Public Budget As Decision-Making Process

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Public Budget As Decision-Making Process

• Decision - Making Models
• Incremental Change Model
• Satisfying Model
• Ideal Rational Model
• Stages of Problem Solving Model

• Many People use these theories or models as their
  guide to reform public budgeting
• To understand these theories or models , a
  criterion must be developed to judge them and the
  concept of conceptual models itself must be
  explained
• A conceptual model can viewed as a tool which
  enables the user to understand and deal with
  complex phenomena
• A tool can be judged good or bad in terms of
  the users purpose

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• Professionals should judge conceptual models or
  theories in terms of the models usefulness in
  helping them accomplish their tasks
• These tasks must be accomplished within a
  decision-making context largely induced by the
  ideologies of the culture
• Decision-making models can be judged in terms of
  their applicability to the decision-making
  environment of the public budget person

• Some major and commonly noted decision-making
  models are the Incremental Change Model, the
  Satisfying Model, and the Ideal -Rational Model.
  To this list, a provocative but little-cited
  model called the Stages of Problem Solving can
  be added.

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• Incremental Model
• This model is used for descriptive and normative
  purposes ( The former refers to a model which is
  constructed for purposes of explaining and/or
  predicting the consequences of policy choices
  while the latter is constructed for purposes of
  optimizing the attainment of some utility ). The
  model tells us that the best predictor of what
  will happen in the future is what we are doing
  now. Our focus shall be on the normative use of
  the model

• Main Features of this model
• Style of policy - making based on small,marginal
  changes from existing policies.
• It narrows the area open to dispute, thereby
  reducing conflicts, and that it is consistent
  with the principles of conservatism
• Budget processes were seen as stable,
  predictable, changing little from year to year
  and based on well defined roles that could
  represented by relatively simple decision rules

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• In developing a budget, the agency takes the role
  of an advocate and the budget reviewer takes the
  role of accommodates
• This model is an excellent tool for understanding
  the political environment of public policy
  making, but it is not useful for explaining the
  more technical difficulties associated with
  analysis.

• The Satisfying Model
• Based on certain criterion ( See Figure )
• Select first acceptable alternative, the
  acceptable is the standard for judgment.
• This model dramatically emphasizes that decisions
  are made under pressure, and sever limitations
  make achieving even a satisfactory alternative a
  significant accomplishment.

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• The Rational Model
• The model systematically breaks decision-making
  down into six phases
• 1. Establish a complete set of the operational
  goals, with relative weights allocated to the
  different degrees to which each may be achieved
• 2. Establish a complete inventory of other
  values and resources with relative weights
• 3. Prepare a complete set of the alternative
  policies open to the policy maker

• 4. Analyze the alternative policies by making a
  valid predictions of the cost and benefits of
  each alternative
• 5. Calculate the outcome ( net expectations ) of
  each alternativeand
• 6. Compare the net expectations and make a
  selection.
• The problem with this model is that the best
  alternative often cannot be achieved because of
  practical concerns ( lack of time ).

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• Stages of Problem Solving Model Phases
• 1. Perception that a problem exists. This permits
  the possibility of multiple value perspectives
• 2. Considering the solutions
• 3. Analyze the alternatives
• 4.Decide whether to reconsider the nature of the
  problem or to plan resolve the problemand
• 5. Evaluation of outcomes

• Phases 4 and 5 are not part of the rational
  model. From evaluation, the decision maker may
  either start over by reconsidering the problem or
  re-plan his or her actions steps

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• Comparative analysis of the four models
• The incremental model is an excellent tool for
  understanding the political environment of public
  policy making. With this model, the public budget
  person can better understand how the budget
  process is dominated by the strategies employed
  by and the conflicts that arise among
  participants. Proponents of this model argued
  That a process which concentrates on an increment
  is preferable to one that attempts to review the
  whole budget because it moderates conflict,
  reduces search costs, stabilizes budgetary roles
  and expectations, and reduces the amount of time
  that officials must invest in budgeting , thus
  increasing the likelihood that important
  political values will be taken into account.
• The Satisfying and Ideal - Rational Models are
  useful for understanding the difficulties
  associated with decision-making. The Satisfying
  Model dramatically emphasizes that decisions are
  made under pressure, and

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• Severe limitations make achieving even a
  satisfactory alternative a significant
  accomplishment. The problem with model is that
  one is often not satisfied that the best
  alternative has been selected. On the other hand,
  the desire for deciding on the best alternative
  is reflected in the Ideal-Rational Model. The
  problem with that model is that the best
  alternative often cannot be achieved because of
  practical concerns such as a lack of time.
• The Stages - of - Problem Solving Model can be
  contrasted to the Ideal- Rational Model. In the
  problem solving model, the starting point is the
  perception that a problem exists, thus permitting
  one to consider the significance of culture,
  time, and perspective. By contrast, in the
  rational model the starting point is the
  definition of ones goals. Next, in the
  problem-solving model, the person formulates the
  problem,

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• Defines alternatives, gathers information, and
  tests proposals. In the rational model, the next
  steps cited are defining alternatives and
  gathering information. In the problem-solving
  model, the last steps are planning action, taking
  action steps, and evaluating outcomes. Again in
  contrast, the rational model is limited to
  deciding a given matter with the intention of
  maximizing goals. The rational model dose not
  extend to taking action steps and evaluating
  outcomes. Another distinction is that the
  rational model dose not have reconsideration as a
  factor, whereas the problem-solving model does.
• The problem-solving model can help people working
  in public budgeting understand the nature of
  analysis. The rational model serves as the
  primary theoretical explanation of how analysis
  should conducted, but the rational model can not
  be attained.

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• The problem-solving model serves as an
  alternative theoretical explanation of how
  analysis should be conducted in the budgetary
  process. The model permits cycles of defining
  ones problem, producing alternatives, and
  testing alternatives. It implicitly recognizes
  that any given analysis will depend upon the
  ingenuity of the analysts, the kind of data
  available to them, the amount of resources at
  their command in undertaking the analysis, and
  other factors. Also the problem solving model
  helps the public budget person relate budgeting,
  management-by-objectives, progress reporting,
  accounting, auditing, and program evaluation.
• Non of the models by themselves is adequate. The
  problem-solving and the incremental change models
  help the bureaucrat to understand the role of
  program and budget analysis in the budget-making
  process.

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• They can be significant, but there are some
  constraints in using them. The problem solving
  model helps the bureaucrat to understand the
  context in which intelligence, knowledge, and
  analytical techniques must be used. Together, the
  models meet the criteria.
• The rational model, the theoretical basis for
  some budget reforms, can lead individuals to make
  false and naive expectations. That model ignores
  the political context and demands the impossible
  in terms of analysis.. This can encourage some
  individuals in the budget process to neglect
  timeliness, seek needlessly expensive data,
  search for needless alternatives, and quest for
  clarity in objectives which will not be
  forthcoming.