PAD 505 Discussion Questions and Answers

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Week 1 Discussion 1 “The Craft of Budgeting” Please respond to the following:

From the first e-Activity, evaluate the relationship between Congress and the President and discuss two (2) reasons why the presidential duties may conflict with the role of Congress. Justify your response with examples.

From the first e-Activity, discuss three (3) major concerns of public budgeting and finance for a public administrator. Justify your response with examples.

RE: Week 1 Discussion 1

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From the first e-Activity, evaluate the relationship between Congress and the President and discuss two (2) reasons why the presidential duties may conflict with the role of Congress. Justify your response with examples.

The President duties will have the Congress and President fighting over power, especially when Trump is trying to take control over all departments and agencies. In the past with President Nixon attempt it failed. The Congress is setup to handle the departments and agencies. Amongst the Congress and President, they should come up with a plan that generates support from the President but is overseen or dictated through the Congress. Another conflict would be veto, an example of this is when The White House has issued a strong statement that not only rebukes the latest Republican attempt to repeal the ACA, but also promised to veto the bill, while Obama was in office. If the Congress and President are not aligned together on the same common goal it will always be a pull and tug in power struggle.

From the first e-Activity, discuss three (3) major concerns of public budgeting and finance for a public administrator. Justify your response with examples.

1. Balanced Budget: As suggested by the name a balanced budget is that which has no deficit or surplus. The revenues coming are equal to the expenditures.

2. Revenue Budget: It is just the details of the revenue received by the government through taxes and other sources and the expenditure that is met through it.

3. Performance Budget: This type of budget is mostly used by the organizations and ministries involved in the developmental activities. This process of budgeting, considers the result or the performance of the developmental program thus insuring cost effective and efficient planning. With the increasing developmental challenges and awareness regarding the usage of tax payer’s money, new methods of budgeting are required of which the performance based budgeting has emerged as a transparent and accountable method.

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Week 1 Discussion 2

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“Government Budgeting and Expenditures” Please respond to the following:

Based on the second e-Activity that focuses on the Budget of the United States Government for Fiscal Year 2014 and 2015, analyze the president’s messages and the three (3) budgets you selected. Discuss four (4) governmental expenditures that you believe will have a significant impact on the national economy. Justify your response with examples.

RE: Week 1 Discussion 2

The fiscal for the years of 2014 and 2015,The focal point of initial budget or fiscal reform was the executive budget concept.Giants of American public administration, like Cleveland, Good now and Willoughby, were spokesmen for the idea of the executive budget. Some saw the budget as central to letting the executive make public policy, others saw it as a coordination tool, and still others wanted to use it to deter waste and inefficient government. In short, the budget was to be a method of control.In 1910 President Taft initiated the Commission on Economy and Efficiency (often referred to as the Taft Commission). The Commission’s report, entitled. The Need for a National Budget, was presented to Congress in 1912 and thereby focused national attention on budgeting and sound fiscal management. Among the major recommendations made were the following

The President should prepare and present a budget to Congress (the executive budget idea).
2. A budget message should accompany the budget and should outline policy proposals of the President as well  as include summary financial information.
3. The Secretary of the Treasury should submit a consolidated financial report to Congress.
4. Each agency should submit to Congress an annual financial report.
5. Agencies should establish and maintain a comprehensive accounting system

Thus, budget reform in the United States began with the idea of strengthening the executive and simply establishing a budget with estimated revenues and expenditures and some accompanying information. The primary tool used to obtain control was the line-item, or object-of-expenditure, budget. Thus, the executive budget idea was coupled with the line-item budget.

Line-Item Budgeting

Prior to line-item budgeting, most budgets were lump sum. Line-item budgets simply listed categories (line-items) of expenditure, such as salary, overtime pay, postage, gasoline, office supplies and so forth. These objects of expenditure could be collapsed into broad categories such as personnel, operating and capital expenses. Statutory or administrative controls could be imposed on the transfer of funds from one line-item to another, or between broad categories of expenditure. In addition, another level of oversight was established with the legislative body’s broad discretion in how detailed it appropriated funds.

Line-item budgets were relatively easy to use and understand. Thus, they were attractive to legislative officials. Politically they were attractive because they did not focus explicit attention on substantive policy issues or choices. Thus, line-item budgets had a number of appealing features. They allowed central control over inputs, or money, before they were used. They were uniform, comprehensive and exact. They allowed routines to be established. Line-items provided multiple opportunities for control to occur, such as in purchasing and hiring staff. And, they allowed for budget cutting. With line-items came central budget offices which perpetuated the idea of control (Schick, 1971: 14-43).

Line-items were to bring about more control over public spending. Even during the emphasis on line-item budgeting, however, some authorities had a more expansive vision for budgeting. An example of this early recognition of the limits of line-item budgeting comes from Lent D. Upson, writing in 1924, who said “the average city official confronted with the budget finds nothing in it that enables him to determine in a large way the value of the activities that are rendered the public; or in lesser way the degree of efficiency with which such activities are conducted” (Upson, 1924: 72). Thus, the limitations of line-item budgets were recognized by some observers soon after their adoption. The questions that Upson posed would later be addressed by the concept of performance budgeting.

Performance Budgeting

The New York Bureau of Municipal Research had proposed early in its work that city budgets be on a unit cost basis and show work done as well as work proposed rather than just line-items. The Bureau was not successful in implementing the idea, however, and it took about thirty more years for these ideas to get significant attention again. This came with the report of the first Hoover Commision (the Commission on Organization of the Executive Branch of Government) in 1949. This Commission recommended that budget information for the national government be structured in terms of activities rather than line-items, and that performance measurements be provided along with performance reports (Burkhead, 1961; Mikesell,1995: 171). With the expansion of governmental activity during the New Deal, attention began to shift to management efficiency, particularly at the national level. [Interestingly, the effects of this period on the states was often the opposite of the experience of the national government. While it expanded, the states, due to inelastic taxes and debt restrictions, experienced constraints. Thus, they did not expand as did the national government during this period (Schick, 1971: 29)]. An awareness of the need for efficiency and interest in management improvement was evident also at the local level. This is illustrated by Ridley and Simon’s (1943) Measuring Municipal Activities. With the heightened interest in management came the concept of performance budgeting, the next phase of budget reform and innovation.

Performance budgeting emphasized the things that government does rather than the things it buys. It therefore shifted attention from the means of accomplishment to the accomplishment itself. The Municipal Finance Officers Association presented a model accounting classification emphasizing activity classifications within functions in 1939 and again in the 1940s and 1950s. This had considerable influence on municipal budget practice (Burkhead, 1961: 136). Governmental expansion during the New Deal and World War II led to wider interest in performance budgeting in order to more efficiently use financial resources. Thus, it focused on activities and outputs, things that could be identified and measured.

Performance budgeting encountered a number of problems, particularly at the national level. Budget estimates were “no more meaningful than those in line-item budgets” (Miller, 1996: 95). Work measurement presented problems. Measuring the output of governmental services was imprecise. Inputs could be easily measured, but not outputs. In addition, “performance budgeting lacked the tools to deal with long-range problems” (Miller, 1996: 95).

Schick’s studies of state budget practices in the late 1960s and early 1970s found that they showed a great deal of variation in adoption of key techniques of performance budgeting. His conclusion was that what they adopted did not compare “favorably with performance budgeting’s potential” (Schick, 1971: 59). The narratives added by the reform were not very helpful to policy makers. Workload statistics were introduced which usually gave some indication of the volume of governmental activity, but failed to relate work to costs or performance. And, cost statistics had very little application. Schick’s conclusion was that performance budgeting as a reform was superficial. New information was provided but it did not push out the old (Schick, 1971: 59).

Program Budgeting

The next budget reform phase emphasized program budgeting and planning. Program budgeting, however, as Miller notes, suffered from a “severe identification crisis in the budgetary literature” (Miller, 1996: 95). Namely, it was used synonymously with performance budgeting and the planning, programming budgeting system budget reform. Jesse Burkhead in his 1956 budgeting text attempted to distinguish between performance and program budgeting by pointing out that a program could be higher in an organization than performance units, and, indeed, could encompass several organizational units. Program budgeting was more forward looking while performance budgeting tended to focus on what had been accomplished already.

Word Cited:http://www.ipspr.sc.edu/publication/budgeting_in_america.htm

It examines the cyclical movements and trends in economy-wide phenomena, such as unemployment, inflation, economic growth, money supply, budget deficits, and exchange rates. By contrast, microeconomics focuses on the individual parts of the economy. It studies decision making by households and firms and the interaction among households and firms in the marketplace. It considers households both as suppliers of factors of production (labor, land, capital, entrepreneurship) and as ultimate consumers of final goods and services. 

Gross Domestic Product The GDP equals the total value of goods and services produced in a country during a year. Economic growth is, therefore, a sustainable increase in the amount of goods and services produced in an economy over time. However, economic growth is different from economic development. Noneconomists usually make little or no distinction between the two terms, using them interchangeably. Going further than GDP growth, economic development can be defined as “a multi-dimensional process of change focused on the betterment of the community, state, and/or country … and aimed at producing more ‘life sustaining’ necessities such as food, shelter, and health care and broadening their distribution, raising standards of living and individual self esteem, and expanding economic and social choice” (Todaro 2005, p. 4).

Development theories have started to look beyond GDP per capita as a sole measure of development and to consider other measures, such as health-care availability, educational attainment, equality of income distribution, and political freedom. GDP growth, though necessary, is not a sufficient condition for economic development. Modern theories try to explore other requirements for sustainable economic development, including the availability of sound government policies and institutions, infrastructure, lack of trade barriers, and fair judicial systems.

Capital accumulation is an essential factor for economic growth and development, which typically involve large-scale investments in infrastructure, industry, education, health, and financial sectors. Simon Kuznets (1901–1985) argued that levels of economic inequality can change as countries develop and, hence, accumulate more capital. Presumably, countries at early stages of development have relatively equal distributions of income because levels of per capita income and capital are low. As a country develops, more capital is accumulated and income distribution becomes unequal in favor of the owners of capital. Eventually, more-developed countries move back to lower levels of inequality either directly, through social welfare programs and other redistribution mechanisms, or indirectly, through “trickle down”effects.

Macroeconomists usually try to evaluate the economy’s growth and development performance either in comparison to other economies (cross-sectional analysis) or over time (time-series analysis). In other words, macro-economists investigate why the economies of many developing countries in Asia, Africa, Latin America, and eastern Europe tend to grow at a slower rate than those of developed countries, and how the rate of economic growth for a certain country can be improved over time.

Although sustainable growth is always desired by economic policymakers, economies do not always grow steadily and sometimes undergo periods of slowdown or expansion. Slowdowns in economic growth are called recessions. Severe economic slowdowns are called depressions (e.g., the Great Depression). During recessions, aggregate incomes decrease, as does the demand for goods and services. As a result, firms realize less profit, more firms go out of business, and, therefore, job opportunities become scarce.

On the other hand, economies can sometimes grow unusually fast. These periods of rapid economic growth are called expansions, and particularly strong expansions are called booms. During an expansion, businesses witness increasing growth and, hence, profits; incomes are higher because more people get raises and promotions; and, as a result, the demand for goods and services increases, which causes firms to realize even more profits, and more job opportunities become available. Given their importance, macroeconomists have a keen interest in analyzing economic fluctuations and whether policymakers can (or should) do anything about them.

Unemployment Rate The second most important macro-economic concept is the unemployment rate, which is a key indicator of the condition of the labor market. The unemployment rate is defined as the percentage of people willing to be employed at the prevailing wage rate, yet unable to find job opportunities. When the unemployment rate is high, work is not only hard to find, but also less rewarding as people already holding jobs might find it difficult to get wage increases or promotions. A low unemployment rate is an indication of good economic performance. Thus, keeping workers employed is always a chief concern of economic policymakers.

Inflation The third most important macroeconomic concept is inflation, which is an increase in the overall level of prices measured by the consumer price index. This index shows how the value of money changes over time. Inflation is one of the primary concerns of economists and policymakers because it imposes a variety of costs on the economy. When the inflation rate is high, the real value of money erodes. People on fixed incomes, such as pensioners who receive a fixed dollar payment each month, cannot keep up with the rising cost of living. Inflation also redistributes wealth among the population in a way that has nothing to do with merit. When there is a sustained period of inflationary pressure, lenders and workers lose while borrowers and employers benefit because many work and loan contracts in the economy are specified in terms of money. Another cost of inflation is that it discourages saving. The income tax treats the nominal interest earned on savings as income, even though part of the nominal interest rate merely compensates for inflation. This reduces the after-tax real interest rate, and hence makes saving less attractive.

International Trade Another major macroeconomic topic is international trade, which is the exchange of goods and services across international borders. Because modern economies are highly interdependent, macro economists often study the impact and desirability of free trade agreements. They also study the causes and effects of trade imbalances, which occur when the quantity of goods and services that a country sells abroad (its exports) differs significantly from the quantity of goods and services its citizens buy from abroad (its imports).

Word Cited: http://www.ipspr.sc.edu/publication/budgeting_in_america.htm

Week 2 Discussion 1

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“Organizing Budget Data and Chart of Accounts” Please respond to the following:

From the first e-Activity, discuss three (3) major government programs that impact federal spending and whether any of the programs can be realistically cut. Justify your response with examples

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From the first e-Activity, discuss three (3) major government programs that impact federal spending and whether any of the programs can be realistically cut. Justify your response with examples

In the past, three major programs were established for long term benefits: Medicare, Medicaid, and Social Security, but no one knew that these programs would be the fastest growing source of revenue.

1. Medicare- is a federal system of health insurance for people over 65 years of age and for certain younger people with disabilities. Realistically a person over 65 would not be able to afford an insurance that will cover everything that they would need from healthcare to living assistance, so there is no way that this program could be cut without causing negative impact.

2. Medicaid-a federal system of health insurance for those requiring financial assistance. This program is mostly based on low incomed families. I believe that if we have the Affordable Care Act in place, why should we continue to have Medicaid, if the ACA is also a way that people that can’t afford healthcare receives it. It’s like one of the same.

3. Social Security-any government system that provides monetary assistance to people with an inadequate or no income. (in the US) a federal insurance program that provides benefits to retired people and those who are unemployed or disabled. In the manner that Social Security is going now it will no longer exits with in the future in 30-40 years out. In placing private investments like Thrift Saving Plans, 401(k), and any other retirement plan that is offered through employers would be benefit the retired people. On the other hand, the disabled and unemployed people would not have assistance.

Week 2 Discussion 2

“Budgeting 101” Please respond to the following:

From the second e-Activity, discuss three (3) challenges in the budget process. Justify your response with examples.

From the third e-Activity, identify and explain your choices for reductions and increases. Discuss at least two (2) lessons you learned about the challenge of balancing the federal budget.

RE: Week 2 Discussion 2

Budgeting 101″ Please respond to the following: From the second e-Activity, discuss three (3) challenges in the budget process. Justify your response with examples.

1. House and Senate Work Out Differences in Conference Committee Since the spending bills are once again being debated and amended separately, House and Senate versions must go through the same conference committee process as the Budget Resolution. The conferees should agree on one version of each bill capable of passing in both the House and Senate by a majority vote

2. Full House and Senate Consider Conference Reports Once the conference committees have forwarded their reports to the full House and Senate, they must be approved by a majority vote. The Budget Act stipulates that the House should have given final approval to all the spending bills by June 30. The process always runs behind.

3. The Government Begins its New Fiscal Year When the process goes as planned, all the spending bills have been signed by the president and have become public laws by October 1, the start of the new Fiscal Year. Since the federal budget process rarely runs on schedule anymore, Congress will usually be required to pass one or more “Continuing Resolutions” authorizing the various government agencies to continue operating temporarily at existing funding levels. We have had a government shut down in the last ten years.

From the third e-Activity, identify and explain your choices for reductions and increases. Discuss at least two (2) lessons you learned about the challenge of balancing the federal budget.

I eliminated the Iraq and Afghanistan operations: Costs of military occupations and reconstruction funds. One reason I chose to eliminate this is because I don’t consider the mission a valuable mission anymore, the government has gone and restored their government and help with many other things and no its time to slowly move out and let them do what we have taught them.

I also eliminated Health Insurance Tax Benefits: Employer contributions for medical insurance and care, Self-employed medical insurance premiums, Medical Savings/Health Savings Accounts, Deductibility of medical expenses because the rate that it is going now the working people need to invest in private investments and Affordable Care Act to ensure that they are supported when it comes to insurance. For an example my medical insurance equals up to 223.00 bi -weekly just for insurance and I could try to receive a more lesser insurance plan through ACA.

I decreased Aid to Low-income Families: Housing assistance, Food stamps, Other nutrition programs (WIC, school lunches), Supplemental security income (SSI), Family support payments, Low income home energy assistance, Earned Income Tax Credit, Child Tax Credit, Other aid to the poor. In lowering this, the government can set forth programs to allow these families training so that they can be more qualified for better paying jobs or programs where the retired and disability get the benefits they need.

I increased Military Retirement and Services: Military retirement benefits; Disability and insurance for veterans; veterans’ education, training, and rehabilitation; Hospital and medical care for veterans & retired military; Veterans housing and other benefits, because many veterans after retirement are disable and this would be away that we continue to make our army strong.

I increased Education: Elementary & Secondary education, Higher education, Research and general education programs. The youth is our future, they need all the knowledge and the skill sets to grow into working professionals to make our country decisions in the future.

I also increased Military Spending: Military personnel, Operation and maintenance, Procurement, Research and development, Military construction, Family housing, Nuclear weapons activities, Other defense-related activities. The Trump Administration is trying to make the military strong again and by increasing the military spending my help with past military service members, unite the present service members by giving them the needs of the daily incentives they need to complete a mission, and mentor the new recruits. The challenges that are used to plan and organize a budget goes hand and hand. It goes through channels of importance and if a decision is not agreed upon it could put the country in a government shut down.

Week 3 Discussion 1

“Preparing the Operating Budget” Please respond to the following:

From the e-Activities, discuss two (2) differences between Michigan’s budget and your state budget in terms of budget process, financial reporting, and costs analysis (fixed costs, step-fixed costs, and variable costs). Justify your response with examples.

Discuss the pros and cons of forecasting over a five to ten (5-10) year period. Justify your response with examples.

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Preparing the Operating Budget” Please respond to the following: From the e-Activities, discuss two (2) differences between Michigan’s budget and your state budget in terms of budget process, financial reporting, and costs analysis (fixed costs, step-fixed costs, and variable costs). Justify your response with examples.

Arkansas Budget Process consists of four components: Preparation, Authorization, Funding, and Review and Revise. Arkansas goes through different department requesting budgets with instructions from the Department of Finance, The Governor receives the request, then has a legislative council hearing. The Director of DFA is required by law to present the Official General Revenue Forecast no later than 60 days prior to the beginning of the legislature. By rule, the Joint Budget Committee introduces recommendations as the appropriation measures for the next biennium. The Legislature adjourns. The agencies prepare their operating budget for the next fiscal year which starts on July 1. Michigan Budget Process Consists of 3 stages: Development of Governor’s Executive Budget, and Enactment by the legislature, and Budget Revision. Michigan has the Appropriations Committees assign the budgets to specific subcommittees. These subcommittees then conduct a series of hearings. State department directors and their staff present an overview of the Governor’s proposed budget, followed by briefings from House Fiscal Agency and Senate Fiscal Agency staff. The legislative procedure for consideration of the appropriation bills is basically the same as for other bills except that appropriation measures receive priority on the legislative calendars. Each department prepares the allotment of appropriations and may request revisions, legislative or administrative transfers, or supplemental appropriations. The State Budget Office must approve revisions to allotments. Transfer of funds other than administrative transfers within a department must be submitted by State Budget Office to the House and Senate Appropriations Committees. The difference between the two is that Arkansas uses Different Departments and agencies to for Preparations and Michigan uses committees and subcommittees. With Michigan, the state budget is just like any other bill and Arkansas is not.

Discuss the pros and cons of forecasting over a five to ten (5-10) year period. Justify your response with examples

The Pros of forecasting over a five to ten-year period would be that you have an outline to build off with the widespread availability of data in virtually every department of the government, and the computer’s capability to process it, applications for different funding analysis seem almost limitless. Since a funding analysis is based on verifiable data, it can be subjected to thorough scrutiny for validation. The use of numbers makes the analysis more exacting. A funding analysis can be replicated, checked, updated and refined when necessary.

Example: Keeping Social Security stable, the numbers will not vary in large sums so that this can be easily forecast over five years.

Cons: A major problem in forecasting trends involves identifying turning points. With hindsight, turning points are clearly visible, but it can be difficult to tell in the moment whether they are mere aberrations or the beginning of new increases or decreases that will be needed in different programs of government funding. Long-term projections need more data to support them, and that may not always be available, particularly for a new business or product line. In any case, the further out one forecasts, the greater the possibility for error, because the passage of time will inevitably introduce new changes or funding. Also, the data might not give a true estimate. Example: The state decides to get rid of a program that would change the events that was included in the forecast in the previous years and would affect the future years in a large sum difference.

Week 3 Discussion 2

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“The Budget” Please respond to the following:

From the first e-Activity, discuss four (4) governmental expenditures that you believe will have a significant impact on your local economy over the next year. Justify your response with examples 

Discuss two to three (2-3) challenges an administrator may face when developing and reviewing proposals for budget cuts.

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The Budget” Please respond to the following: From the first e-Activity, discuss four (4) governmental expenditures that you believe will have a significant impact on your local economy over the next year. Justify your response with examples

The Department of Defense: The DoD contributes billions of dollars each year to state economies through the operation of military installations. This spending helps sustain local communities by creating employment opportunities across a wide range of sectors, both directly and indirectly. Active duty and civilian employees spend their military wages on goods and services produced locally, while pensions and other benefits provide retirees and dependents a reliable source of income. States and communities also benefit from defense contracts with private companies for equipment, supplies, construction and various services such as health care and information technology.

The Department of Education- Though only about 20 percent of the total local budget, higher education programs make up a large share of federal education investments. For example, about half of the U.S. Department of Education’s budget is devoted to higher education (excluding loan programs). Higher education funding also comes from other federal agencies such as the U.S. Departments of Veterans Affairs and Health and Human Services, and the National Science Foundation. The state of Arkansas is now making it were tuition is free for a Veteran. I believe that will also impact the local economy.

The Department of health care- Local governments spend an estimated $85 billion per year on health care, meaning about one of every eight dollars spent by local governments is for health-related activities, including protecting the health of the community, providing health care for low-income and uninsured residents, providing health benefits for their employees and retirees, and helping states finance Medicaid.

Social Security:  A study conducted by the Southern Rural Development Center has found that cutting Social Security payments would have a significant impact on the economy. The study found that Social Security payments play an extremely important and significant role in the country’s economy, especially for the economy in rural areas. In 2009, 51 million people in the United States (about 17 percent of the population) received some sort of Social Security payment each month, which totaled approximately $675 million annually. In August 2016, more than 60 million people in the United States received monthly Social Security payments and their total monthly benefits were more than $75 million. The study found that if Social Security benefits were cut even five percent, the nation’s economic output would be $63 billion less and we would have 419,000 fewer jobs. In addition, tax revenue would decrease by $7.8 billion. It is a benefit that you have earned and that you have the right to collect if you are unable to work because of a permanent disability. The payments could provide you with the monthly income you need to survive, what they need for housing, food and other necessities, and that you put back into your local economy.

Source: http://www.morganweisbrod.com/blog/study-examines-social-security-payments.com

Discuss two to three (2-3) challenges an administrator may face when developing and reviewing proposals for budget cuts.

Deciding what to cut. This is generally the most visible and controversial task. Decisions about what to cut have long-term strategic consequences for the organization and those it serves. There are no easy solutions, and the negative impacts of downsizing. Downsizing a program can have unsatisfactory, even disastrous results. In the aftermath of cutbacks, programs may find themselves in serious decline.

Week 4 Discussion 1

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“Revenue Estimating” Please respond to the following:

From the e-Activity about the “Annual Population Estimates 2000 to 2009,” analyze and forecast a comparison of the population growth rate from 2010 through 2016 of the State of Michigan and your state. Provide these figures in your response for each year. Based on your prediction for the years 2015 and 2016, discuss the impact of each state’s population increase on the four (4) highest discretionary spending accounts. Note: Please refer back to Week 3 and review the State of Michigan and your state’s budget.

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Revenue Estimating

Michigan’s population growth has shown an increased and remarkable growth rate between 2010 and 2016. This population led to increased population in the United States. Despite the huge numbers of people leaving the state, the number of people still remained high of approximately 9,883,640 people in 2010. In 2011, there was also a decrease because of migration which recorded a total number of 9,876,589 people. There was an increase in 2012 whereby Michigan’s population rose to 9,886,879. The number kept increasing at a faster rate giving 9,900,506 in 2013,9,916,306 in 2014,9,922,576 in 2015 and 9,928,846 in 2016. This rapid growth was due to the growth of auto industry in various states. On the other hand, Texas is rated the third position in rapid population growth adding up to the U.S population. In 2010 to 2016, the number of people increased as follows 25253466, 25674681,26059203, 26448193, 26956958, 27469114 and 27862596 respectively. There is a different between the Texas population growth rate and the Michigan whereby from 2016, Michigan’s population records a fall in population growth whereas in Texas the population growth still keep of increasing. It shows that by 20120, Texas would be leading in the population growth. Michigan is a home for many residents whereas othersare migrating to other cities (Smith, Tayman & Swanson, 2006).

Conclusively, there are various impacts which have been created by the rapid population growth in Texas as well as in Michigan. In Texas, there is more stress put on the public infrastructure whereby the state by 2020 will need to construct bigger and bigger school, hospital, roads, administrations and also other sectors for provision of services to cater for all the citizens.  There are also increased taxpayers in Texas contributing highly to government funds. This will contribute to the rise of the overall governmental funds which will then be used to build more public infrastructures to cater for the rapid growth of the Texas population. The rapid population growth strains financial conditions in Texas. Michigan’s population adds billions of dollars to the economy because most of the residents are immigrants. They contribute to the value of the financial conditions of the state enabling Michigan to improve the living conditions, public infrastructures and services (Smith, Tayman & Swanson, 2006).

References

Smith, S. K., Tayman, J., & Swanson, D. A. (2006). State and local population projections: Methodology and analysis. Springer Science & Business Media.

Week 4 Discussion

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“Trend Analysis” Please respond to the following:

Discuss at least two (2) challenges an administrator should consider when preparing a trend analysis over a five (5) year period. Justify your response.

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Trend Analysis

Administrators face various challenges including financial management during trend analysis. It becomes a task for the administrators to balance the financial conditions especially for many years. There is no identified measure for the financial management of the government entities and the administrator should take an approach which is comprehensive to include both external and fiscal factors. In order for the administrator to be able to deal with financial challenges for 5year period, he or she needs to evaluate and identify the factors affecting or leading to financial conditions. The identified factors should therefore be eliminated not to cause severe consequences. Another challenge which the administrator should put into consideration is the data source. The sources for obtaining information for 5years should be analyzed well to avoid wrong information which would in turn mislead the whole organization. Trend analysis is all about making comparisons of an organization for a period of time. It is therefore necessary to ensure that the information at hand is from a trusted source. Getting the right information ensures that the analysis are real and shows clear trend or the organization’s performance(Walt et al. 2010).

Conclusively, trend analysis for a period of five years contains much information therefore it should be handled with care to avoid loss of information or any interference. When the administrator is preparing trend analysis, he or she should be very careful or data input to avoid giving the wrong information. He or she should be sure of the information being used for trend analysis so that the inflation and deflation can be calculated too. The administrator should consider external and internal factors affecting the business during trend analysis to ensure that the analysis is done effectively (Walt et al. 2010).

 

 

References

Walt, G., Shiffman, J., Schneider, H., Murray, S. F., Brugha, R., & Gilson, L. (2010). ‘Doing’health policy analysis: methodological and conceptual reflections and challenges. Health policy and planning23(5), 308-317.

Week 5 Discussion 1

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“Life Cycle Costing” Please respond to the following:

From the first e-Activity, discuss at what point an administrator should decide when the product should be terminated during the life cycle analysis. Justify your response with reasons and an example.

Discuss two to three (2-3) actions an administrator should review consistently to alleviate over budgeting for operating and maintenance costs of a capital project.

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Life Cycle Costing

Life cycle of a product refers to the stages which products are put through for example, most products usually begin from introduction and end with withdrawal, where the point in which the product is first brought into the market is termed as the introduction. Products have generally four stages which are maturity, growth, introduction and decline and these stages however support the promotion and the sales of the product. In life cycle costing, there is a stage in which an administrator is to come up with decisions on the time when the product should be put into termination during the analysis of the life cycle (Paul, 2011).

The right time to terminate a product is important despite the fact that focusing on its success is also a factor to be considered in the process. The decision that has been made to terminate the project will be known to be vivid when huge changes in its environment come up. On the other hand, the decisions can be made difficult if changes which are many and minor accumulate in these factors. One is also bound to consider the type of a project before making a conclusion on whether to pull the plug or not to. When the expenditures of a project are recoverable, it is easier to abandon it than when it has a little value for example it may have closing costs which are high like penalties of breached contracts, loses from the closing of facilities (Cerullo, 2007).

 In products for construction for example, there are high costs in case of a termination because an incomplete building has no salvage value. The two major reasons as to why an administrator can decide to terminate a product are political assassination and change in the environment of the project. Senior management and an occasional survey of the team of the project are essential and are the actions that may assist to monitor the environment of the project. Additionally, other techniques like cybernetic and No-Go control processes can also be used (Mantel, 2008).

                                             References

Balachandra, R., & Raelin, J. A. (2009). When to kill that R&D project. Research Management.

Cerullo, M. J. (2007). Determining post-implementation audit success.

Meredith, J., & Mantel, S. J., Jr. (2008). Project management: A managerial approach. New York: John Wiley & Sons.

Paul, L. G. (2011). Know when to bail out.

Week 5 Discussion 2

5

“Cost-Benefit Analysis” Please respond to the following:

From second e-Activity (Parts 1–IV), assume that you submitted your analysis that recommended Project A to your superior. She, however, negated your analysis and chose Project B. Support your recommendation with at least two (2) reasons for accepting the financial implications of Project A. Discuss at least one advantage and one disadvantage of ex ante analysis and ex post analysis. Justify your answer with examples.

Discuss at least one (1) advantage and one (1) disadvantage of ex ante analysis and ex post analysis. Justify your answer with examples.

RE: Week 5 Discussion 2

5

“Cost-Benefit Analysis” Please respond to the following:

From second e-Activity (Parts 1–IV), assume that you submitted your analysis that recommended Project A to your superior. She, however, negated your analysis and chose Project B. Support your recommendation with at least two (2) reasons for accepting the financial implications of Project A. Discuss at least one advantage and one disadvantage of ex ante analysis and ex post analysis. Justify your answer with examples.

 I would tell my supervisor that Project A meets all requirements for the internal rate of return, net present value and the payback period is almost three years less than Project B. A monetary savings would be recognized with Project A because you are paying the project off in a shorter period of time.

Discuss at least one (1) advantage and one (1) disadvantage of ex ante analysis and ex post analysis. Justify your answer with examples.

 “Ex-ante” refers to any prediction that is made prior to either before all of the variables are known, or generally before an event occurs. For example, an ex-ante price on a stock is an informed estimate functioning as a prediction of future events when not all variables are known. It provides for a predictive model, allowing for the uncertainty surrounding current conditions or any unknown factor that may change the outcome.

In general finance, company earnings may be predicted ex ante. Often, this involves examining current known financial data and extrapolating by considering anticipated activity and previous experiences. For example, a company may note an ex-ante rise in sales due to the release of a new model of one of its products. Ex-ante predictions can apply to anticipated gains or losses, as the term is neutral in regards to the nature of the event.

Companies attain ex-post data to forecast future earnings. Ex-post data is utilized in studies such as value at risk (VaR), a probability study that approximates the maximum amount of loss an investment portfolio may incur on any day. VaR is defined for a specified investment portfolio, probability and time horizon.

Ex-post yield differs from ex-ante yield because it represents actual values, essentially what investors earn rather than estimated values. Investors base their decisions on expected returns versus actual returns, which is an important aspect of an investment’s risk analysis. Ex-post is the current market price, minus the price the investor paid. It shows the performance of an asset; however, it excludes projections and probabilities.

http://www.investopedia.com/terms

Week 6 Discussion 1

5

“The Financial Plan” Please respond to the following:

Based on the e-Activities, assess and explain the restrictions placed on state and local government debt in your state. Provide examples to support your answer. (Provide the Websites’ URLs in your discussion when using the discussion thread in the online course shell.) 

Identify at least two (2) methods needed to avoid restriction limits.

RE: Week 6 Discussion 1

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The Financial Plan

The world continues to experience a paradigm shift in the area of financial matters, capitalism continues to sweep across the globe as people try to embrace the same in a bid to continue remaining relevant in the market. In terms of managing public money, the general public and the legislature arm of the government acting on behalf have discrete right to expect that funds collected by the help of powers laid down by parliament will be channeled in the areas discussed and for the right purpose. Therefore, public servant are charged with the responsibility of using the money collected responsibly for the benefit of the people (Accounts, 2011).

Good common sense and accurate financial management prowess is all that is needed to manage public money to avoid embezzlement of the same. There are underlying conventions which spell out how certain issues are dealt with. These rules are meant for ensuring that the agreed upon policies programs and projects are completed in due course and are working as it had been intended for.

In the Unites States, the national debt is estimated to be at $ 19,888,392,426,061 which keeps on changing as time goes by. On the other hand the federal spending in the country is at $ 3,950,201,974,104 which as well keeps on changing with time. The largest budget items in the country ranges form; Medicare, social security, defense, income security and federal pensions. Therefore we can see that US has prioritized citizens in terms of their well-being and minimized her debt, this is well covered by the figures read in the budget.

On the other hand, the debt held by the Public is all federal debt held by persons, companies, state or local governments, Banks, foreign governments, and other entities outside the United States Government.

Intergovernmental holdings are government account series securities held by the government trust funds, revolving funds, and special funds; and federal financing bank securities.  Each year since 1969, Congress has spent so much money than what it accrues in terms of income, the department of treasury has therefore had to solicit for money to meet the needs of congress. In this line, the US national debt stands at $ 19.8 Trillion.

For instance in Kenya as of 2017 through 2018, the budget is at Sh. 2.6 trillion which is to cater for different counties and ministries across the nation. It is one of the highest budget ever in the country. The budget is to be financed through collecting taxes and borrowing from other countries Sh. 1.7 trillion is to be generated from taxes while the remaining Sh. 900 billion to be generated from loans and grants. Of this, the 47 counties are to receive a total of 329.1 billion in 2017/2018 against the Sh288 billion they got in the 2015/2016 financial year which is still too low for the ever growing population (Fund, 2012).

References

Accounts, G. B. (2011). Accountability for public money: twenty-eighth report of session 2010-11, report, together with formal minutes, oral and written evidence. The Stationery Office.

Fund, I. M. (2012). Kenya: Poverty Reduction Strategy Paper: Progress Report. International Monetary Fund.

Week 6 Discussion 2

5

“Budget Decisions” Please respond to the following:

Discuss the major challenges that you believe the public will encounter as a result of the proposed budget. Justify your answer with examples.

Speculate on the optimal stage during the budget decision making these challenges could be minimized. Justify your answer with examples.

RE: Week 6 Discussion 2

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Budget Decisions

In a nutshell budgeting is a process of coming up with the estimated amount of money to be used within a given fiscal year by the government. In so doing, the person in charge of finance programs conducts research and analysis to be in a position to allocate funds for each ministry, local government and regions basing on their needs(Margaret J. Barr, 2010).

The general public however is not fully satisfied with any proposed budget for the following reasons; one of them is that there is always an aspect of locking out the preferences of citizens and preferences. In this, the public will always feel that things they deem integral have not been prioritized in the budget and instead those that are not at their hearts are taken care of on the grounds of generalization. The issue of security may be of concern in some region and not others but the budget may seem to lean towards the same since it is a national disaster.

There is also the problem of equity. When the budget is proposed you find that allocation of funds and resources varies from region to region or from ministry to the other stirring animosity among the public who might begin looking at it as a way of favoritism by the government. The problem has always been linked to skewed research in certain areas. Some regions may be small in terms of geographical size but allocated large amount of money yet those that are large only get meagre funds(Novick, 1967).

More so, in a perfect market, an efficient allocation of resources will be achieved by the forces of supply and demand, through the process of price mechanism. In the event that we have market failure, then public intervention is vital in the process. Lack of public intervention in such scenarios poses a threat to the public who feel left out of the proposed budget.

To optimize the above potential problems, there should be professional principals and agents who ought to conduct numerous research on the ground to ascertain the real needs of the people which should be reflected in the budget. Those needs that come first in a given region should be treated with great concerns and addressed.

Secondly, there should be modelling of the economy whereby we should have macroeconomic forecast, establishment of the Growth Domestic Product, growth, deficit, inflation and unemployment cases among others. These issues should be given priority before proposing any budget.

Lastly, there is to be rationalism whereby it seeks to relate policy to clearly specified goals for public intervention and when the goals have been defined, technicians should be on their feet to seek means of achieving them by appraising alternative strategies. Identification of the full range of possible solutions, an assessment of their feasibility and impact, and selection of the preferred option can be employed here.

References

Margaret J. Barr, G. S. (2010). Budgets and Financial Management in Higher Education. John Wiley & Sons.

Novick, D. (1967). Program Budgeting: Program Analysis and the Federal Budget. Harvard University Press.

Week 7 Discussion 1

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“Presenting the Budget” Please respond to the following:

From the first e-Activity, discuss two (2) recommendations the authors make regarding the applicability of performance budgeting to the current United States government. Assume you have been appointed as the new administrator for a federal agency. Propose two to three (2-3) strategies for connecting performance indicators to the budget. Provide examples to support your response.

RE: Week 7 Discussion 1

 

From the first e-Activity, discuss two (2) recommendations the authors make regarding the applicability of performance budgeting to the current United States government.

 

Recommendation 1: A common thread of modern public budgetary reforms is improving the transparency and accountability of government – specifically by measuring and reporting on government performance and assessing the results of government operations and programs. However, federal efforts at a results oriented budgeting system to date, have greatly enhanced the transparency of government operations at this level though have not extended past what is termed by Joyce (2003) as “performance informed budgeting”. That is, a direct relationship between performance and budget allocation is not clear, even though information about federal government program performance is much more pervasive and readily available to budgetary decision makers internal to government as well as stakeholders (citizens, lobbyists, constituents and others) external to government.

Recommendation 2: It is now common to find performance budgeting efforts linked to other public management initiatives, such as strategic planning. Strategic planning requires goal definition, which in turn sets the stage for the measurement of those program activities necessary to reach such goals. In addition, Performance-based budgeting (PBB) aims to link, in a binding and comprehensive way, strategic planning objectives, expenditure appropriations and expected results from government programs.

 

Source:

 

http://www.ief.es/documentos/recursos/publicaciones/revistas/presu_gasto_publico/51_GomezWilloughby.pdf

 

  

Assume you have been appointed as the new budget analyst for a federal agency. Propose two to three (2-3) strategies for connecting performance indicators to the budget.

 

Strategy 1: Government has adopted the private sector’s strategic planning approach to help set priorities and allocate scarce resources in a changing environment. Too often, however, public-sector strategic planning is an event or worse, just a document. A state’s strategic plan is presented with much fanfare and then just fades away. Or an agency prepares a strategic plan to meet executive or legislative mandates but does not use the plan to direct agency activities.

Strategic planning is a continuous process that requires constant feedback about how the current strategies are working. The market tells the private sector how it is doing. Profit levels, return on investments, and sales trends let businesses know when they need to adjust their strategies. Performance measurement provides the public sector with comparable information.

 

Strategy 2: Performance measurement relies on specified end outcomes not just activities, but the results of those activities. The strategic plan’s goals and objectives focus performance measurement on outcomes and help define appropriate performance indicators. However, the strategic plan defines the performance to be measured, while performance measurement provides the feedback that keeps the strategic plan on target.

 

Strategy 3: Develop an inventory of informational needs based on interviews with users and analysis of data requested by units on a routine basis (e.g., for accreditation reports, for grant proposals, for program review self-study, for assessment, for resource allocation).

 

Sources:

 

http://webarchive.urban.org/publications/310259.html

 

http://www.bgtplan.lsu.edu/office/mission.htm

Week 7 Discussion 2

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5

“Writing Budget Justifications” Please respond to the following:

From the second e-Activity, provide three (3) justifications for an increase to the four (4) highest discretionary spending accounts. 

From the second e-Activity, provide three (3) justifications for a decrease to the four (4) highest discretionary spending accounts.

RE: Week 7 Discussion 2

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From the e-Activity, provide three justifications for an increase to the four highest discretionary spending accounts.

 

Justification 1: Mandatory Spending eats up most of the budget. For example, Mandatory spending is the benefits provided by Social SecurityMedicare and other programs established by prior Acts of Congress. It consumer nearly two-thirds of total spending. It’s estimated to come in at $2.543 trillion in FY 2016. Mandatory spending is skyrocketing, thanks to the huge number of Baby Boomers who are reaching retirement age. Social Security and Medicare benefits will grow from 28% of the budget in FY 1988, to 36% in FY 2016. They will consume 40% of the budget by FY 2024.

Justification 2: Interest Payments on the National Debt. One of the fastest growing expenses is interest payments on the national debt. In FY 2016, it will be $283 billion, or enough to pay for ten Justice Departments. By 2024, it will nearly triple to $785 billion, becoming the second largest budget item after Social Security. Enjoy government services now, because you’ll be paying for it in ten years!

Justification 3: Discretionary SpendingDiscretionary spending pays for actually running the government. The President proposes spending $1.168 trillion in FY 2016. This is the only part of the budget that the President and Congress can debate each year. One thing they don’t argue about is the need for military spending. As a result, this consumes two-thirds of the discretionary budget. That means it’s greater than all other departments combined. True military spending is spread out among different agencies and budget categories.

 

Source:

 

http://useconomy.about.com/od/fiscalpolicy/p/Budget_Spending.htm

 

 

 

 

 

From the e-Activity, provide three justifications for a decrease to the four highest discretionary spending accounts.

 

Justification 1:  The recovery that followed the 2007-2009 financial crisis and recession has been relatively slow. Economic growth in the United States, however, has been faster in recent years than in many other advanced economies. Economic recoveries following major financial crises can be much less robust than recoveries following more cyclical downturns. Some continue to call for a more expansionary fiscal policy to respond to high unemployment levels, which would entail larger budget deficits in the short run. Other economists are skeptical that such fiscal policies would ameliorate deeper problems caused by high personal and federal debt levels, and therefore call for fiscal restraint as a first step towards addressing longer-term fiscal challenges, or at least a transition to a less expansionary fiscal policy.

 

Justification 2:  When the Supercommittee failed to reach agreement on $1.2 trillion in additional cuts required in the Budget Control Act of 2011, this triggered sequestration. Sequestration is a series of automatic budget cuts totaling $1.2 trillion, including interest savings, over nine years, beginning on January 2, 2013. Sequestration imposes 50 percent of its reductions on defense, which represents only 17 percent of federal spending in 2013. Mandatory spending accounts for 64 percent of the budget in 2013, but receives only 15 percent of the sequestration cuts. Also, two of the largest spending programs, Social Security and Medicaid, are exempt from sequester savings, as is all but 2 percent of Medicare.

 

 

Justification 3: Anti-poverty spending provides benefits to poor and low-income individuals and families in the form of income, health aid, food stamps, and housing assistance. Anti-poverty spending surged by 49 percent, inflation-adjusted, since 2002. In addition, Support Payments to States and Temporary Assistance for Needy Families (TANF) dropped by 28 percent. TANF is a block grant and is not adjusted for inflation or caseload changes.

 

Source:

http://www.heritage.org/research/reports/2012/10/federal-spending-by-the-numbers-2012

Week 8 Discussion 1

“Allocation and Allotments” Please respond to the following:

From the first e-Activity, examine and evaluate the disparity of your state’s budget allocation for education and property tax to the various localities.

Based on your assessment, challenge or defend the equity of the system across the various localities.

RE: Week 8 Discussion 1

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Allocation and Allotments

The state’s budget allocation for education and property tax to the various localities to which the allocation for education can be termed as school money was brought about by the projects by the collaboration between an education team and some reporters who were researching on how the states pay for their public schools and why they fail to cater for the students concerned accordingly. Bruce Baker says different amounts of revenue earned locally are raised differently basing on their local bases and apparently no effort is being put to balance that. Their aim is majorly to show what may come about due to studying in the poor schools and to air out the school funding imbalance (Rolph, 2011). Something to worry about is that the gap resulting from this is growing but not shrinking hence making a large difference between the poor and the wealthy students.

Moreover the school funding in the states is known to come from three main sources, the state, local money and the federal money. On the property taxes, it is always the first thing when it comes to a request that have been made to aid in paying for school. This again has a problem because the values of property vary from place to place accompanied by tax revenues, meaning that the annual round art of facilities for example new textbooks depends on the value of property or wealth that surrounds them. These schools undergo a lot of suffering because they struggle over raising money locally. They also got a very less amount from the state because there was recession to add on it.

Tough decisions were to be made and included performing a crosswalk every morning as a cross guard, walking the children across the street. Another action put across was that some of them even thought of putting donated washers and dryers in some of the schools to give room for an hour of volunteering in the classroom. The parents a d guardians living in that can spend luxuriously say that that works well for them but that cannot remember that the case is not the same in all places.

 

 

  References

Rolph, E. S. (2011). Government allocation of property rights: Who gets what?. Journal of Policy Analysis and Management.

Week 8 Discussion 2

5

“Variance Analysis” Please respond to the following:

Recommend at least two (2) strategies an administrator can apply to ensure that the budget is performing according to the established performance indicators. Justify your response.

From the second e-Activity on “Variance Analysis”, propose at least two (2) actions an administrator can take to avoid assumptions in budget items to avoid overlooking favorable or adverse line items in the budget. Provide examples to justify your response.

RE: Week 8 Discussion 2

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Variance analysis

Variance analysis can be defined as a tool used in the control of a budget for instance, for revenues or costs by analyzing the performance using variances between the actual, and the budgeted amount. Finding the difference between the two costs, the standard and the actual costs allows the positive output. For instance, the costs of direct labor can be put into division to get the efficiency and the rate variance. Therefore variance analysis can generally be said to aid in the understanding of the current costs to be able to put future costs into control and this benefits the management of a given organization, (Eckerson, 2010). .

The first strategy that the administrators can put into application to ensure that the budget is performing according to the established performance indicators is the change of the organization. This is because when the companies have goals which are established, when their objectives are clearly defined and the productivity results are always put into display for everyone to see, the organization is also put into a positive direction. Performance can well be a clear indicator of the efforts that are being put by the individuals working in the organization. They get to know the ones who do not perform well and put them in a position to.

Another strategy is the performance management. It harness information technology to monitor the business execution and also assists the organizations to achieve their goals. Using metrics, they are also able to provide a measurement which guides them in gauging the effectiveness of the processes of management and strategy. Moreover, a performance management system supports the framework in the fact that it has the technical and the business architecture hence the metrics distills the strategy of the organization to serve its stakeholders. It enables them to take action, know the opportunities and the problems, evaluate their goals and come up with a decision. These are some of the actions the administrators ought to take in order to improve their performance generally.

                                                  References

Eckerson, W. W. (2010). Performance dashboards: measuring, monitoring, and managing your business. John Wiley & Sons.

Week 9 Discussion 1

5

“Multiyear Plans” Please respond to the following:

Propose at least two (2) strategies to avoid assumptions in a multiyear plan. Justify your response. 

RE: Week 9 Discussion 1

5

Multiyear Plan

Multiyear planning is a step that gives important actions and decisions that keep guide and puts into shape a given organization, what it does, why it does it, who it gives services and its future focus. Effective strategies on planning does analyses its success apart from articulating the progress of the organization, its actions and where it’s going. Therefore being a master of other plans, the plan can actually give the general direction to the firm. Areas like human resource, communications and media, finance, and development wholly are given a specific guidance by the plan to be able to bring success to the organization.

Scanning environment is one of the strategies that aid in avoiding assumptions in a multiyear plan. Her, they analyze information concerning the environment which includes  the internal and the external to ensure they identify emerging issues, how they need to improve, their challenges, and to get to know the steps they should all take in order to make a move. They get into an activity of evaluating the weaknesses and strengths by having an open dialogue and with the use of appropriate approaches. This strategy also calls upon the boards for instance the director, which helps them to generate intelligence and reach a comprehension of the meaning of information (Steele, (2009).

Secondly, is the act of engaging key stakeholders? This involves  the parents and guardians for example if it’s a school board, the staff  and the students will have to meet together to be able to set the goals ,mission, vision for the achievement of the students  which will be integrated in the multiyear plan. Many other ways of getting critical issues and expectations is creating opportunities such as forums and opens space technology to get their personal thoughts and perspectives. This will help them to be able to effect the functioning of the school where success can be achieved. The major reasons for getting this move further to the future prosperity of the society wholly.                                             

 

 Reference

Mankins, M. C., & Steele, R. (2009). Turning great strategy into great performance. Harvard business review2607.

Week 9 Discussion 2

5

“Analyses” Please respond to the following:

Recommend at least two (2) best practices for analyzing multiyear financial statements. Justify your response. 

RE: Week 9 Discussion 2

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Analyses

Financial statement analysis is known to be a very powerful tool for the particular users who use financial statements, each having various aims concerning the circumstance of entity financially. The people concerned mostly are the investors, creditors, management and the regulatory authorities. In the process of analyzing finance, there is the use of horizontal and vertical analysis. In vertical analysis, each item on a statement is listed as another items percentage, while horizontal analysis compares the information of finance over the periods of reports. This will generally have to mean that in a balance sheet, items are stated as a percentage of all assets while in a financial statement, items are listed as a percentage of the gross sales.

 The second method is the use of various types of ratios, which helps to put into calculation the relation that is there between two numbers. Later, both can be compared to the ratios that had been calculated earlier to be able to examine the performance of the organization. This will be depicted when the financial statement is ready and most ratios will be between the expectations while a small number will show the slight problems that are being faced by the organization. Some of the categories of the ratios include activity ratios, liquidity ratios, leverage ratios and profitability ratios (Covin, 2011).

 Additionally there are some issues that can be faced in the process of interpreting the results and this are comparison of companies and periods, and also operational information. Therefore, the future performance of the industry such as the changes in claims of warranty cannot be seen because it only presents the total picture. Secondly, another issue can arise from comparison where frequent comparison of company ratios in order to gauge their performances and this may end up giving wrong conclusions because every single company has its own way of aggregating information. On the other hand the issue concerning comparing the periods may not be reliable because a company may not have maintained the accounts in which they store their information so that they differ from time to time.

 

                              References

Zahra, S. A., & Covin, J. G. (2011). Contextual influences on the corporate entrepreneurship-performance relationship: A longitudinal analysis. Journal of business venturing10(1), 43-58.

Week 10 Discussion 1

“Major Tax Structures” Please respond to the following:

From the e-Activity on the “Quarterly Summary of State & Local Tax Revenue,” illustrate with examples the burden of state, local, and state-local taxation in your state.Compare the burden of your state with two neighboring states.

Compare the burden of your state with two neighboring states.

RE: Week 10 Discussion 1

North Carolina residents pay nearly 10 percent of their income in taxes, placing the state squarely among the 20th-most taxed in the nation, said the nonprofit Tax Foundation in its most recent Annual State-Local Tax Burden Ranking.

With its ranking at No. 17, North Carolina has the second-highest tax burden per person among Southern states at 9.9 percent, according to the Tax Foundation researchers. “In general, lower tax burdens are going to be associated with more money in the hands of businesses,” said Scott Drenkard, a Tax Foundation economist. Businesses can do more hiring and increase productivity in a state where the tax burden is not as high.

According to the findings of the foundation’s research, North Carolina residents have a tax burden of 9.9 percent. They paid $2,648 in taxes per capita to their home state, and $887 to other states, for a total of $3,535. Per capita income is $35,659, or 37th lowest among the states. To arrive at the 9.9 percent tax burden, the tax total is divided by the per capita income.

North Carolina residents’ tax burden was 9.7 percent in 1977 and dipped to 9.2 percent by 2000. It jumped to 10 percent each year from 2006 to 2009, except for 2008, when it was 10.2 percent, according to a table provided with the research.

 “In fiscal year 2010 we saw both shrinking taxes paid and shrinking incomes for most state residents, but taxes shrank faster than income in most cases, thus a majority of states saw decreased burdens and the national average decreased very slightly also,” Malm said.

https://www.carolinajournal.com/news-article/n-c-tax-burden-ranks-second-highest-in-the-south/

South Carolina tax burden:

South Carolina had the 10th lowest effective income tax rate of the 41 states with an income tax in 2012. South Carolina’s high standard deductions and exemptions allow taxpayers to shield a higher portion of their income from state income taxes, reducing their effective tax rate compared with most other states.

South Carolina’s effective tax rate is 2.99 percent, based on 2012 figures, the most recent studied. That effective rate is far lower than the state’s 7 percent top income tax rate.

The perception is S.C. residents are taxed at the 7 percent rate, when reality is – after deductions and exemptions – the effective rate is 2.99 percent.

South Carolina is a comparatively poor state. In 2012, 81.5 percent of S.C. taxpayers reported federal adjusted income of less than $50,000.

Legislators also reviewed the state’s 6 percent sales tax rate. Local governments can tack on additional sales taxes for special purposes, including building projects or tourism-related activities.

However, the state misses out on about $3 billion a year in revenues because some goods and services are exempt from the sales tax.

In 2012-13, the largest sales tax exemption – $722 million – was on motor fuel, which has its own excise tax. The second largest exemption – $449 million – was on sales of prescription medicines. The third was groceries – $435 million.

http://www.thestate.com/news/politics-government/article101629497.html

Virginia tax burden

The state of Virginia has a progressive income tax, with rates ranging from 2% to a top rate of 5.75%. Of the 43 states with a personal income tax, that top rate slightly lower than average. It ranks 27th overall.

The Commonwealth’s sales tax ranks near the bottom of all states. When taking into account both state and local rates, Virginia’s average of 5.63% is 10th lowest in the country. The property and fuel taxes in the state are likewise lower than the national averages.

There are four tax brackets for filers in Virginia. While lower earners pay lower marginal (and effective) rates, the top bracket begins at just $17,000 in taxable income. This means most taxpayers in Virginia will pay the top rate of 5.75%.

In Virginia, you can only claim itemized deductions if you did so on your federal return. Conversely, if you did claim itemized deductions federally, you must itemize your deductions on your Virginia return.

There are several categories of income that are taxable at the federal level but may be subtracted from your taxable income in Virginia. Among the types of income you can subtract from your AGI to calculate taxable income are disability income, Virginia lottery prizes, Virginia college savings plan distributions and Virginia National Guard income. On the other hand, certain types of income, most notably capital gains, are taxed as regular income and must be included in your state return.

Virginia Sales Tax

The base, statewide rate of 4.3% in Virginia is combined with a statewide local rate of 1%, meaning the effective floor for sales tax in Virginia is 5.3%. In addition to that 5.3% rate, localities in the Northern Virginia and Hampton Roads regions collect a 0.7% sales tax, bringing the total in those areas to 6%. The table below shows the sales tax rates for the counties of Virginia. In Virginia, many cities are “independent cities” which means they are not in any county.

https://smartasset.com/taxes/virginia-tax-calculator

Week 10 Discussion 2

“General Taxes” Please respond to the following:

Review the following scenario and then analyze the impact of tax holidays on the budget.

(a) Scenario: Several states have declared sales tax holidays for which the state does not collect sales tax on selected items for those day or days. In most instances, the holiday has applied to purchases of clothing and the period has been a week to 10 days in August. The primary reason is to provide a “back-to-school” discount as families get ready for the upcoming year. However, in recent years, some states have proposed or enacted holidays for hurricane survival supplies, gasoline, Energy Star appliances, and guns and ammunition. 

(b) Impact Analysis: Analyze the impact of tax holidays of up to 10 days in your state. Create a table with two (columns. The first column should list Yield, Equity, Administration and Compliance, and Economic Impact. The second column should explain the impact of tax holidays in each area. 

RE: Week 10 Discussion 2

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Week 10 Discussion 2 “General Taxes” Please respond to the following:

 

Review the following scenario and then analyze the impact of tax holidays on the budget.

(a) Scenario: Several states have declared sales tax holidays for which the state does not collect sales tax on selected items for those day or days. In most instances, the holiday has applied to purchases of clothing and the period has been a week to 10 days in August. The primary reason is to provide a “back-to-school” discount as families get ready for the upcoming year. However, in recent years, some states have proposed or enacted holidays for hurricane survival supplies, gasoline, Energy Star appliances, and guns and ammunition. 

(b) Impact Analysis: Analyze the impact of tax holidays of up to 10 days in your state. Create a table with two (columns. The first column should list Yield, Equity, Administration and Compliance, and Economic Impact. The second column should explain the impact of tax holidays in each area. 

 

Sales tax holidays are designated periods when selected products are exempt from state (and sometimes local) sales taxes. The state of North Carolina repealed its tax-free weekend event when Governor Pat McCrory signed legislation in 2013 that also reduced corporate and personal income taxes. As a result, the state held no tax-free events during 2014, 2015 and 2016.

The move was unpopular with businesses and shoppers, and a bill calling for its return was introduced in April 2016, but it did not pass.

This means that there will be no sales tax-free shopping in the state in 2017. 

Sales tax holidays don’t make sense as tax policy. While ostensibly a tax break to help working families afford the costs of sending kids back to school, the holidays are more beneficial to affluent shoppers, who have the means to change the timing and amount of their purchases. And because consumers are mostly shifting (rather than increasing) their purchases, the holidays do little (if anything) to boost economic growth.

But there are two reasons why sales tax holidays might not be all bad.

First, as policy-makers search for ways to make their states more competitive, a sales tax holiday might be the least-bad option. Sales tax holidays don’t cost much revenue because they last only a few days and the prices of eligible items are typically capped. North Carolina recently eliminated its holiday but deeply cut its income and corporate taxes in a tax reform package. The sales tax holiday cost the state $14.5 million in 2011, a fraction of the half-billion-dollar price tag of the tax cuts this fiscal year. And if the economy goes south or adequate revenue does not materialize, holidays are far easier to change than other tax policies.

Second, shifting the timing of consumer’s purchases is sometimes worthwhile. That’s not likely the case for back-to-school holidays—families buy clothing throughout the year, not just in late summer—but encouraging residents to stock up on emergency supplies before hurricane season could help when storms hit.

In some situations, sales tax holidays can make sense. But generally, they’re bad tax policy unless the alternative is large tax cuts with dubious growth assumptions, and not just for a weekend but for the whole year.

17 states, primarily in the southeastern U.S., will hold a sales tax holiday in 2016, down from a peak of 19 states in 2010.

Sales tax holidays do not promote economic growth or significantly increase consumer purchases; the evidence shows that they simply shift the timing of purchases. Some retailers raise prices during the holiday, reducing consumer savings.

Sales tax holidays create complexities for tax code compliance, efficient labor allocation, and inventory management. However, free advertising for what is effectively a paltry 4 to 7 percent discount leads many larger businesses to lobby for the holidays.

Most sales tax holidays involve politicians picking products and industries to favor with exemptions, arbitrarily discriminating among products and across time, and distorting consumer decisions.

While sales taxes are somewhat regressive, this does not make sales tax holidays an effective tool for providing relief to low-income individuals. In order to give a small amount of tax savings to those with lower incomes, holidays give a large amount of savings to higher income groups as well.

Political gimmicks like sales tax holidays distract policymakers and taxpayers from genuine, permanent tax relief. If a state must offer a “holiday” from its tax system, it is an implicit recognition that the state’s tax system is uncompetitive. If policymakers want to save money for consumers, then they should cut the sales tax rate year-round.

North Carolina officials found that repealing their sales tax holiday in 2013 would save the state $16.3 million the next year, and put those dollars toward individual and corporate income tax cuts. Other states would be wise to follow D.C.’s and North Carolina’s lead and reevaluate the costs and benefits of sales tax holidays.

Sales tax experts and economists widely agree that there is little evidence of increased economic activity as a result of sales tax holidays. Politicians claim that sales tax holidays largely pay for themselves through increased economic activity and new collections. But experience shows that the claims of economic stimulus, increased revenue, and consumer savings are greatly exaggerated. States see little net economic activity as a result of sales tax holidays; the holidays instead represent a costly-to-administer revenue loss for the government.

https://taxfoundation.org/sales-tax-holidays-politically-expedient-poor-tax-policy-2016/

Week 11 Discussion 1

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“Review” Please respond to the following:

Recommend three (3) strategies you might use as a first-time administrator to ensure that you are effective in the role.

RE: Week 11 Discussion 1

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Technical skill

As used here, technical skill implies an understanding of, and proficiency in, a specific kind of activity, particularly one involving methods, processes, procedures, or techniques. It is relatively easy for us to visualize the technical skill of the surgeon, the musician, the accountant, or the engineer when each is performing his own special function. Technical skill involves specialized knowledge, analytical ability within that specialty, and facility in the use of the tools and techniques of the specific discipline.

Of the three skills, technical skill is perhaps the most familiar because it is the most concrete, and because, in our age of specialization, it is the skill required of the greatest number of people. 

Human Skill

Human skill is the executive’s ability to work effectively as a group member and to build cooperative effort within the team he leads. As technical skill is primarily concerned with working with “things” (processes or physical objects), so human skill is primarily concerned with working with people. This skill is demonstrated in the way the individual perceives (and recognizes the perceptions of) his superiors, equals, and subordinates, and in the way he behaves subsequently.

The person with highly developed human skill is aware of his own attitudes, assumptions, and beliefs about other individuals and groups; he is able to see the usefulness and limitations of these feelings. By accepting the existence of viewpoints, perceptions, and beliefs which are different from his own, he is skilled in understanding what others really mean by their words and behavior. He is equally skillful in communicating to others, in their own contexts, what he means by his behavior.

Such a person works to create an atmosphere of approval and security in which subordinates feel free to express themselves without fear of censure or ridicule, by encouraging them to participate in the planning and carrying out of those things which directly affect them. He is sufficiently sensitive to the needs and motivations of others in his organization so that he can judge the possible reactions to, and outcomes of, various courses of action he may undertake. Having this sensitivity, he is able and willing to act in a way which takes these perceptions by others into account.

Real skill in working with others must become a natural, continuous activity, since it involves sensitivity not only at times of decision making but also in the day-by-day behavior of the individual. Human skill cannot be a “sometime thing.” Techniques cannot be randomly applied, nor can personality traits be put on or removed like an overcoat. Because everything which an executive says and does (or leaves unsaid or undone) has an effect on his associates, his true self will, in time, show through. Thus, to be effective, this skill must be naturally developed and unconsciously, as well as consistently, demonstrated in the individual’s every action. It must become an integral part of his whole being.

Conceptual skill

As used here, conceptual skill involves the ability to see the enterprise as a whole; it includes recognizing how the various functions of the organization depend on one another, and how changes in any one part affect all the others; and it extends to visualizing the relationship of the individual business to the industry, the community, and the political, social, and economic forces of the nation as a whole. Recognizing these relationships and perceiving the significant elements in any situation, the administrator should then be able to act in a way which advances the over-all welfare of the total organization.

Hence, the success of any decision depends on the conceptual skill of the people who make the decision and those who put it into action. When, for example, an important change in marketing policy is made, it is critical that the effects on production, control, finance, research, and the people involved be considered. And it remains critical right down to the last executive who must implement the new policy. If each executive recognizes the over-all relationships and significance of the change, he is almost certain to be more effective in administering it. Consequently the chances for succeeding are greatly increased.

Not only does the effective coordination of the various parts of the business depend on the conceptual skill of the administrators involved, but so also does the whole future direction and tone of the organization. The attitudes of a top executive color the whole character of the organization’s response and determine the “corporate personality” which distinguishes one company’s ways of doing business from another’s. These attitudes are a reflection of the administrator’s conceptual skill (referred to by some as his “creative ability”—the way he perceives and responds to the direction in which the business should grow, company objectives and policies, and stockholders’ and employees’ interests.

https://hbr.org/1974/09/skills-of-an-effective-administrator 

Week 11 Discussion 2

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“Recall” Please respond to the following:

Describe three (3) concepts or skills you learned in the course that you can apply in your current or future professional life. 

RE: Week 11 Discussion 2

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Describe three (3) concepts or skills you learned in the course that you can apply in your current or future professional life.

The three (3) concepts or skills I learned in the course that I can apply in my current professional life is.  The first one is Written Strategic Planning– Strategic planning is an organizational management activity that is used to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes/results, and assess and adjust the organization’s.

 The Second- Budgeting Process- Budgeting is the process of creating a plan to spend your money. This spending plan is called a budget. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do. Budgeting is simply balancing your expenses with your income.  

The Third- Trend Analysis– is the rampant practice of collecting information and attempting to spot a pattern.

In my current job I utilize these skills on regular bases, working for a Non-Profit Organization I use all but one of the skills.  The budget is set prior to the organization receiving funding for the allotted time frame.  Working for the Department of Labor, we look at trends and have to maintain a budget daily, as well as the planning process for the organization.  The skills I’ve learned will not only benefit me in my professional life, but also personal life as well.   

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