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Exam > Section 1, Chapter 3 - Budgeting > Flashcards

Section 1, Chapter 3 - Budgeting Flashcards

1
Q

What are appropriations?

A

The authorities to spend money

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2
Q

What is a key budgetary control requirement?

A

Monitoring a revenues

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3
Q

How is the role of budgeting different in the government than the private sector?

A

Government budgets, establish legal authority for providing services, operating programs, and allocating resources

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4
Q

What does the adoption of budgets typically require?

A

The enactment of legislation passed by the legislative branch and signed by the executive branch
** this law is called an appropriation act or ordinance act, but is commonly thought of as the budget

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5
Q

What are the two documents that could be included with a budget?

A
  • establishing the law or force of law, to levy taxes and other revenues
  • an appropriation act that sets legally binding limits on spending
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6
Q

What is examined in the budget process?

A

Services, available, resources, and the role of government in the economic and social development of adj jurisdiction

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7
Q

How does budgeting in the government and fiscal policy relate to each other?

A

Budgeting is an element of fiscal policy in less is much more than setting the financial goals for the coming year

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8
Q

Who generally initiates the budget process?

A

The executive branch of a government entity

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9
Q

Who establishes and promulgates the major priorities agencies are to address in the preparation of their requests?

A

The chief executive officer — President, Governor, mayor, city or town manager, county executive, etc.

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10
Q

What are agencies priorities often based on?

A

Long rang strategic plans, or long range objectives that are to be accomplished

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11
Q

Who advises the CEO on financial matters?

A

The CFO

Can also be titled any of the following:
- Director of management and budget
- finance Director
- Budget Director
- Controller
- Chief accountant

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12
Q

What information is required in the budget document to provide historical and trend analysis?

A

Information about the past year, current year, and the amount that will be requested for the new year

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13
Q

What is the CFO responsible for?

A
  • developing and promulgating the budget calendar, designing the forms are to be used, and the process that is to be followed
  • Making projections of revenues, particularly for the general fund, or the equivalent major fund of the entity
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14
Q

When are projections of revenues made?

A
  • Usually while the agencies are preparing their requests
  • Larger governments may prepare preliminary estimates to have a reference point from which to begin the review of agency requests
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15
Q

When are estimates of revenue updated?

A

They’re updated periodically based on recent events and economic forecast

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16
Q

When is the final estimate of revenue made?

A

It’s made just prior to submission of the budget to the legislative body

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17
Q

What is needed for new or expanded programs?

A

A justification from the head of the agency to support the request

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18
Q

What is the purpose of internal hearings in the budget process?

A

For the CEO and CFO to establish priorities for their request that will be submitted to legislative body

Because the total amount requested by the organizational units often exceeds the estimated resources available

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19
Q

What is done after hearings are concluded?

A

The budget request is prepared and submitted to the legislative body (Congress, state legislative, city or town council, board of commissioners, etc.

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20
Q

What usually accompanies the budget document?

A

The propose appropriation document setting, for the amount proposed to be spent

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21
Q

What are the two houses in the legislative body for the federal government and all states except for Nebraska?

A
  1. Senate. (upper house)
  2. House of Representatives/delegates (lower house)
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22
Q

What is done after both the senate and the house acted on their own budgets?

A

A conference committee is formed to settle any differences and agree on a single budget

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23
Q

Who makes the final decision as to the format and content of the appropriations act or ordinance?

A

The legislative branch , regardless of the line items and spending requests, submitted by the executive branch

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24
Q

Does the legislative authority modify the budget documents submitted by the executive branch?

A

Rarely, instead, it outlines its actions in the appropriation document, which has force of law

Some states and local governments may modify the budget to reflect the action taken by the legislative branch

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25
Q

How are changes to the appropriations bill made during deliberations?

A

Amending the appropriation

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26
Q

Who has line item veto authority?

A

Most governors and mayors

It’s on constitutional for the president 

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27
Q

When is a continuing resolution passed, and what does it do?

A
  • past if legislative body is unable to pass a budget prior to the starts of the new fiscal year
  • allows organizational units to continue operating for limited. While the budget process continues.
  • It’s also a law
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28
Q

What happens when the president, governor or CEO refuses to sign a continuing resolution?

A

The government shuts down until authorization is passed to allow operations to resume

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29
Q

What are the negatives of ear marking?

A
  • Marketing resources for a specific purpose can distort the process involved in allocating scarce resources
  • Resources cannot be shifted to other purposes unless the law is changed, or if the entity has specific authority to transfer resources to another purpose
  • If additional resources are needed, they are not available
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30
Q

What can be done when the government has used up in appropriation and needs more spending authority?

A
  • each government has procedures for dealing with changes
  • They may have the authority to transfer spending authority from one appropriation to another, or within an appropriation (up to a certain amount or percentage)
  • Amend the original appropriation
  • A separate piece of legislation authorizing a new appropriation can be enacted
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31
Q

What are expenditure budgets usually organized around?

A

The organizational structure of the government

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32
Q

Why are some significant elements of the budget document?

A
  • The fund from, or for, which appropriations are to be made
  • The organizational unit
  • Other categories, such as function, program, category, and/or line item or object class
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33
Q

Who sets the guidelines for the level of detail presented in the final budget document?

A

The executive branch

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34
Q

What does organizational unit refer to?

A

It refers to the department, division, agency, bureau, board, commission, or other organizational unit that is responsible for carrying out governmental operations.

Larger entities of several organizations, headed by appointed of the CEO or sub entities within the larger agency

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35
Q

Where are appropriations often made?

A

At the sub entity level

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36
Q

What does function refer to?

A

one of the major government service classifications

Public safety, social services, income, security, community development, public works, education, general government, natural resources and justice are all functional elements of governmental services

** some organizations provide summaries by function in the budget document

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37
Q

What does program refer to?

A
  • A group of activities within a function, such as tax enforcement, clean air, school, lunch program, traffic enforcement, street resurfacing, community oriented policing, housing, rehabilitation, and federal work study
  • May also be a standalone budget request, particularly if the organization does not use a functional classification in the budget document
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38
Q

How can programs be established?

A

My administrative policy, or by funding source, and particularly grants

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39
Q

Where are associated performance measures most likely to be presented?

A

The program level

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40
Q

What does category or source refer to?

A

The type of revenue generated

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41
Q

How are revenue sources generally grouped?

A
  • taxes
  • Licenses and permits
  • Intergovernmental
  • Charges for services and miscellaneous
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42
Q

What does character refer to?

A

The fiscal period that Expenditures are presumed to benefit.

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43
Q

What period does current expenditures benefit?

A

The current period

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44
Q

What period do capital outlays benefit?

A

The present and future periods

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45
Q

My period does service benefit?

A

Past, present and future

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46
Q

What is object class or object?

A

The types of items purchased or services, such as personal services, supplies, materials, purchased services

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47
Q

What does a chart of accounts do?

A

Classify the revenues and expenditures into different classifications 

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48
Q

What is line item budgeting?

A
  • each organizational unit prepares its budget,m request by line item or object class such as salaries and benefits, supplies and materials, utilities and equipment within the required format
  • The traditional approach originally used by most state/local governments
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49
Q

What is the line item budget request frequently based on?

A

The amount spent in the prior year increased for inflation

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50
Q

What does the item budgeting process focus on?

A

The specific amounts requested for each budget line

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51
Q

What are some advantages of line item budgeting?

A
  • Cost containment (establishing a specific dollar amount for each line item defines the maximum amounts that will be spent on those lines)
  • Easy to understand
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52
Q

What are some disadvantages of line item budgeting?

A
  • It eliminates the ability to choose the best way to accomplish the mission of the unit
  • A manager cannot easily shift spending among the line items to address changing needs
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53
Q

What is baseline budgeting?

A
  • programs and activities will continue into the next budget period with perhaps a change in the population that needs to be served, but without any increase/decrease in the level of service.
  • Budget developers estimate what it will cost to continue the program and its current level of service, considering inflation, demographic changes, and other factors not related to service delivery
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54
Q

What are some advantages to baseline, budgeting?

A
  • requires a little analysis only how much it will cost to continue the program as it exist today
  • It reduces the amount of time needed to review the budget request
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55
Q

When is baseline budgeting useful?

A

When resources are impacted by economic conditions in a conservative budget approach is needed to maintain sound financial condition.

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56
Q

What is the major disadvantage of baseline budgeting?

A

It assumes that all programs will continue as they are negating a review of programs to see if they are worthwhile in accomplishing the intended purposes

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57
Q

What do program budget consider?

A

The proposed expenditures in relation to the programs or services, for which the monies would be spent

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58
Q

What does program budgeting direct reviewers to?

A

It directs the reviewer to the public priorities regarding the delivery of services. It explains why the request is being made.

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59
Q

Why are some advantages of program budgeting?

A
  • gives managers the greatest flexibility in adopting new methods, technologies and organizations structures, to deliver customer service and maximize efficiency
  • Focuses on broad missions of government
  • it often includes performance measures in the budget, so evaluations can be made as to whether the program is meeting its goals/objectives
  • It allows decision-makers to see the total amount allocated to programs across agencies
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60
Q

What is the concept of zero based budgeting?

A
  • Organizational unit begins with zero budget, and must justify even the continuation of existing programs
  • The first package requires the organizational unit to discuss the implications of eliminating the program
  • The next package would be the minimum level of service it could be provided
  • Additional packages represent the increasing level of service
  • Decision packages are added there’s no more alternatives to consider
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61
Q

What are some disadvantages of zero based budgeting?

A
  • Complicated, time-consuming
  • zero base for government programs is not realistic
  • there’s no reference point
  • Many cost components and many programs are not discretionary in the government environment (salaries can’t be cut without approval, discretionary spending)
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62
Q

When was zero-based, budgeting, rescinded by the federal government?

A

1981

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63
Q

What is the current trend in budgeting for the federal government and many state and local governments?

A

Performance budgeting

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64
Q

What are several initiatives around performance budgeting?

A
  • reforms flowing from the downsizing efforts of the first Hoover commission
  • planning programming, budgeting systems begun by President Johnson
  • management objectives (President Ford)
  • zero based budgeting (President Carter)
  • GPRA and GPA modernization act
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65
Q

What is performance budgeting?

A

The process, whereby the preparer states for a defined level of resources, it will provide a defined level of performance

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66
Q

What do planning programming budgeting systems assume?

A
  • Various levels and types of performance could be arrayed, quantified, and analyzed to make the best budgetary decision
  • Decision-making by presenting and analyzing choices among long-term policy objectives and alternative ways of achieving them
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67
Q

What did performance budgeting focus on?

A
  • Linking and agencies stated objectives to their budget requirements
  • Agency managers would be accountable for achieving executive objectives with appropriate level of accomplishments within the overall goals of the government
  • Managers would be responsible for specific outputs and outcomes
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68
Q

What do state governments use performance budgeting to do?

A

Improve the effectiveness and efficiency of programs

69
Q

What is performance linked to?

A
  • Output
  • Outcome
  • Efficiency measures
70
Q

How do some governments establish the budget request for performance budgeting?

A

Multiply the cost per unit of service times the number of service units that will be provided

Example: cost for Ms $15,000 and estimated runs was 750. The budget would be $11.25 million.

71
Q

What are three factors that make program budgeting difficult?

A
  1. Lack of Knowledge of the connection between resources and results
  2. Lack of cost accounting systems that could track resources dedicated to intended result.
  3. Potential impact of external factors.
72
Q

What type of budget is often prepared? In conjunction with the operating budget?

A

A budget is often prepared in conjunction with the operating budget, but is presented in a separate document or as a separate section of the budget

73
Q

What is different about state and local capital budgets?

A

They’re separated to highlight the specific financing source and identify the long rage planning issues for capital improvements

74
Q

How does prioritizing between operating needs and capital projects/capital equipment?

A

When resources are strained, projects are usually delayed until resources become available, because operating budgets are generally less discretionary than budget

Operating needs take priority over capital projects and capital equipment

75
Q

How does the federal government differ from state/local governments when it comes to financing capital projects?

A

It does not finance capital project separately from operating activities activities

76
Q

What does the annual budget include for capital assets that are not already fully funded?

A

The annual budget includes outlay requests in order to make payment for projects authorized in prior fiscal years

77
Q

Why are capital budgets often presented separately?

A

Because many capital acquisition and construction project span several years before complet. And the annual operating budget focuses only on a single year and cannot address the unique issues that arise in multi year projects.

78
Q

How long is the typical capital plan?

A

Five years

79
Q

What does the capital plan include?

A
  • projects that are being proposed
  • The estimated cost
  • estimates of operating costs
  • Details on how the projects are to be funded
80
Q

How is the development of capital budgets different than operating budgets?

A
  • The requesting departments or divisions first must justify a capital need based on program plans and then must consider alternative ways to meet the need
  • then, budget request are prepared that link the capital needs to the program, goals and objectives
81
Q

What are some means of financing capital projects?

A
  • Notes and bonds (debt) for construction and acquisitions
  • Intergovernmental grants
  • Public private or public public partnerships and availability payment arrangements
  • Special assessments were only those who benefit from the project pay for it
  • Current resources
82
Q

What is the most common method of financing capital projects?

A

issuing notes and bonds

83
Q

What is rebatable arbitrage?

A

A federal government tax that state and local governments are susceptible to if they accumulate bond proceeds for too long of a period

84
Q

What do you state and local governments do to avoid rebatable arbitrage?

A
  • Time issuance of bonds to the construction schedule
  • First issue short-term notes until project is completed
  • Then ab bond is issued reflecting the total cost of the project (the maturity of the bond issue is equal to or less than the useful life of the associated facility so taxpayers who benefit from the project pay for it
85
Q

What are general obligation bonds?

A
  • Distinct bonds issued by the government
  • they have full faith and credit of the government standing behind the bond
  • Have the lowest interest rates
86
Q

What are revenue bonds?

A
  • Payment on revenue bonds is limited to the revenue stream the backs the bonds
  • Limited backing for bondholders
  • Has higher interest rate than general bonds
87
Q

Who most often issues revenue bonds?

A

Government water and sewer operations, and other enterprises

The debt service is paid from fees, charge to water and sewer users

88
Q

What are serial bonds?

A

A few bonds are paid off each year over a series of years

Once principal payments start, the payment for debt service includes both principal and interest. principal payments can be level each year, that is, the amount retired each year is approximately the same

89
Q

What is the most common alternative for serial bonds?

A

Level debt service

90
Q

What is level debt service?

A
  • The amount paid for principal and interest each year is about the same
  • comparable to a mortgage payment by a homeowner
  • It’s preferred by most governments because it’s easier to budget the same amount each year
91
Q

What are term bonds?

A

Bonds that come do at the same time

Example: if a government issued a 20 year, $10 million term bond, it would only be required to pay interest payments for the first 19 years. In year 20, the government would make the final interest payment and the $10 million principal payment

92
Q

What is a zero coupon bond?

A
  • The government makes no payment for principal or interest until the bonds are due
  • To protect bondholders, bond covenants usually require the establishment of a sinking fund
93
Q

What are certificates of participation?

A
  • a lease purchase agreement with a private sector company to finance capital projects
  • enable several persons to participate in the lease purchase
  • Must be disclosed as debt by state and local governments and accordance with GAAP (GASB statement, 87, leases, based out, reporting of capital assets they may be reported as a lease for budgetary purposes, even though the government owns the asset)
94
Q

What are grants?

A
  • Intergovernmental revenues that are designed to encourage development of programs and governmental entities that can provide operating resources, but cannot afford the capital start up costs
  • important source of funding for capital projects
  • Have been vital to significant improvements to highways, airports, and sewer plants
95
Q

What are special assessments?

A
  • source of funding for certain projects
  • Used when the objective is to cause those who benefit from a capital project to pay for it
  • water and sewer improvements are often funded by special assessments
  • There’s no question that the property owners directly benefit
  • Property owners are charged in annual assessment sufficient to pay debt service on the bonds (gov can also be required to pay a portion of the cost)
96
Q

How are current resources used to undertake capital projects?

A

-Financing projects for older, mature governments
- A certain amount of capital improvement is required each year so it’s cost-effective to set aside portion of current resources to use debt each year
- Setting aside a portion of taxes and other revenues to be used to pay directly for capital projects, or used to pay for the debt service for projects

97
Q

What are financing authorities?

A
  • vested with the power to issue debt for capital projects the benefit only a government (example, the finance corporation created by San Francisco— the finance corporation issues debt that is to be used to buy equipment that is used by a variety of departments in the city and county. The city enters into a lease agreement with finance Corp. promising to pay rental payments, equal to the amount of the debt service of the bonds.)
98
Q

What are some aspects about budgets (and budgetary accounting)?

A
  • prospective in nature
  • Forward looking, setting for resources that are expected to be available and how those resources are to be used
  • used control spending
  • there’s no set form of debits/credits used by state and local governments, but the notion of controlling spending in the basic forms of reporting our common
99
Q

What did the federal financial management improvement act of 1996 require agencies to do?

A

Required federal agencies to use the specific set of budgetary accounts in the US standard general ledger

100
Q

What do financial management systems use to identified budgetary accounts and financial accounts?

A

Account numbers

101
Q

What does the general ledger crosswalk to?

A

Stimulates which accounts are included in each line of the financial statements that are subject to audit

102
Q

What is the accounting equation (balance sheet format)?

A

Assets = liabilities + fund balance (or net position)

103
Q

What is the fund balance/net position?

A

The difference between assets and liabilities — what is left over for our own use

104
Q

What is an obligation?

A

A formal reservation of budget authority that will result in a future expenditure of funds from treasury

105
Q

What can happen when budget authority is over obligated?

A

I can result in an anti-deficiency act violation, which entails both fines and imprisonment

** similar laws exist state and local levels

106
Q

What does the federal budgetary equation provide agencies?

A

The ability to monitor their total budgetary resources (appropriations being the major resource) and how those resources (referred to as funds/money) are being distributed and their status

It must always be in balance

107
Q

What is the budgetary equation?

A

Budgetary resources = status of budgetary resources

** the total of all the budget resources of an agency must equal the total for all the stages through which an appropriation flows in an agencies budget execution process

108
Q

What equation do state and local governments use to determine if spending is greater than available resources?

A

Estimated beginning available fund balance
+ estimated revenues
= amount available for appropriation
- Appropriations
= estimated ending available fund balance

109
Q

What does the amount available for appropriations tell government officials?

A

How much is available from the beginning fund balance, along with revenues/added resources for appropriation/spending?

110
Q

What are encumbrances?

A
  • budgetary control tools used during budget execution
  • Used by state and local governments
111
Q

What is the result of establishing in a encumbrance?

A

The set aside of money in the appropriation for a specified purpose

112
Q

What is an example of an encumbering document?

A

A purchase order

Funds are set aside (encumbered) so that when the vendor delivers and request payment, funds will be available. Once goods/services are received, the encumbrance is reversed, and payable is established.

113
Q

What is the difference between state/local and federal governments when it comes to obligations?

A

Obligations are not reversed at the federal level as they are at the state/local level

114
Q

What basis of accounting does a federal budget use?

A

Cash basis budget however, some budgetary transactions recognize future spending (such as accrued interest on debt is recognized before actual spending occurs) and some cash outflows are not recognized as budgetary outflows (disbursement of loans)

115
Q

How can cash needs be financed when there’s a deficit?

A

Through borrowing

116
Q

What is perhaps the most important report issued during the operating year by a government entity?

A

The budget status report

117
Q

How often are budget status reports prepared?

A

It varies. They can be prepared daily, weekly, monthly, etc..

Currently many governments provide reports online at any time

118
Q

What basis of accounting are budgetary reports prepared on?

A

Budgetary basis of accounting

119
Q

What do revenue status reports focus on?

A
  • receipts to date compared to revenue estimates
  • are revenues keeping pace with the project? If not, what is the reason for the lag? Is it a result of timing or changes in the economy? If the leg is an economic downturn, then there may not be sufficient resources to support appropriations.

Governments can adjust their revenue estimates to reflect actual conditions

120
Q

What are some techniques that can be used for revenue forecasting?

A

Sophisticated:
- Regression analysis
- Marginal utility analysis
- Cost benefit studies
- Cost effectiveness
- Sensitivity
- Payoff matrix
- Present value analysis

Simple: compute average growth rates based on the previous period, such as five years and adjust for known economic events within the jurisdiction

121
Q

What is the most important concept for revenue forecasting?

A

Identifying the revenue sources and analysis of how those revenues increase and decrease

The method for forecasting revenues will vary based on the revenue source

122
Q

What does the methods and sophistication of forecasting revenues based on?

A
  • vary based on revenue source
  • The expertise of financial planning and personnel in the availability of technology (governments have revenue, forecasting experts, within the central budget authority to develop projections or utilize a non-partisan group of economic professionals to aid in revenue projections)
123
Q

In establishing the budget, who is the federal government rely on for economic assumptions and projections?

A
  • OMB (executive branch)
  • The Congressional Budget Office (legislative branch)
  • The joint committee on taxation (legislative branch)
  • The federal open market committee (US federal reserve)
  • The blue chip panel of private sector forecast
124
Q

What do you most local governments rely on when establishing the budget?

A

Property tax because they’re easy to predict

The government database on all property and the evaluation of Land and Land improvements. The government periodically revalues the property and updates records. Tax rates are determined it knows how much is due for the coming budget.

125
Q

How are licenses, permits, and user fees usually forecasted?

A

Trend analysis

126
Q

How are excise taxes (gas, cigarettes, beer, and wine) forecasted?

A

Trend analysis

127
Q

How do you governments forecast inter governmental revenues from grants and other shared revenues

A

Wait until awards are made while others may estimate future revenues on past awards 

128
Q

What is required for effective budget execution?

A
  • effective controls to monitor spending against the budget
  • effective controls to monitor performance against goals and objectives
129
Q

What do performance based budget use performance measures for?

A

To identify costs necessary to achieve, given levels of outputs or outcomes

130
Q

What are the performance measures in performance based budget based on?

A

Historical analysis of the costs occurred in previous years or comparison, with other entities providing similar services

The measure must be reevaluated on a regular basis to ensure the government is achieving for economy, efficiency, and effectiveness in the delivery of services

131
Q

What expenditure analysis must also be considered when establishing a baseline from which to project?

A

The type of expenditure

132
Q

What are cost estimates usually based on?

A

The effects of inflation for the procurement of goods and services

133
Q

What are capital outlays generally based on?

A

Planned improvements, request for equipment, and property purchases

Capital outlets are more discretionary than operating costs in generally are reduced or postponed when resources are strained

134
Q

Where is debt service specified?

A

In the bond indentures or payment contracts

135
Q

What are the least to most discretionary expenditures?

A
  • General obligation bonds are least
  • Revenue bonds
  • Operating costs
  • Operating outlays
136
Q

What does effective budget execution require?

A
  • effective controls to monitor spending against the budget
  • effective controls to monitor performance against goals and objectives
137
Q

What two purposes does monitoring the budget achieve?

A
  1. Assessment of governmental program performance.
  2. Evaluation of the relevance of priorities for the delivery of services.
138
Q

What improves the effectiveness of controls to monitor spending against the budget?

A

I centralized budget management staff independent from program management staff

139
Q

What is the central budget authority responsible for?

A
  • establishing the policies and procedures for assessing budgetary performance, and the governments progress for meeting financial and programmatic goals
  • monitoring to ascertain whether actual revenues are keeping pace with projections of estimated revenues
  • In the event of a revenue shortfall, they must act to reduce spending to bring it in line with new estimates
140
Q

How is federal agencies authority to spend controlled?

A

Apportionments (of appropriations) issued by OMB and allotments (of apportionments), made within departments and agencies

141
Q

How often are annual appropriations apportioned?

A

Quarterly

But apportions can be made for specific purposes, by program or by sub organizational unit

142
Q

What is the purpose of making apportionment by quarter?

A

To control spending and ensure funds are available for the entire year

143
Q

What’s the purpose of making an apportionment for specific activities, programs, or sub organizational units?

A

To ensure money will be expended, consistent with the administrations policies

144
Q

Who is responsible for ensuring expenditures do not exceed appropriations?

A

The central budget office

145
Q

What is the purpose of encumbrances?

A

In additional tool to ensure overspending does not take place (state and local governments)

146
Q

Who approves transfers between or among appropriations, and may increase or decrease appropriations during the fiscal year?

A

The legislative body. However, the central budget authority is granted permission to allow transfers between appropriation line items within the department, such as between divisions, operating and object classes. And maybe allowed to approve transfers between departments, if the amounts are below a certain level. transfers often require approval of legislative body

147
Q

How often does a central budget authority compare the budget and actual revenues and expenditures?

A

Monthly and quarterly

Periodic adjustments may be necessary to maintain balanced budget

148
Q

What does revenue analysis do?

A

Build historical database to support the budget development process

149
Q

Do governments who use quarterly distribution of funds have different rules regarding the amounts at end of quarter?

A

Yes. In some instances, the unused funds are moved into another account. The department that needs approval from the central budget authority to move the money to a different account. In some instances, the balance automatically roll forward into the new quarter, and are added to the new distribution of funds.

150
Q

What are prior appropriations continued?

A

Laws that allow balances of annual appropriations to automatically roll forward into the following year (state and local governments)

151
Q

What is an advantage of prior appropriations continued?

A

It eliminates the use or lose tendency that many governments have

152
Q

What is a disadvantage of prior appropriations continued? What have some governments done to dealt with it?

A

unspent funds are resource that can be used for other purposes

Some governments have dealt with his problem by allowing the department to use a portion of the balance while the rest are set aside as a resource for other purposes. Collapsing occurs in the remaining funds are held in savings and must be appropriated by a future budget process.

153
Q

What is lapsing?

A

If an encumbrance/appropriation averts 20 dollars at the end of a budget period

154
Q

How long are appropriations available for obligation?

A

One fiscal year, unless otherwise specified

155
Q

How long does an appropriation expire for?

A

Five years regardless, whether it was a one year or multiple year appropriation

156
Q

What happens during the expired phase of an appropriation?

A

The appropriation is no longer available for new obligation

Expired balances, however, can be used to fund modifications that do not increase the scope of existing contracts, but do increase the amount paid to the contractor

157
Q

What is an important monitoring of the essential budget authority?

A

Revenues, and the estimated appropriations. What is actually happening compared to the amount estimated? Are revenues keeping peace with the estimates?

158
Q

What was state and local governments do if revenues are falling short of estimates?

A

Reduce spending

The governor or mayor will often issue an executive order, essentially freezing activities, or reducing the amounts they have been appropriated. Failure to act could result in a deficits at the end of the year

159
Q

How are agency budgetary controls different than central budget authority?

A

Large agencies usually incorporate some levels of controls beyond those exercise by the central authority. However, the focus is directed toward more detailed information about individual programs, then concerned over appropriations.

160
Q

What are some agency based budget control tools?

A
  • Monthly and quarterly reports that compare actual spending against the budget
  • Detailed reviews of encumbrances and vacancy controls
161
Q

What have computerized accounting and budget systems improved?

A

The information available to agency personnel. Many automated systems provide online access to budgetary data, as well as the ability to approve/reject transactions for subordinate units. The system allows for agency personnel to enter purchase request directly into the accounting system, which automatically test the request against available budget. Databases can either be updated immediately or overnight.

162
Q

What do most state and local governments use as the major budgetary control tool to ensure funds are available prior to entering into agreements?

A

Encumbrances

163
Q

What does the federal governments use as the major budgetary control tool to ensure funds are available prior to entering into agreements?

A

Commitments and obligations

164
Q

What must first be done when government manager wants to purchase supplies/materials or finalize a contract?

A

An encumbrance or commitment/obligation must be first approved and accounted for in the system to ensure that funds are available to pay the bill when it comes to

165
Q

What is a successful way to control expenditures and ensure that appropriations are not exceeded?

A

Reviewing encumbrances, commitments, and obligations for purchasing and contracts

This is particularly true during the last quarter of the fiscal year, when departments are trying to spend available balances

166
Q

What are the major spending cost in the local, state and federal government

A
  • local: personnel costs account for 70 to 80% of total operating costs
  • State and federal: shared revenues and transfer payments are the majority spending categories however, personnel cost still account for 70 to 75% of operating categories
167
Q

What is an effective central management tool involving controlling the hiring of personnel?

A

Requiring central approval before a position could be filled

168
Q

What is a vacancy credit?

A

When a government employee leaves, the amount of time required to fill, the vacancy can be lengthy. As a result, a certain level of savings can result, even if the position is eventually filled

When a vacancy occurs, analyze the need for the position and freeze hiring if resources are strained. Filling only mission essential positions.

169
Q

What is an effective method of downsizing the organization, without a major disruption in providing critical services?

A

Filling only mission critical positions

Exam (14 decks)

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