University of Colorado Denver SCHOOL OF PUBLIC AFFAIRS

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1 Updated 1/5/2016 University of Colorado Denver SCHOOL OF PUBLIC AFFAIRS PUAD : Governmental Budgeting and Accounting Spring 2016 Tuesday & Friday 1:00PM 3:30PM Location: Lawrence Street Center (LSC) 500 Professor: Todd Ely Phone: Office: Lawrence Street Center 525T Office Hours: Thursday 10:00AM noon, or by appointment Course Description: The primary objective of this course is to teach students how to use financial information to make decisions in public organizations. The secondary objective is to help students develop the financial skills and communication abilities required of public managers. The course focuses on managerial and financial accounting. More specifically, students are introduced to tools for developing, implementing, and controlling a budget within an organization. Topics include the development of operating budgets, cash budgets, break-even analysis, cost behavior, the time value of money, capital budgeting, long-term financing, and variance analysis. We will also be introduced to the primary accounting statements and governmental accounting. This course also focuses on developing spreadsheet skills. Budgeting and financial decision-making require these skills. It is assumed that students have little prior knowledge or use of a spreadsheet program. We will develop these skills throughout the course, in assignments and optional tutorials, and apply them to the topics we cover. By the end of this course, you will be able to: Develop various budget documents Read and interpret a budget Understand different types of budgets, and how each aids in decision making Use Excel throughout the budgeting process Understand the basics of financial accounting Read and interpret audited financial statements Perform basic financial condition analysis Course Materials: Steven A. Finkler, Thad Calabrese, Robert Purtell, and Daniel L. Smith, Financial Management for Public, Health, and Not-for-Profit Organizations, Fourth Edition, 2013, Prentice Hall (referred to as Finkler afterwards). Note: The 2009 Third Edition is also acceptable. City and County of Denver Mayor s 2015 Budget The remaining readings, as well as the Denver budget, are available on Canvas.

2 Subscribe to GovManagement Daily at: Course Electronic Shell Canvas: A course shell has been set up through Canvas, which contains handouts, lectures, assignments, and other materials. Course Requirements and Grading: Your course grade will be determined as follows: Assignments Percent of Final Grade Points Class Participation/In-Class Exercises 5% 50 Homework (5) 20% 200 Projects (3) 50% 500 Final Exam/Take-Home Project 25% 250 Total: 100% 1000 Spreadsheet Competency (0%): You will complete introduction to spreadsheets tutorials prior to the first assignment if you do not have existing spreadsheet skills. I strongly encourage you to use the opportunity presented by this class to enhance your spreadsheet skills. A series of voluntary Excel training modules are provided through Canvas. For those who prefer using a Mac, tailored guidance on Excel can be found at: Class Participation/In-Class Exercises (5%): Students must complete the reading assignments before class and come to each class prepared to summarize and discuss them. We will typically engage in problem-solving exercises during the class period. Students are expected to actively attempt the in-class exercises and contribute to its discussion. Excessive absence and/or unwillingness to participate in class discussions will result in grade reduction. Class participation is evaluated by the following criteria: Contributions: frequent and consistent; high-quality ideas; succinct, cogent examples and arguments; integrate course readings and personal experiences. Listening: process and reflect on comments of students and instructor. Integrity: respectful; inclusive; welcoming; sincere commitment to learning. Attendance: attendance is taken each class meeting. Meeting with Instructor: Please schedule a time to meet with the instructor during the course. This is an opportunity for me to learn more about you, your experiences, and your interests, as well as for you to explore any issues with the course. Homework (20%): Five (5) homework assignments allow you to actively apply the content from the current readings. I encourage you to discuss the homework in small groups, but you must write up your own answers (two students turning in identical homework assignments constitutes cheating). Spreadsheet templates will, in most instances, be made available via Canvas. Homework and projects are due at the beginning of the session via Canvas. If you do not submit your assignments by the due date, you will receive a deduction of 10 percent of the points each day after the missed date. After 3 late days, I will no longer accept assignments. If students have 2

3 extenuating circumstances beyond their control, then I will consider an extension on the due date. Approval must be requested prior to the due date. Homework Points Class Session and Due Date #1: Finkler 2-24 (Local Hospital), 15 Class 2, 2-25 (Roche City) January 22 #2: Finkler 3-27 (Georgeville 35 Class 3, Police), Bland Excel Exercise #1 January 26 #3: Finkler 4-47 (Jamestown 50 Class 5, Clinic), Mead Meals on Wheels February 2 Center Case Study, Questions 1 and 2 (Ch. 9, response in memo format) #4: Finkler Mead Meals on Wheels Center Case Study, Question 4 (Ch. 9, response in memo format) #5: Lafayette Library Accounting Problems and CAFR Tasks 50 Class 11, February Class 15, March 8 Skills/Topics Operating budgets, Cash budgets Program budgets, Cost allocation, Budget projection Costs (fixed, variable, average, total, marginal), Break-even analysis, Operating budgets, Professional memo writing Net Present Value (NPV), Capital budgeting Accrual accounting, Balance sheet, Activity statement, CAFRs Projects (50%): Projects are designed for you to apply the course content in practical settings and communicate quantitative information in a professional memo format. In the projects, you will 1) use a variety of methods to forecast sales tax revenue for a city, 2) develop a proposed budget for a new municipal program, and 3) extend a program budget using various scenarios in a team setting. Be prepared to share your findings with the class. The late policy is the same as described above for homework assignments. Project Points Class Session and Due Date Forecasting Revenues 100 Class 7, Project February 9 Northville I Budgeting 200 Class 9, Simulation February 16 Northville II 200 Class 14, Budgeting Simulation March 4 Skills/Topics Inflation adjustment, Forecasting methods, Calculating forecasting error Flexible and transparent budgets, Cost types, Parameters and assumptions Teamwork, Personnel scheduling, Program budgeting, Break-even analysis Take-Home Final Exam (25%): The final examination for this class will be posted on Friday, March 4 th after class and is due on Friday, March 11 th. Extra Credit: Budget Hearing Observation Memo (1.5% or 15 points): Observe a state or municipal budget hearing. It is acceptable to virtually attend the hearing (or past hearing) given this is a Spring semester course. Write a two page double-spaced memo describing and analyzing the hearing along several dimensions (i.e. the hearing topic, the role of elected officials, staff involvement, public engagement, and use of evidence for budget justification). Include the hearing agenda, if available, with the memo. The memo guidelines will be available on Canvas. The memo is due any time before March 11 th. 3

4 Updated 1/5/2016 Course Overview (January 19 March 11): Class Date Topics Assignments Due 1 1/19 Course Overview and Budget Types 2 1/22 Budget Formats Homework 1: Finkler 2-24 (Local Hospital), 2-25 (Roche City) 3 1/26 Budgeting Process and Politics Homework 2: Finkler 3-27 (Georgeville Police), Bland Excel Exercise #1 4 1/29 Understanding Costs and Break-Even Analysis 5 2/2 Revenues, Histories, and Forecasting Homework 3: Finkler 4-47 (Jamestown Clinic), Mead Meals on Wheels Center Case Study Questions 1 & 2 (Ch. 9) 6 2/5 Capital Budgeting 7 2/9 Capital Budgeting and Long-Term Financing Project 1: Forecasting Revenues Project 8 2/12 Budget Justification and Professional Ethics 9 2/16 Performance Management and Citizen Input Project 2: Northville I 10 2/19 Budget Constraints and Solutions 11 2/23 Introduction to Financial Accounting Homework 4: Finkler Mead Meals on Wheels Center Case Study Question 4 (Ch. 9) 12 2/26 Financial Accounting, Continued 13 3/1 State and Local Government Accounting and Reporting 14 3/4 Financial Statement and Condition Analysis Project 3: Northville II 15 3/8 Nonprofit Financial Management & Course Review Homework 5: Accounting Problems Handout & CAFR Exercise 16 3/11 Additional Topics Take-Home Final Exam Due

5 Updated 1/5/2016 Detailed Course Outline: Class 1: Course Introduction and Budget Types Class 2: Budget Formats 1) Finkler, Chapter 1 (skim), Chapter 2 (to the top of pg. 46) and Chapter 3 (to the section on forecasting on pg. 88) 2) City and County of Denver 2015 Budget, Budget Introduction, pgs ) Mitchell, David and Kurt Thurmaier. Foundations of Public Administration. Currents and Undercurrents in Budgeting Theory: Exploring the Swirls, Heading upstream, Homework #1 due: 1) Watch Get to know Excel 2010: Create formulas at (if not already comfortable using Excel) 2) Budget Exhibits 1 & 2 based on Introduction to Spreadsheets handout (if not already comfortable using Excel) 3) Finkler Problems 2-24, Local Hospital, 2-25 Roche City (1.5% of final grade) Class 3: Budgeting Process and Politics (Hot Topic: Budget response to a natural disaster) 1) Finkler, Chapter 2 (remainder) and Chapter 3 (remainder) 2) Rubin, Irene. The Politics of Public Budgets in The Politics of Public Budgeting, pgs ) Mikesell, John. Budgets and Political Strategies in Fiscal Administration, 7 th ed, pgs ) The Budget Calendar & Process, City and County of Denver 2015 Budget, pgs ) Center on Budget and Policy Priorities, Introduction to the Federal Budget Process, Updated January 3, ) Circular No. A 11: Preparation, Submission, and Execution of the Budget, Executive Office of the President Office of Management and Budget, August (Skim Sections 10 and 15) 7) Mikesell, John L. and Daniel R. Mullins. Reforms for Improved Efficiency in Public Budgeting and Finance: Improvements, Disappointments, and Work-in-Progress. Public Budgeting & Finance 31.4 (2011): Homework #2 due: 1) Finkler Problem 3-27, Georgeville Police, Bland Excel Exercise #1 (3.5% of final grade) Class 4: Understanding Costs and Break-Even Analysis 1) Finkler, Chapter 4

6 2) Ammons, David M. Staffing Factor Calculation: Projections for Extended-Hour or Uninterruptible Services, in Tools for Decision Making, CQ Press, Class 5: Revenues, Histories, and Forecasting (Hot Topic: Public pension systems) 1) Wang, XiaoHu. Revenue Forecasting, in Financial Management in the Public Sector, M.E. Sharpe: ) Mikesell, John L. and Justin M. Ross. State Revenue Forecasts and Political Acceptance: The Value of Consensus Forecasting in the Budget Process. Public Administration Review 74.2 (2014): ) Ammons, David M. Adjusting for Inflation When Comparing Revenues or Expenditures, in Tools for Decision Making, CQ Press: ) Allan, Ian. Evaluating Alternate Revenue Sources, Ch. 16, in Budgeting: Formulation and Execution ) Peng, Jun. Sustainable Approaches to Retiree Benefits, in Handbook of Local Government Fiscal Health, Helisse Levine, Eric A. Scorsone, and Jonathan B. Justice, eds. Jones & Bartlett Publishers, 2012: pgs Homework #3 due: 1) Problem 4-47, Jamestown Clinic & Mead Meals on Wheels Center Case Study (Questions 1 & 2, Ch. 9) (5% of final grade) Class 6: Capital Budgeting 1) Finkler, Chapter 5 2) Marlowe, Justin, Rivenbark, William C., and A. John Vogt. Capital Budgeting and Finance: A Guide for Local Governments, ICMA: 2nd edition, Chapter 3 excerpt, pgs ) Denver Capital Improvements Program, Six-Year Capital Program Plan (CIP), pgs and (also skim through some project overviews). 4) Denver Capital Improvements Program, Six-Year Capital Program Plan (CIP), CIP Priority System in Appendix. Class 7: Capital Budgeting (continued) & Long-Term Financing (Hot Topic: Conduit bonds) 1) Finkler, Chapter 6 2) The Bond Market Association. Overview of the Municipal Bond Market, in The Fundamentals of Municipal Bonds. Wiley Finance, ) Official Statement Examples (skim) 6

7 4) Whaley, Monte. Weld County only one in Colorado without long-term debt. The Denver Post, January 27, Project due: 1) Forecasting Revenues Project (10% of final grade). Class 8: Budget Justification and Professional Ethics 1) Finkler, Chapter 8 (Note: You are skipping over Chapter 7 for now) 2) Mikesell, John. Preparation of Agency Budget Requests in Fiscal Administration, 7 th ed., pgs ) California Department of Finance, How To Write An Effective Budget Change Proposal, ) California Department of Finance, Parlin Fork Conservation Camp & Commission on Improving Life Through Service BCPs. (skim) 5) Bardach, Eugene, Report from the Trenches: The Life of the Apprentice Budget Analyst, Journal of Policy Analysis and Management 24.2 (2005): ) NASBO, Budget Analyst Training Program, Modules 11, 12, and 13. 7) Circular No. A 11: Preparation, Submission, and Execution of the Budget, Executive Office of the President Office of Management and Budget, August (Skim Section 51 - Basic Justification Materials) Class 9: Performance Management and Citizen Input 1) Bland, Robert. Budgeting for Improved Performance, Ch. 6, A Budgeting Guide for Local Government, ICMA Press: 2 nd ed. 2) Joyce, Philip G. The Obama Administration and PBB: Building on the Legacy of Federal Performance-Informed Budgeting? Public Administration Review 71.3 (2011): ) City and County of Denver 2013 Citizens Budget, pg. 23 plus three program overviews of interest to you (such as Energy Management, Graffiti, Outdoor Aquatics and be prepared to discuss them in class). 4) Zients, Jeffrey D. Memorandum to the Heads of Executive Departments and Agencies: Use of Evidence and Evaluation in the 2014 Budget, Office of Management and Budget, May 18, ) Government Performance and Results Act (GPRA) examples. (skim) Project due: 1) Northville I (20% of final grade) Class 10: Budget Constraints and Solutions (Hot Topic: Government bankruptcy) 7

8 1) Finkler, Chapter 7 2) 2010 Budget in Brief: Budget Impacts, 2010 Denver Budget Introduction, pgs ) Financial Policies and Reserves, 2015 Denver Budget Introduction, pgs ) Martell, Christine, and Paul Teske. "Fiscal Management Implications of the TABOR Bind." Public Administration Review 67, no. 4 (2007): ) Waisanen, Bert. State Tax and Expenditure Limits National Conference of State Legislatures. 6) Ives, Martin and Thad Calabrese. Creating Deficits with Balanced Budgets. Journal of Government and Financial Management 60.4 (2011). 7) Mikesell, John. When Government Finances Go Horribly Wrong in Fiscal Administration, 7 th ed, pgs Class 11: Introduction to Financial Accounting The Balance Sheet 1) Finkler, Chapter 10 2) Balance Sheet examples (skim) Homework #4 due: Finkler, Mead Meals on Wheels Center Case Study (Question 4, memo format, Ch. 9). (5% of final grade) Class 12: Financial Accounting (continued) The Activity & Cash Flow Statements 1) Finkler, Chapter 11 and Chapter 12 2) Activity and Cash Flow Statement examples (skim) Class 13: State and Local Government Accounting/Reporting (Hot Topic: Enterprise funds) 1) Finkler, Chapter 13 and Chapter 14 2) Johnson, Walter L. and Welch, Judith K. Using Graphical Presentations in Government Financial Reports. Government Finance Review (Apr 2007): ) 2014 Denver Comprehensive Annual Financial Report (CAFR) (skim based on given tasks) Class 14: Financial Statement and Condition Analysis 1) Finkler, Chapter 15 and Chapter 16 8

9 2) Mead, Dean M. The Development of External Financial Reporting and Its Relationship to the Assessment of Fiscal Health and Stress, in Handbook of Local Government Fiscal Health, Helisse Levine, Eric A. Scorsone, and Jonathan B. Justice, eds. Jones & Bartlett Publishers, 2012: pgs ) Hildreth, W. Bartley, and Gerald J. Miller. Debt and the local economy: Problems in benchmarking local government debt affordability. Public Budgeting & Finance 22.4 (2002): ) Review one of the following reports: City and County of Denver Office of the Auditor. Fiscal Sustainability: Financial Condition and Transparency Performance Audit, December 2013 Office of the State Auditor. Fiscal Health Analysis of Colorado School Districts, July Project due: 1) Northville II (20% of final grade) Class 15: Nonprofit Financial Management and Course Review Homework #5 due: 1) Accounting Problems Handout and CAFR Exercise (5% of total grade). Class 16: Additional Topics Final Exam Due (25% of final grade) 9

10 Additional Course Rules and Requirements: 1) To do well in this course, you must devote a significant amount of time. Please keep in mind that materials build cumulatively. Do not fall behind, as it is nearly impossible to catch up once that happens. 2) If you need to miss class, you do not need to notify me (although you are encouraged to do so). You are responsible for finding out what you missed, including any announcements made in class. 3) Please note the due date of the final exam. 4) Academic dishonesty is unacceptable and will not be tolerated. Cheating, forgery, plagiarism, and collusion in dishonest acts undermine the School s educational mission and your own personal and intellectual growth. You are expected to bear individual responsibility for your work and uphold the ideal of academic integrity. Any student who compromises or devalue the academic process will be reported to the administration and subject to disciplinary action. Additionally, academic dishonesty will result in 0 points for the assignment. The responsibility for ethical conduct rests with each individual member of the academic community students, faculty, and staff. UCD has an ongoing commitment to maintain and encourage academic integrity. Therefore, the University has created a set of standards of academic honesty and procedures governing violations of these principles. A tutorial reviewing the policy is available at: ents/student/introduction/index.htm The participant is responsible for understanding and adhering to the university guidelines on ethical academic behavior. Violations of the ethics and honor code are taken seriously, are dealt with according to SPA and University policies, and will result in failure to pass the course. Proper citing of unoriginal ideas is critical and plagiarism is absolutely unacceptable. Pertinent to this data-oriented class, copying of spreadsheet data also constitutes plagiarism. Unless an assignment is designated as joint, the participant is expected to complete his/her own assignments unless instructed otherwise. Grading Criteria: My grading criteria and the weight for each assignment for the final grade are included on the instructions for each individual assignment. PLEASE refer to the assignments on Canvas and read each assignment description carefully. For the final grade, I grade on a 100 point scale (divide the 1000 points possible by 10). The grade equivalent for the scale is: A = % A- = % B+ = % B = % B- = % C+ = % C = % C- = % D = % F = 65.9% or below 10

11 Access, Disability, Communication: Students with disabilities requiring accommodations, please contact the Office of Disability Resources & Services located in NC#2514 (or call TTY ). The staff will assist you in both determining reasonable accommodations as well as coordinating these accommodations. Course Success: Active participation in class discussion forum is important for your success and for establishing an active learning environment that will benefit the entire class. As a graduate class, your professional and prior academic experiences and knowledge will be a key part of the dialogue and debate. Please draw upon those experiences to help you critique and assess the course readings and material. The class should maintain an open forum for discussion. At the same time, keep in mind that the purpose of discussion questions, case assignments, and assigned readings is to ensure that we have constructive and informed discussions. Applying your knowledge through in-class simulations, written assignments, and presentations, is also essential for rounding out the learning process. Finally, please pay careful attention to the instructions on the assignments (see Canvas, for details). Discuss any course-related challenges or difficulties you encounter with me as early as possible during the semester. Changes to the Syllabus: I reserve the right to alter the existing syllabus based on the progress of the class. All changes will be communicated in advance. 11