Financial Strategy for Public Managers Open Textbook Library

It excoriated the Ferguson Police Department and the Ferguson City Council for encouraging, both actively and passively, the sort of aggressive policing that Ferguson residents had decried. But perhaps even more important, it explained that the most compelling evidence of biased policing was not arrest records or police reports. Ferguson generated more than $2.5 million in municipal court revenue in fiscal year 2013, an 80 percent increase from only two years prior. In all, fines and forfeitures comprised 20 percent of the city’s operating revenue in fiscal year 2013, up from about 13 percent in 2011. By comparison, other St. Louis suburbs relied on fines and fees for no more than six percent of operating revenue. Regardless of how their employees’ retirement plans are managed, every government must account for the money they pay into those plans.

• When a government pays salaries it has less cash and, in turn, less current financial resources to apply elsewhere.
• So practically speaking, expenditures and expenses are not that different.
• On the basis of “average” unit costs, this proposal is a definite “no go” for Cheng and Duncombe.
• A fiscal note is an analysis of how a proposed piece of legislation would affect the existing state budget.
• Ideally, the financial statements you are working with should report on the organization’s operating and financial position for at least two financial periods.
• With this simple framework we can do the accounting recognition for most of the basic types of transactions a typical public organization will encounter.

States can only exceed the TEL revenue or appropriation caps if they exercise their override provision (e.g., legislative majority or super-majority vote). Procedural limits are unique in that they are not part of the  budgeting processes and apply only if the Governor seeks to levy new or higher taxes. If financial statements tell an organization’s financial story, financial statement analysis is the annotated bibliography of that story. Sections of the text might also be suitable for other courses often found in Master of Public Administration, Master of Public Policy, and other programs. Chapters 2 and 3 would be appropriate for courses on governmental accounting, debt management, credit analysis, or non-profit financial management. Chapters 4 and 5 work well for an applied course on public or non-profit budgeting.

The Beginner’s Guide to Reading & Understanding Financial Statements

This is the salvage value or residual value or value at write-off. If we subtract the salvage value from the historical cost, and divide by the useful life, we get the annual depreciation expense. It incurred a variety of expenses – staff time, travel, supplies, etc. – to deliver that service. When should it recognize the expenses incurred to deliver that program?

• The centerpiece case at the end of the book (The Cascadia Hearing School) should retain its relevance and usefulness well beyond the 2015 financial statements used in the case.
• In the aggregate, they must take in more revenue than they spend, or they will cease operating.
• Also, each statement’s presentation style and terminology can vary depending on the type of organization that prepared it.
• So total annual fixed costs are ($6,000 + $900 + $1,500 + $180 + $100) or $8,680.
• Chapters 2 and 3 would be appropriate for courses on governmental accounting, debt management, credit analysis, or non-profit financial management.
• Specifically, they look at how potential cuts or changes in programs, or the incidence of a new tax or fee, might disproportionately affect people of color or particular neighborhoods within the City.

The difference between actual results and budgeted results is known as a budget variance. Effective public managers understand when, where, and why variances happen. They also use insights from variances to identify inefficiencies and other current management concerns,  and how they make future budgets.

Open Textbooks

As with most public health programs the main costs will be related to personnel, namely public health nurses, outreach counselors, and nutritionists. The program will also require space and other overhead costs. The outreach and education components will require advertising, travel, and other costs.

• In the revenue chapter, the treatment of topics across the complete range of government types is refreshing (for example, including special districts and counties).
• Comparable facilities also have one certified staff assistant for every 20 attendees.
• The two staff members who delivered that program rode together to that off-site location in one of their personal vehicles.
• When we think of fiscal accountability in government we usually think of the budget.
• Services like copying, information technology, payroll, exist to serve clients within the organization, so they’re called service centers.

Are you interested in gaining a toolkit for making smarter financial decisions and communicating decisions to key stakeholders? Explore our online finance and accounting courses, and download our free course flowchart to determine which best aligns with your goals. An annual The Basic Financial Statements Financial Strategy for Public Managers report is a publication that public corporations are required to publish annually to shareholders to describe their operational and financial conditions. Financial statements offer a window into the health of a company, which can be difficult to gauge using other means.

Recognition Concepts for Special Circumstances

We also believe the time is right to bring to the market a free, open source treatment of this critically important subject. Governments show their proprietary fund assets, liabilities, and net position in a Combining Statement of Net Position. Like the Statement of Net Position, here OP has drawn a distinction between major and non-major proprietary funds.

This adjusted for spending number is divided by 365 to produce a rough measure of average daily spending. OP’s General Fund has $114.7 million in total assets, more than two-thirds of its total governmental funds assets. The basic distribution of cash and receivables in the general fund is quite similar to the distribution we saw earlier in the government-wide Statement of Net Position. OP also has few General Fund liabilities relative to its General Fund assets. As you’ll see a bit later, most general fund spending is on salaries and other expense/expenditure items that do not generate a liability.

Non-Profit Financial Ratios – An Illustration

They have allowed their governments to borrow record amounts of money, but denied them the financial means to repay that money. They have little or no new money to commit to innovate programs of the sort that Zuckerberg and others would like to see. A government’s Statement of Activities presents much of the same information we see on the income statement for a for-profit or non-profit.

• I prefer that the financial statements chapter is before the transaction chapter.
• Maybe it has had to borrow a lot of money to build out its service delivery capacity.
• Others are more feasible, but might place costs disproportionately on the population the program is designed to serve.
• An indirect cost rate is a ratio of indirect costs to direct costs.
• Keep in mind that funding agencies and financial analysts often would need access to at least four if not five years of financial data.
• Utilities (e.g., electric, water and sewer, garbage) for the new office space were expected to average $500 per month.

Fortunately, many governments were able to reconstruct historical cost figures by reviewing old invoices, purchase orders, construction plans, and other historical documents. Those assets were then grouped into fixed asset networks, assigned a useful https://quickbooks-payroll.org/ life and a depreciation schedule, and depreciated to the present day. That depreciated figure became the original capitalized infrastructure asset value. The most liquid assets appear first, and the least liquid assets appear near the bottom.

Unlike other public financial management texts/ the authors also integrate foundational principles across the government/ non-profit/ and “hybrid/for-benefit” sectors. Coverage includes basic principles of accounting and financial reporting/ preparing and analyzing financial statements/ cost analysis/ and the process and politics of budget preparation. The text also includes several large case studies appropriate for class discussion and/or graded assignments. It offers a thorough, applied, and concise introduction to the essential financial concepts and analytical tools that today’s effective public servants need to know. It starts “at the beginning” and assumes no prior knowledge or experience in financial management. They draw upon dozens of real-world examples, cases, and applied problems to bring that relationship between information and strategy to life.