This course is a general introduction to the theory and practice of public budgeting and finance.  Public budgeting focuses on how public organizations strategically plan a budget, manage ongoing activies, and control spending.  We will examine the dominant schools of thought on the topic, variations on the themes of  muddling through and systems planning (also known as PPBS --Planning, Programming, Budgeting System).  Public finance focuses on how public organizations should collect and spend revenue to promote the common good, and how they actually do (note that a large component of 'should' unavoidably reflects individual ideologies concerning the role of government.)  In terms of revenue collection, we will focus primarily on the various forms of taxes and their impacts on social welfare.  In terms of expenditures, we will emphasize  public organizations in a market economy, stressing the importance of their role  in providing goods and services that markets fail to provide adequately or efficiently.  These include public goods, social safety nets including healthcare, natural monopolies, and certain essential goods.  We will also focus on the role of government in income distribution. 

We will cover national, state and local budget and finance systems, as well as non-governmental organizations.  We will make an effort to bring in as many practitioners as possible to offer a 'real-life' perspective. 

We assume familiarity with the basic principles of microeconomics, though key elements will be reviewed.

Our overall objective for this course is to explain how public organizations should collect revenue, prepare budgets, and spend the revenue they collect, and how they actually do this in practice. 

Specific objectives required to achieve this include:

1.    Survey the dominant theories of public budgeting, and compare them with dominant approaches in practice, and current trends;
2.    Learn how to strategically plan a budget, how to manage ongoing activities, and how to control spending;
3.    Understand the role of public organizations in a market economy.  Specifically, we will examine the assumptions concerning market structure, human nature, human values and the characteristics of scarce resources that are required for markets to result in efficient allocation, and assume that public organizations must provide key goods and services that markets systematically fail to supply;
4.    Understand social security, public health and other major categories of public expenditure;
5.    Understand the theory and practice of the redistribution of wealth and resources. Specifically, we will distinguish between wealth  created by nature and society (the commonwealth), and wealth created by individual effort;
6.   Understand the impact of taxes on social welfare. 
7.   Learn from practitioners in the field.

1. Introduction to public budgeting and finance
2. Public goods, externalities and other market failures
3. Macroeconomics, money and the federal reserve
   
4. The budget process: preparation, approval, execution and audit
5. Political Economy
6. Basic Theories of budgetary behavior: incrementalism and the search for rationality and comprehensiveness
7. Public expenditures: social security and public health
8. Income distribution, including corporate welfare and natural resource policies
9. Fund accounting and financial reporting
10. Basic theory of taxation
11. Capitall budgeting for public enterprises
12. Federal, state and local public finance
    

This course will use WebCT to:

1. Post the syllabus and important announcements
   
2. Post required and recommended readings on the course calendar 
3. Post and receive assignments
   
4. Communicate with all of you
   

Readings should be completed before class.  This is a graduate level course, and you can expect about 500 pages, a little more than 150 pages per weekend.

Selected chapters from Rosen, H. (2003) Public Finance, 7th edition. McGraw-Hill.  The first three chapters of this book will be available on electronic reserve a week before class. The compiled chapters will be available as a book from the University bookstore by Wednesday, July 14.  The cost is approximately $43.

Electronic Reserve Readings: required journal articles and book chapters.  These will be available at the library in hardcopy, and also on on the Web.  You may find the readings directly by going to http://voyager.uvm.edu, clicking on course reserves, then selection PA 305, or by linking to them through the syllabus or the Web-CT calendar.  We expect the readings to be available by July 10.

Vermont Treasury Department (http://www.tre.state.vt.us/office/)
INSERT LINK TO OTHER WEBSITE JEFF MENTIONED-- accounting office
Office of Management and Budget (supposedly non-partisan, but almost always reflects the politics of the current administration.): http://www.whitehouse.gov/omb/
Congressional Budget Office (generally non-partisan) http://www.cbo.gov
Center on Budget and Policy Priorities (progressive think tank, favors more equal income distribution, social welfare programs, etc.) http://www.cbpp.org/
Tax Policy Center (non-partisan, middle of the road think tank) http://www.taxpolicycenter.org/home/
The Geonomy Society (Georgist economics, based on the idea we should tax wealth created by nature and society, especially land, non-partisan) http://www.progress.org/geonomy/
Cato Institute (Right wing libertarian think tank, anti-government, anti social welfare, anti-tax) http://www.cato.org/current/federalspending/index.html
Heritage Foundation (Highly partisan far-right think tank, pro-military, pro laissez-faire, anti-government, anti social welfare, anti-tax) http://www.heritage.org/research/budget/issues2004.cfm. If you look at this  site, also read CBPPs A POINT-BY-POINT RESPONSE TO HERITAGE FOUNDATION CLAIMS ABOUT FEDERAL SPENDING at http://www.cbpp.org/1-14-04bud.htm

Lecture notes will be posted on-line (see WebCT homepage), though this may not be possible for guest lectures.

1. Class Participation (10%)

2. Homework assignments (20%)

3. Group Research Project (40%)
3. Final Examination, take home (30%)

Rosen, Chapters 1-3, Part I and Part II (available on electronic reserve)
Drucker, Peter F., "Managing the Public Service Institution," The Public Interest, Vol. 33 (Fall 1973), 43-60
Grizzle, G., "Five Great Issues in Budgeting and Financial Management" pp. 193 to 223

Recommended reading:

Lewis, C., The Field of Public Budgeting and Financial Management, 1789-1985

Simulacra case study

Daly and Farley (2003) Ecological Economics, Principles and Applications (Island Press: Washington, DC)  Chapter 10: Market Failures

Classroom Exercise: Voluntary contributions to the public good

Daly and Farley, Chapter 14: Money

• Committee on the Budget, United States Senate. The Congressional Budget Process.  http://www.senate.gov/~budget/republican/major_documents/budgetprocess.pdf
• State of Vermont Agency of Administration, Finance and Management, Budget Process http://www.state.vt.us/fin/Budget_Process.htm
• State of Vermont Agency of Administration, Finance and Management, FY04 Executive Budget Recommendations Summary http://www.state.vt.us/fin/Fin%20Budget%20Documents/2004%20ebrs.pdf
• Caiden, N. Public Budgeting amidst Uncertainty and Instability. in in Jay M. Shafritz, A. C. Hyde adn S. J. Parks (2004) Classics of Public Administration, fifth edition.  Thomsom Wadsworth: Belmont, CA  pp. 2423-433
• Gosling, J., Budgetary Politics in American Government, Third Edition, New Your: Garland Pubishing Inc., Chapters 6 and 7
  

• Rosen, Chapter  6

• Key, Jr., V.O. The Lack of a Budgetary Theory in Jay M. Shafritz, A. C. Hyde adn S. J. Parks (2004) Classics of Public Administration, fifth edition.  Thomsom Wadsworth: Belmont, CA  pp. 118-121
• Lindblom, C. E. , "The Science of 'Muddling Through', " Public Administration Review, Vol. 19 (Spring, 1959), 79-88
• Schick, A., "Systems Politics and Systems Budgeting," Public Administration Review, Vol. 29 (March/April 1969), 147-151.
• Schick, Allen, "The Road to PPB: The Stages of Budget Reform,"  Public Administration Review, Vol. 26 (December, 1966), 234-258.
• Wildavsky, A. Rescuing Policy Analysis from PPBS.  in Jay M. Shafritz, A. C. Hyde adn S. J. Parks (2004) Classics of Public Administration, fifth edition.  Thomsom Wadsworth: Belmont, CA  pp. 271-283

Required reading:

• Rosen, Chapters 9 and 10

Required reading:

• Rosen, Chapters 7- 8
• Wilkinson, T. Tree Cutting by the Numbers: Environmentalists try fighting Alaska logging for environmental reasons.
• Edwards, C. and T. DeHaven (2002) Corporate Welfare Update.  Cato Institute Tax and Budget Bulletin No. 7, May 2002.  http://www.cato.org/pubs/tbb/tbb-0205-7.pdf

Recommended reading:

• Daly and Farley, Chapter 15: Distribution
• Boston Globe series on corporate welfare http://www.corporations.org/welfare/#globe

• Glick, Paul E., "The Basics of Governmental Accounting and Financial Reporting".  Chapter 2 in Paul Glick, How to Understand Local Government Financial Statements: A User's Guide (Chicago, Illinois: Governmetn Finance Officer's Association, 1986)

• Rosen, Chapters 12 and 13
• Smith, J. and K. Nelson.  Giving Life to the Property Tax Shift (PTS), Redefining Progress http://www.progress.org/geonomy/rppaper.html

Recommended reading:

• Dunkiel, B., M.J. Hammond adn J. Motovalli (1999) Sharing the Wealth: If We Shift the Tax Burden from Work to Waste, Everyone Benefits.  E/the Environmental Magazine, available on-line at http://www.emagazine.com/view/?456

Axelrod, Donald, "The Special Case of Capital Budgeting," Chapter 15 in Budgeting for Modern Government, 2nd edition, New York: St. Martin's Press, 1995.

• Rosen, Chapters 15: The Personal Income Tax and 18:Deficit Finance
  
• Bruce, Neil (2001) Public Finance and the American Economy, 2 ed. Addison Wesley:  Boston.  Chapters 18: Spending by State and Local Governments and 19: State and Local Taxes
  
• Batt, William.  The Nexus of Transportation, Economic Rent, and Land Use.  April, 2002
• Lav, I. J. , and A. Brecher (2004) Passing down the Deficit: Federal Policies Contribute to the Severity of the State Fiscal Crisis.  Center on Budget and Policy Priorities. http://www.cbpp.org/5-12-04sfp.pdf