LE 101 PUBLIC ADMINISTRATION AND LAW ENFORCEMENT Lecture

R.S. DAMIAN +255713428318

TOPIC 7: INTRODUCTION TO PUBLIC SECTOR BUDGETING (3 LECTURES) Respicius Shumbusho Damian 7.1. Meaning, nature and Scope of Budgeting (levels, types, actors, and components) A budget is a financial plan. It converts all activities of an organization into financial values. Budgets explain the annual activities of the government in terms of monetary values including the sources of money, their destinations (and sometimes how it will be spended). A budget has two main components; the revenues and expenditure. Budgeting is usually annual in the sense that money allocated for a given year must be spent during that year. For a budget to be effective there should be close relationship between the revenues and expenditures. A budget of which the revenues are far high compared to expenditures is said to have surplus while the budget of which the expenditure are far high compared to revenues is said to have deficit. A theoretical assumption (formula) that inform the budgeting process is that; Revenues Expenditure =0 (or at least 0+something) little surplus (especially before execution). What if the cost of activities identified by the budget become too low-or drops on the course of executing the budget? Levels: individual, family, departmental, organizational, government etc. here we concentrate on government or public sector budgeting . Actor s/Stakeholders: (i) The government - the President/Prime Minister and his Cabinet who formulate the budget and other economic policies and the executive branch of the government; (ii), Parliament/Assembly which gives approval to the budget proposals submitted by the government and the legislative committees that subject the proposals detailed scrutiny before they are voted by the legislature; (iii), Civil society, especially organized groups, by creating awareness as well as interests in budgets so as to encourage them to engage decision-makers on budgeting; (iv), The multi-lateral International Financial Institutions, other donors and creditors who, as part of their development assistance, tend to play an important role in determining the type of economic policies we adopt, and (v) Media that plays an important role in the dissemination of the analysis. Types: Budgets can be classified on basis of different factors. (i) According to the time frame: since budgets are financial commitments (like spending policy), government budgets are usually short term (annual), especially to avoid retaining mistakes over a long time.

LE 101 PUBLIC ADMINISTRATION AND LAW ENFORCEMENT Lecture

R.S. DAMIAN +255713428318

Current Budget: usually months or weeks depending on a single event in process. Are common at departmental levels. Short-term budget: usually a year (or less than a year) Long-term budget: more than one year (however it is rare due to uncertainties). (ii) According to the details /focus Line Item Budget: it is the simplest traditional method of budgeting that lists the expenditure items (objectives/activities/assets) that the organization wants to spend on and the cost of each of the items. The items are listed departmentally in the sense that there is no connection between one department and another. It aims at controlling rather than comparing what is spent on one item and another. Assessment may be done by comparing proposed figures and evidences of expenditure e.g. receipts. Performance Budget: it is based on measurable performance of activities to make sure that what is spent is equivalent to the results (outputs). Eg if it is a budget for road construction, the emphasis will be on the kind and quality of roads rather than the materials bought so as to maximize the proportion between the expenditure and performance. The estimates of the budget are always based on previous budgets (one budget becomes a precedent to the next). Program Budget: is a budget in which each amount of resources spent is tied to achieving a specified goal. The program is broken up into several specified activities or clusters of the program (which must all aim at completion of the program). It compares different alternatives to maximize the outputs from the expenditure. This model started in the 1960s when the US was spending on wars in Vietnam as a way of coordinating complex expenditure. It is a complex budgeting model that involves complex calculations and comparative simulations across activities and departments on basis of established directive (in decentralized organizations). Zero Base Budgeting (ZBB): is a type of budgeting in which the previous budget is neglected and the organization looks at its activities and priorities afresh. Zero-base budgeting assumes that the previous year's budget is not a valid base from which to work. Thus, organizations and departments are forced to thoroughly examine their operations and justify their departments activities based on their direct examination of organizational goals. (iii) According to nature criteria: Flexible budgets (can change), or Fixed budget (not change) (iv) Functional Criteria: cost, capital, expenditure, administrative (v) Content Criteria: Physical or monetary

LE 101 PUBLIC ADMINISTRATION AND LAW ENFORCEMENT Lecture

R.S. DAMIAN +255713428318

7.2. The Process of Budgeting In Public Sector Organizations (Government) In governments and their organizations, budgeting is a cyclic process with several interconnected stages. However, the stages can be grouped into four broad stages. These are: i. Budge Formulation: Executives draft a budgeteconomic modeling by central banks, estimation of revenues, determine MDAs expenditure ceilings, preparation of Medium Term Expenditure Framework (MTEF), MDAs submit budget proposals, Medium Term Expenditure Committee (MTEC) reviews proposals (in consultation with the treasury institutions), cabinet approval, adjustments are made and the budget tabled to the parliament, debates and approval (if no amendments rare) , budget voted for (appropriation act) and becomes an approved budget. ii. Budget Enactment: on behalf of the government, the ministers of finance presents the budget before the parliament for discussion and approval iii. Budget Execution: government departments and agencies implement programs and spend the funds. iv. Budget Oversight (Auditing and Assessment): departments and agencies report expenditure to the Supreme Auditing Institution (SAI)-CAG in case of Tanzania. The SAI refers the report to the legislature the legislature refers the report to the Public Accounts Committee (PAC) that has powers to discuss and provide opportunity to NSAs to and media to be involved then refer it back to the full legislature. The legislature has powers to make recommendations for the government to take action (though rarely effective). 7.3. Features of a Sound Budgetary System (using selected criteria) A sound budget must have several features including: Based on Plausible assumptions: economic assumptions (e.g. inflation, exchange, time versus activities, The budget should reflect the vision and priorities of the organization/country: E.g. if the vision of the nation is to reduce poverty, the expectation is that government spending would largely target creation of employment and enhancing participation of low income people in the economy. If it were to modernize LE process, more spending would be on LE technology, research, and training. It should be largely participatory: includes a broad range of stakeholders at all stages. A combination of top-down and bottom -up is appropriate in public sector budgeting. Internally, implementers are more motivated and committed if they are involved in preparation of the budget (not at stage of spending the money). Other actors including individuals, businesses, CSOs, etc should not be excluded. There should be proportion between revenue and expenditure: budget surpluses are as bad as deficit or sometimes than deficits as they express

LE 101 PUBLIC ADMINISTRATION AND LAW ENFORCEMENT Lecture

R.S. DAMIAN +255713428318

lack of efficiency in public expenditure management. If money has to be spent, just spend it, but do not embezzle it because there is nowhere to spend it. Ti should be well integrated with other government processes: A budget process that is well-integrated with other activities of government, such as the planning and management functions, will provide better financial and program decisions and lead to improved governmental operations. There should be effective budgetary control tools: these ensure selective and expenditure and periodic reporting of financial performance among MDAs. They are tools for making sure that actual expenditures go in line with budgeted expenditure, revising budgets with changing circumstances, and placing responsibility for failure to achieve budget targets and goals. Should not be too dependent: the more dependent is the budget, the more the likelihood of jeopardizing performance autonomy and prioritization. Carefully planned: those sanctioned to make the budget must be competent and experienced enough to handle such a sensitive task as small mistakes in budget preparation can cause a heavy damage to the government and the country as a whole e.g. placing a country into unending debts To sum up; a good budget incorporates a long-term perspective, establishes linkages to broad organizational goals, focuses budget decisions on results and outcomes, involves and promotes effective communication with stakeholders, and provide incentives to government management and employees.

7.4. The importance of budgeting for Law Enforcement Agencies (LEAs) Like the rest of public service organizations, LEAs require financial planning as an important managerial tool. The process of budgeting and budgets in particular are important in the following ways; Budgets once passed become a proposed policy that guides the LEAs on spending governments money. Budgets provide the means for converting collectively owned resources into human needs (e.g. security and order). This is important since human needs are unlimited while resources are limited. Thus, the limited resources are allocated to competing human needs. Budgets are legitimate tools for effective allocation of resources among different functions of LEAs. Budgets seek to achieve maximum outcomes at the reasonably low cost, but still not jeopardizing efficiency. Therefore, budgets seek to strike a balance between effectiveness and efficiency in use of resources among LEAs. Budgets ensure that the money of the tax payers is used for correct purposes in executing law and order

LE 101 PUBLIC ADMINISTRATION AND LAW ENFORCEMENT Lecture

R.S. DAMIAN +255713428318

Through budgeting, LEAs set priority functions to which the scarcely available resources must be committed so as to meet the needs of the people Budgets are means of controlling peoples behavior in terms of spending. They limit officials in LEAs to make sure that they spend monies in accordance with the laws (e.g. public procurement Acts, Annual Expenditure Acts, etc). That is why there are Supreme Auditing Institutions like the CAG, auditors etc. Thus, budgets balance human purposes against organizational purposes. Budgets are determinants of LEAs autonomy in the execution of their functions. The more the LEA has influence in terms of determining and defending its financial proposals, the more it is likely to enforce laws without constraints and interference (e.g. SUMATRA Eastern Zone Case), Also, some examples from the current Internal Affairs Budgets. CONCLUSION: Most of the LEAs and the LEOs who participate directly in law enforcement processes rarely participate in the budgeting process. Most of them do not have the chance to provide inputs during budgets. As a result, they fail to come up with budgets that meet their actual finances required to be spended for fulfilling their responsibilities to the public. Just take some examples; If it happens that: Police officers fail to make an important intervention due to lack of fuel. Police officers fail to make patrol due to lack of vehicles SUMATRA Eastern Zone fails to make commuter buses inspection due to lack of sufficient work force. TFDA fails to inspect pharmacies for fake medicines due to lack of personnel