfort zone. 

Berg, A. (2020). ILLINOIS BUDGET INCLUDES AUTOMATIC $1,800 PAY RAISE FOR STATE LAWMAKERS. Retrieved from https://www.illinoispolicy.org/illinois-budget-includes-automatic-1800-pay-raise-for-state-lawmakers/

Cerullo, M. (2020). For one business owner, painful job cuts only way to save her company. Retrieved from https://www.cbsnews.com/news/coronavirus-chronicles-ice-cream-shop-owner-lays-off-staff-save-company/

Lambert, L. (2020). How the U.S. economy is doing in 8 charts. Retrieved from https://fortune.com/2020/07/12/how-is-us-economy-doing-2020-recession-unemployment-rate-benefits-consumer-spending-job-losses-state-by-state-pmi-coronavirus-pandemic/

Lovett, K. (2018). Panel approves first state legislative pay raises in 20 years, but ties them to reforms. Retrieved from https://www.nydailynews.com/news/politics/ny-pol-pay-raises-legislators-mccall-thompson-reforms-20181206-story.html

Menifield, C. C. (2017). The basics of public budgeting and financial management (3 ed.). Retrieved from https://ecampus.vitalsource.com/#/books/9780761869764/cfi/6/16!/4/2/2@0:0

Pugliese, N. (2018). Murphy, lawmakers quietly approved millions in raises for legislative aides. Retrieved from https://www.northjersey.com/story/news/watchdog/2018/10/08/nj-lawmakers-quietly-approved-millions-raises-legislative-aides/1534117002/

PEER TWO: (JOSHUA)

What impact does the salary increase of local and state politicians have on the local or state budget? For instance, in New York State the initial legislation passed before the session began in the upcoming year. Salary increases for legislators are put on the table, discussed, and eventually passed. Afterward, the state budget is discussed.

Salary increase has the obvious impact of raising the expenditure status of the local municipality.  The size of the increase is really what should be questioned, or even the frequency.  If this were a simple cost of living (COL) adjustment, then it would coincide with an overall increase in the potential tax base as an offset (Lovett, 2018).  In this case, it was a cost of living increase and one that they had not received in nearly twenty years.  The complication is that the budget was not to be approved until after the increase had been voted on.  This could have left them in a situation where there was no way to cover the cost of the increase other than to absorb it and add it to the bottom line.  That is why this can be looked at as being a little suspect as it should have been something to be voted on after a budget was passed.  That budget could have accounted for the increase and shown the taxpayers where this increase would have affected them directly, whether it be in a property tax or sales tax increase.  Moving forward a predictable plan should be created where a COL is discussed and voted on every other year.  This would allow for the increase to be known, predictable and something that the constituents could have a say in.  It would also serve as in indicator that an area of revenue for the area was due to be increased as a result.  This is a situation that could have easily been avoided and really should have been avoided.  By having the vote in advance of the budget vote, it put this very basic issue in a bad light and perpetuated the “cloak and dagger” thought that many citizens have of their politicians.  While there were parameters placed around the increase, they seem more like an afterthought than part of a plan.  Even the parameters themselves should have warranted more debate, as the earning potential outside of their roles was limited (Lovett, 2018).  I would be interested to see the true feelings of those involved, especially those that don’t count on this stipend as their actual income.  To limit earn potential in order to hold public office may in fact be necessary and keep everyone’s ethics to the same standard, but it is worthy of a discussion as to what level that is required.

How does your company or organization address the variation in labor types (part-time, full-time, temporary, and paid internships)? How has your company addressed ways in which to lower overhead rates and fringe benefits, an often-expensive part of staff salary?

My point of reference on this one is the Air National Guard and specifically the way by which they employ the civilian workforce.  The program is called being an Air Reserve Technician or (ART) and within this category of pay you have permanent, indefinite and temporary.  Permanent employees have made it through their one-year probationary period and are now  “permanent” in their position.  They receive full pay, healthcare benefits, retirement fund matching and earn time toward their actual civil service retirement.  Indefinite employees are those that are hired until they are no longer needed.  Meaning that even if they are in the position past the year mark, they do not convert to permanent.  As this is a military structure and federal budgets are in play, these employees typically work from fiscal year to fiscal year until they apply for a permanent position, or until they end up being furloughed, as you can stay in one of these positions until you choose to move on or the money runs out.  Indefinite employees receive the same pay and benefits as those that are permanent but have none of the security.  The last category is temporary workers and it is just how it sounds.  These employees have essentially no job security as their position is only within the fiscal year and they can be let go with only two weeks of advanced noticed.  These are typically thought of as “surge” positions, or positions that need to be filled to perform a task or function for a short period of time.  They receive pay and healthcare benefits, but none of the retirement credit.  This means that whatever amount of time that is spent performing in a temporary role is only for the pay and doesn’t help towards a retirement at all.  This last status is the least desirable and the first to be eliminated when the budget starts to become an issue.  On my base during this fiscal year alone, we have laid off 20 temporary technicians and 10 indefinite technicians.  By having these three different pay statuses for essentially the same function, the bases and the government in general can keep overhead down and keep the workforce at the size that is needed to complete the mission.

References:

 Lovett, K. (2018, December 6).  Panel approves first state legislative pay raises in 20 years but ties them to reforms.  Daily News.  Retrieved from https://www.nydailynews.com/news/politics/ny-pol-pay-raises-legislators-mccall-thompson-reforms-20181206-story.html

 Menifield, C. E. (2017).  The basics of public budgeting and financial management.  [eCampus].  Retrieved from https://ecampus.vitalsource.com/#/books/9780761869764/

PEER THREE: (JESSICA)

Operation and Personnel       

     For the purposes of this discussion the topic chosen is  the article written by Lovett (2018) “Panel approves first state legislative pay raises in 20 years, but ties them to reforms” will be used as the main form of reference”. In my opinion if there is a pay raise within any organization for profit or non-profit there should be more responsibility added to the employee or if it is a pay raise due to job performance then documentation should be in the employee’s personnel record.  The other instance is that the personnel was hired at the maximum amount for the position and if this is the case raises in the future are usually very minimal if any at all. This is one of the main reasons a person should either budget their own income if they are at the maximum amount or they can opt into having a 90 day review for salary adjustments when getting hired on. In my personal opinion and experience, I tend to take the lower amount or median when it comes to salary. I ask for a 90 day and a yearly salary review, while documenting everything that has occurred throughout the time period. This gives me more leverage to request any increase. When personnel takes on the highest amount, this should be something that is talked about with the hiring board and/or Human Resources. When someone has a clear picture and expectation the costs related to human resources can become more manageable; however, when the personnel isn’t happy and the information was not disclosed from the beginning can lead to an increase in the Human Resources budget and time. Lovett (2018) supports my theory in the article: “we really have to make sure that we send signals to the public about how serious they are about doing their job and doing it well”. This shows that documenting the duties throughout the months would help in proving any raises due to job performance. This can also alleviate the headache some organizations have with disgruntle employees. Transparency with the employees should be the key element with this disparity.

     Performance evaluation and daily reports from the personnel can help regarding salary considerations and prevent any foreseen challenges. Regarding my department seniority, experience, and job performance should be the main factors. Sometimes knowing a second language or providing excellent customer service internally and externally can play a major role. Personally I feel if someone new is getting hired on for the department with the same title as someone else in the department they shouldn’t make more money from the beginning as their counterpart. If the person is getting hired on with a hire salary, the department should look at the current employee with the same position and rectify their salary. Doing this can avoid making the current and loyal employee from leaving or feeling like they are not appreciated. This is especially the case when the employee has to train the new hire. As a decision maker this is something I would recommend with the board and the budget to reduce the impact it will have on the organization and decrease the turnover rate.

There have been recent layoffs in the various industries. Identify a company that has experienced recent layoffs and discuss its impact on the organization, community, and industry.

      Due to COVID 19 layoffs have increased in the entire United States. Many people have lost their jobs and a lot of business became bankrupt. Borden (2020) reported “On July 8, United Airlines said it would issue layoff and furlough notices to 36,000 employees — more than a third of its entire workforce — including 15,000 flight attendants and 2,250 pilots”. There are many other companies that have been hit by COVID and have lost their jobs. The employees are receiving memos on future layoffs, Gilbertson (2020) stated, “In a memo to employees, the Chicago-based airline said 36,000 employees, or 45% of its front-line workers in the USA and more than a third of its overall workforce of 95,000, face layoffs on or around Oct. 1. The most affected groups: flight attendants and airport customer service and gate agents, which account for 26,000 of the 36,000”. This proves that the company is not just cutting certain departments; but, the department that would be easier to replace in my opinion. When interviewing one of the representatives from our agency’s finance department they were very open and answered some of the questions I had. Letting them know this was for a school assignment made them a little more open to answer some of the questions. Our agency reviews the budget quarterly and reassesses the allocated funds. A lot of the times the funding gets distributed by the departments whose output is high and best job performances.

References

_:b1. (2020, July 8). United Airlines to layoff up to 36,000 because of coronavirus fallout. Usatoday. Retrieved on July 13, 2020 from https://eu.usatoday.com/story/travel/airline-news/2020/07/08/united-airlines-layoff-up-36-000-employees-october-coronavorus-fallout/5396857002/ (Links to an external site.) (Links to external site).

Borden, T., & Moné, B. (2020, July 1). The coronavirus outbreak has triggered unprecedented mass layoffs and furloughs. Here are the major companies that have announced they are downsizing their workforces. Business Insider Nederland. Retrieved on July 13, 2020 from https://www.businessinsider.nl/coronavirus-layoffs-furloughs-hospitality-service-travel-unemployment-2020?international=true&r=US (Links to an external site.) (Links to an external site).

Lovett, K. (2018, December 6). Panel approves first state legislative pay raises in 20 years, but ties them to reforms. Daily News. Retrieved on July 13, 2020 from https://www.nydailynews.com/news/politics/ny-pol-pay-raises-legislators-mccall-thompson-reforms-20181206-story.html (Links to an external site.) (Links to external site).

Menifield, C. E. (2017). The basics of public budgeting and financial management. [eCampus]. Retrieved on July 13, 2020 from https://ecampus.vitalsource.com/#/books/9780761869764/