The Budget

• The device that allocates the shortage of public money

• There is never enough money to do all the things people want done.

The Budget

We use budgets to decide what is most important and who gets what proportion, or share, of public resources

Therefore:

A budget (should) =

a priority list of government actions and policies

Budget Analysis

Budget Analysis answers questions

People inside and outside public administration want to know what the numbers and information found in budget documents mean

Budget Analysis

In its most basic form, Budget Analysis is a way to ask and answer questions about the budget and reveal what it represents

Budget Analysis

Governments need analytical information to help decide how money should be allocated

Budget Analysis

Here is the U.S. Treasury definition of Budget Analysis:

Budget analysis is the objective application of

analytic tools and disciplines designed to:

Budget Analysis

1.Improve the process of setting priorities

2.Make better decisions at every level of public administration

3.Increase

transparencytransparency

4.Maintain fiscal discipline

1. Improve1. Improve the process of setting the process of setting prioritiespriorities

We analyze a budget because we We analyze a budget because we want to understand and improve want to understand and improve it.it.

We want to allocate money We want to allocate money where it will do the most good; where it will do the most good; where it will get desired results.where it will get desired results.

2. Make better decisions at every level of public administration

• Budgets allocate money to prime ministers, parliaments, mayors, police, hospitals, soldiers and schools.

• Budget Analysis can guide government actions at all levels by understanding the resources available and what they can really do.

3. Increase

transparencytransparency• Democracy requires transparency

• If the government does not explain what it is doing with tax money , support for elected officials and public sector workers will diminish.

• The people have a right to know how we are spending their money.

4. Maintain fiscal discipline

• Budget deficits grow one expenditure at a time.

• Budgets cannot be properly controlled without analysis of the individual details AND the overall impact of expenditures.

BUDGET ANALYST :

A person skilled in the use of financial,

non-financial,

and policy data

to….

BUDGET ANALYSTS

1. Estimate the results of budgetary operations

2. Devise and check the numbers in budget documents

Budget Analysts3. Assess

proposals for funding

Analysts form expert opinions about the value of budget allocations and expenditures.

Budget Analysts

4. Learn what the money buys

Is it worth it?

Is it the right thing to buy?

Budget Analysts

5. See how money is wasted

or

how it accomplishes public purposes

6. Devise alternative spending options

Analysts almost always imagine alternative ways to spend money better.

Good budget systems seek out these ideas and make sure that decision makers have the chance to consider them.

An analyst is well versed in

The goals, objectives, & priorities

and

current budget trends of the activities or programs of a ministry or a sector

Such as education, health or defense

Budget Analysts

Work in a professional and disciplined manner

Budget Analysts

Are able to communicate well with all levels in an organization, including top policy makers

Budget Analysts

Know both specific details and the overall budget picture in their sector of responsibility

An analyst is well versed in:An analyst is well versed in:

GOALSGOALS – The The long termlong term results that a results that a

ministry wants to achieveministry wants to achieve

OBJECTIVESOBJECTIVES – The intermediate steps needed to The intermediate steps needed to

reach a goalreach a goal

An analyst is well versed in:An analyst is well versed in:

PRIORITIESPRIORITIES – Activities that a ministry wants to complete Activities that a ministry wants to complete

firstfirst

CURRENT BUDGET TRENDSCURRENT BUDGET TRENDS - - Recent changes and plansRecent changes and plans

ACTIVITIES OR PROGRAMSACTIVITIES OR PROGRAMS – Groups of Activities designed to reach goals Groups of Activities designed to reach goals

and objectivesand objectives

ANALYSTS MAY STUDY SECTORS,

Such as public safety

OR SPECIFIC MINISTRIES,

Such as

Agriculture

Budget Analysts

Each analyst is knowledgeable about budgeting concepts

AND

can apply that knowledge in a variety of ways

Budget Analysts

Know and can explain

- How their budget system works

- How money is allocated

ANALYSTS UNDERSTAND BOTH

BUDGET FORMULATION

and

BUDGET EXECUTION

Here are some Here are some KEY KEY QUESTIONSQUESTIONS that every that every

budget analyst should try budget analyst should try to answer about budget:to answer about budget:

WHENWHEN should budget should budget money be spent?money be spent?

Next year?Next year?Next Month?Next Month?

Who should Who should benefitbenefit??

Students?Students?

Farmers?Farmers?

Pensioners?Pensioners?

WHO should WHO should spendspend the money? the money?

– Central Governments? Central Governments? – Local GovernmentsLocal Governments– Citizens? Citizens? – Private Organizations?Private Organizations?

PrioritiesPriorities

The answers to these questions The answers to these questions reveal the priorities of any budgetreveal the priorities of any budget

Priorities are the starting points of all Priorities are the starting points of all budget analysisbudget analysis

Priorities shape our analytical Priorities shape our analytical judgment and guide analysts in judgment and guide analysts in making recommendationsmaking recommendations

Who Has Budget Priorities?Who Has Budget Priorities?

Everyone with an interest in the Everyone with an interest in the budget, including ministers, interest budget, including ministers, interest groups (Teachers, farmers, NGO’s, groups (Teachers, farmers, NGO’s, pensioners, auditors, etc.)pensioners, auditors, etc.)

Public officials responsible for the Public officials responsible for the budgetbudget

Analysts, who see extensive budget Analysts, who see extensive budget data and develop personal priorities data and develop personal priorities on how best to spend moneyon how best to spend money

Who determines budget priorities?Who determines budget priorities?

Public officialsPublic officials– The Prime MinisterThe Prime Minister– The Finance MinisterThe Finance Minister– Other MinistersOther Ministers– ParliamentParliament

These officials have the power to present These officials have the power to present and vote on budgets, which will and vote on budgets, which will alwaysalways reflect their priorities in some way.reflect their priorities in some way.