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Peng Test 2
Cards for Peng test 2
55
Finance
Graduate
03/28/2006

Additional Finance Flashcards

 


 

Cards

Term
Captial budget
Definition
a budget for financing capital projects
Term
operating budget
Definition
budget for day to day operations
Term
3 models for deciding what captial projects to fund
Definition
1. rational actor
2. organizational process
3. governmental politics
Term
rational actor model
Definition
- rationally come up with a decision package
- based on benefits the projects can create
- cant rely on this because benefits are hard to compare
Term
organizational process
Definition
1. Is it mandated
2. Will it pay for itself
3. Establishing a process (like a committee)
4. Establishing criteria
Term
governmental politics
Definition
mainly pork barreling
Term
funding of captial projects
Definition
- long term in nature
- should match strategic plan of city
Term
Financial planning
Definition
- how does this years actions effect multi year planning
- everything is based on current year
- everything in future is a projection
Term
four concepts of budget balance
Definition
1. annual balance
2. biennial balance
3. structural balance
4. cyclical balance
Term
annual balance
Definition
- balacing the budget every year
- required to be balanced on a cash basis
- allows for delayment of payments
Term
annual balance equation
Definition
revenue (recepts) = spending (disburcements)
Term
biennial balance
Definition
- budget is balanced on a two year basis
- more difficult
- can not delay payments
Term
biennial balance equaltion
Definition
Annualized Receipts= Annualized Disbursements
Term
structural balance
Definition
- looking at if recurring revenue is equal to recurring spending
- two levels: year to year and long term
Term
year to year structural balance
Definition
Take out all one time spendings and revenue and look and see if it is balanced
Term
long term structural balance
Definition
- Making long term projections about spending and revenue growth
- If spending is greater than revenue, then you have a long term structural problem
Term
structural balance equation
Definition
Recurring receipts = recurring disbursement
Term
cyclical balance
Definition
- In the long run revenue behaves with an up and down movement on a graph
- Spending remains fairly constant upwards
- When revenue is more than spending = cyclical surplus
- When revenue is less than spending = cyclical deficit
Term
cyclical equation
Definition
cyclical surplus = cyclical deficit
Term
what factors can cause a budget shortfall to occur?
Definition
1. economy
2. forecasting error
3. governmental tax policy
4. spending
5. courts
6. federal government
Term
two types of budget shortfalls
Definition
known and unknown
Term
known budget shortfall
Definition
You know that you have a deficit after baseline budgeting is done
Term
unknown budget shortfall
Definition
You may have a balanced budget but during the fiscal year you can still incur a deficit
Term
gap closing approaches
Definition
1. short term solutions to known budget shortfalls
2. solutions to unknown budget shortfalls
3. programatic cuts
4. budget gimimicks
Term
short term solutions to known budget shortfalls
Definition
- decrease spending
- increase revenue
Term
decreasing spending in short term
Definition
- across the board cuts
- delay maintance
- no new programs
- partical funding
Term
increasing revenue in short run
Definition
- raise selective tax (like Tobacco)
- create tax amnesty so people will pay
- increase user fees
- temporary broad base tax increase
- perminent broad base tax increase
Term
solutions to unknown budget shortfalls
Definition
- limit appropriations to a percentage of estimated revenues
- budget stablization funds
Term
budget stabilization funds
Definition
- Money you can draw from when there is a deficit
- buys you time without having to take action
- replace money later
Term
K-12 cuts
Definition
- per student
- will never be less than last year
Term
Higher Ed cuts
Definition
- takes big cuts because it is discretionary (no subject to federal guideline and has other sources of revenue)
Term
healthcare cuts
Definition
- need to control program growth
Term
ways to control healthcare growth
Definition
- sticter eligibility
- controlling drug costs
- increase copayments
- cut abuse out of system
Term
Criminal Justice Cuts
Definition
control cost by
1. Look at the offenses that send people to jail
2. Look at sentencing
3. Private prisons
Term
across program cuts
Definition
1. freeze salaries
2. freeze hiring
3. cut positions
Term
state budget adoption
Definition
• Once it gets proposed by the Governor it goes to Budget Analysts to determine if anything is wrong
• Legislature gets it, negotiates, adopts
• Goes back to governor for signature or veto
Term
federal budget adoption
Definition
• Once it gets proposed by the prez it
• Legislature gets it, sets a budget resolution, negotiates, adopts
• Goes back to prez for signature or veto
Term
leg vs. exec in budgeting
Definition
prez is more nation center, leg is more state centered
Term
variables that affect executive success in budgeting
Definition
1. size of budget office
2. veto power
3. where you are in election cycle(easier in first couple years)
Term
test of success for executive in budgeting
Definition
- If they get their priorities
- Changes (how different is the final budget from the one they proposed)
- Growth rate of the budget
Term
legislative players in budgeting
Definition
1. leaders
2. committee chairs
3. memebers
4. staff
Term
legislative leaders priorities
Definition
1. Maintain majority
2. Increase Majority
Term
committee chair trends
Definition
- involed in own programs
- favor increased spending
Term
legislative memeber trends and priorities
Definition
1. reelection
2. increase party strength
3. have diverse interests
Term
legislative staff trends
Definition
- keep party in power
- find money for party
Term
interest groups influence on budgeting
Definition
1. vote for candidates
2. money
3. initiatives
Term
two goals in budget execution
Definition
1) Execute the budget as planned
2) Change the plan if the conditions change
Term
two main functions in budget execution
Definition
1. control
2. monitoring
Term
Parts of control
Definition
1. allocation: giving out money
2. witholding: not giving money if u know changes need to me made
Term
Budget monitoring
Definition
variance anaylsis: making the needed changes to execute the budget and know why they occur
Term
Why preformance budgeting?
Definition
accountability, evaluation, benchmark
Term
performacne measures
Definition
Input, Output, Outcomes, Efficiency
Term
2 levels of incentives
Definition
Organizational, Individual
Term
organizational incentives
Definition
budget increase, gain sharing, carry over, less oversight, recognition
Term
individual incentives
Definition
promotionl, bonus, raise, recognition
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