Public Budget Cycle
Public Budget Cycle comprises of the various means by which societal ends are met through budgeting. The budget cycle is used to represent the life cycle of a budget from the creation stage to implementation and evaluation stages (Lee, Johnson, & Joyce, 2008). A fundamental application of budgeting is to ensure equitable distribution of scarce resources in public projects while maximizing societal benefits. The Public Budget Cycle in the U.S. goes through four phases namely: preparation & submission, approval phase, execution & audit, and lastly evaluation. This paper will analyze the Public Budget Cycle with regard to USAID (U.S. Agency for International Development) while addressing how each of the phases relates to the overall organizational mission.
The first phase of the Public Budget Cycle is preparation and submission stage. According to Cropf (2015), this stage begins when the chief executive distributes guidelines to all agencies involved in preparation of documents for budgeting process. Policymakers in the government analyze economic trends in the country and make projections over critical figures and expected revenues in the economy. This also helps in guiding the entire process. USAID’s agency personnel use these guidelines to prepare cost estimates of various programs. Once the estimates are prepared, they are reviewed by the department budget office and revised where necessary. The budget estimates are reviewed to establish where they are consistent to the chief executive’s policy recommendations. The proposed budget is then forwarded to the legislature for further analysis and approval. During this period, the Ministry of Finance disburses funds and grants to all states for use. This also helps in establishing available revenues for use and thus in making cost estimates.
USAID’s organizational mission aims at achieving two outcomes. First, it aims and reducing poverty levels in democratic societies. Second, USAID aims at promoting the development of democratic societies that are resilient and capable of realizing full potential. Budget preparation helps USAID inn achieving maximum developmental impacts in various countries as outlined in its overall mission statement. This is because budget preparation enables USAID to undertake thorough scrutiny of all ongoing projects, examine strategic opportunities in the environment, and formulate policies with regard to a future perspective. The Public Budget Cycle ensures that the agency conducts thorough assessments using relevant data in order to justify need for resources. This is because resource decisions are only based upon concrete strategic plans and performance reports. This helps in achieving the overall organizational mission.
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The second phase in the Public Budget Cycle is the approval phase. This stages involves submission of the executive budget proposal to the legislature for review. Various legislative committees are responsible for reviewing the executive budget proposal from the agency. A number of subcommittees may also be involved in the process depending on the workload. According to Cropf (2015), this process is followed by preparation of 12 appropriation bills which are then reviewed by appropriation subcommittees. Each of the 12 appropriation bills is handled by a separate appropriation subcommittee. This is usually at the federal level of review. In state levels, a single budget bill can be used to review the budget proposal. For a budget to pass, the legislative authorities at the state and national levels must approve it based on the reviews the bodies conduct. This process is marked by hearings from different subcommittees which determine whether the agency budget proposal will pass.
At the legislative houses, the agency practically defends the budget requests through facts and data. The agency may provide data on requests to back up its proposal. All budget and revenue proposals are carefully scrutinized to ensure they are appropriate and link with the mission of the organization (Cropf, 2015). USAID is expected to prepare Country Development Cooperation Strategy (CDCS) reports which details development plans over five year period. This report is prepared in bilateral missions as well as in regional platforms. USAID uses CDCS to define various development objectives and to promote development cooperation in various countries. The CDCS report serves a critical function in relation to budget requests. The CDCS is used for Mission Resource Request (MRR). It is also important in Congressional Budget Justification (CBJ) and in detailing reports on various processes. This is all aimed at ensuring the budget proposal is approved for the entire funds to be released. Once this is done, USAID is able to fulfill its mission of poverty reduction and promotion of economic development in among democratized countries (Cropf, 2015).
The third phase in the Public Budget Cycle is execution and audit stage. Execution phase coincides with the beginning of the fiscal year. In this phase, various agencies are required to submit apportionment plans that indicates the entire amount of the budget (Guess, 2015). Additionally, the apportionment plan details the amount of funds required on quarterly basis. The apportionment process helps in reconciling discrepancies that may arise between planned spending and available revenues. The budget plays the role of executive policy by guiding the plans of the agency over the course of the entire fiscal period until the next one. At this stage, it is only the chief executive who may decline to release funds due to any reason that may seem appropriate. After the funds are released, allotment process occurs whereby the agency divides the funds and allocates to various programs or projects. Allotments may be made on a monthly basis. This helps to control expenditure and unnecessary spending over the financial year. This helps in achieving the mission of the agency in transparent way.
Pre-audits are conducted during the actual use of funds in various projects. Pre-audits ensure that expenditures are only incurred for approved projects only (Guess, 2015). Pre-audits also helps in ensuring that the agency has adequate funds that can meet all expenditures before commencing a particular project. This ensures that projects do not stall midway. The accounting office is partly responsible for conducting pre-audits. In other areas, independent comptrollers are responsible for the pre-audits. The execution phase is also marked by a myriad of other activities such as tax collection which is conducted through an internal revenue service. Pre-audits are critical in ensuring that the project attains set goals and objectives. By ensuring that expenditures are incurred appropriately and for the right projects, this phase helps in realizing the overall organizational mission.
The fourth phase in a Public Budget Cycle is the evaluation phase. The major objective in this phase is to ensure compliance of the project with the appropriation budget (Lee, Johnson, & Joyce, 2008). This phase ensures that there is honesty in the dispensation and use of public money on various outlined projects. In this phase, the accounting docket is put to task to ensure that standards of accounting are followed in administration of the public funds. Auditors are also tasked with ensuring that funds are put in appropriate use and also to seal the loopholes that may exist. In the recent period, auditing has taken a new dimension where it is involved in analyzing the effectiveness of state programs. The audits conducted during the evaluation phase may extend over a period of time beyond the financial year period covered by the funds. These audits may be conducted by private firms, state government auditors, or even the legislative audit units. This ensures there is efficiency in projects undertaken by USAID and may serve as congressional budget justification in subsequent financial periods.
During the evaluation phase, annual reports detailing the various projects and actual expenditures are submitted to appropriate audit bodies. The auditors must then determine whether the funds were put in the best use possible. The various audit reports prepared detailing the application of funds are then submitted to the legislature. The national legislature then forwards the reports to the Public Accounts Committee. The Public Accounts Committee makes the final recommendations concerning the reports to the legislature (Rosenthal et al., 2009). This entire process is of great importance in ensuring accountability in all projects and programs undertaken by USAID. This ensures that USAID puts public funds to best use in poverty reduction efforts in democratic countries and promoting development.
In conclusion, Public Budget Cycle is of great importance in ensuring that there is accountability in implementation of various programs that use public funds. USAID is one of the international organizations involved in poverty reduction. The Public Budget Cycle ensures that budget requests are made depending on planned expenditure, and most importantly ensures that public funds are utilized as per the proposals. The different phases of the Public Budget Cycle ensure that USAID conducts its operations in an accountable way and for the benefit of majority.
Cropf, R. A. (2015). American Public Administration: Public Service for the 21st Century. New York, NY: Routledge.
Guess, G. M. (2015). Government budgeting: A practical guidebook. Albany, NY: SUNY Press.
Lee, R. D., Johnson, R. W., Joyce, P. G. (2008). Public budgeting systems (8th ed.). Sudbury, MA: Jones and Bartlett.
Rosenthal, J. H., Barry, C., & Carnegie Council on Ethics & International Affairs. (2009).Ethics & international affairs: A reader. Washington, D.C: Georgetown University Press.
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