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Budget Analysis is an Art…
Not a Science
Budget analysis does not lend itself to a "cookbook" approach
that is, a sequence of sharply defined steps that results in a desired outcome.
Budgets
for
dummies
Budget analysis involves the application of acquired skills and habits
Analytical Thinking
Budget analysis involves the ability to think analytically,and critically,about policy and program issues.
Analytical Thinking
A mind that questions what others take for granted is essential to effective budget analysis. There are five types of questions that can be asked:
The 5 types of The 5 types of QuestionsQuestions
1.1. ChronologicalChronological2.2. True or FalseTrue or False3.3. InformationalInformational4.4. LogicalLogical5.5. AnalyticalAnalytical
^̂
Chronological Questions
Describe the history of a particular period
For example, "describe the evolution of Rome from a republic to a dictatorship”
True or False Questions
Is the answer to the question a simple choice such as:
Yes or No?
Right or Wrong?
Correct or Incorrect?
True or False?
Informational Questions
• Who?
• What?
• Why?
• When?
• Where?
• How?
They want a billion
dharmas! I have some questions!
Logical QuestionsDemonstrate that something fits in a category:
Example
• “Italian fiscal practices conform to European Monetary Union deficit standards.”
says that• “Italian fiscal practices” must fit the
category: “European Monetary Union deficit standards”
Analytical Questions
A taxonomy or framework helps to organize the discussion and analysis of an activity, programs, or a spending issue.
ExamplesExamples
What percent of Gross Domestic Product What percent of Gross Domestic Product (GDP) is taken by each major tax?(GDP) is taken by each major tax?
How does our spending compare, by How does our spending compare, by function, to similar countries?function, to similar countries?
How many program objectives were How many program objectives were achieved?achieved?
How are the Government’s priorities How are the Government’s priorities reflected in the budget requests?reflected in the budget requests?
Characteristics of Good AnalystsCharacteristics of Good Analysts
Attention to Detail
An effective budget analyst must
master the details
of the spending for which he or she is responsible.
Attention to Detail, continuedThis requires:
• reading the law• knowing the
regulations • understanding how a
spending activity operates in ministries and other locations….
Imagination
The ability to develop innovative solutions to problems is very important
Sensitive to Time
An effective budget analyst is always sensitive to the value of a policy-maker's time.
knowsAnalysts need to avoid the temptation to share
with the decision-maker all that he or she knows
Concise
The Ability to Communicate
The policy maker needs to know "the time of day, not how the watch is made."
The Ability to Communicate
The best analysis and most imaginative solutions are not useful if they cannot be communicated effectively.
The Ability to Communicate
Shakespeare said:
"Since brevity is the soul of wit... I will be brief..." Lord Polonius in “Hamlet”
Act II Scene ii
To budget, or not to budget..
The Ability to Communicate
Presenting issues involves judgment in discriminating between what is merely "interesting"
and
what is "essential" or "necessary" for the policy-maker to know in order to decide the issues.
essential necessary
Loyalty and Discretion
Loyalty is the ongoing commitment to support the decisions of the policy-makers.
Avoid disclosing information that might undercut the
policymaker or budget decisions.
Not this or thisbut this
Patience Recommendations of an analyst may not be accepted initially.
Analysts can, by improving the quality of their analyses,
eventually persuade policymakers to make politically difficult decisions that are good policy.
Integrity and Objectivity
An effective budget analyst establishes a reputation for honest communication. An effective analyst is seen to be objective, seeking facts and information, and using them to support the analysis and recommendations.
Flexibility
Governments change from time-to-time.
Then, policies frequently change and activities and programs are affected.
Flexibility
An analyst must accept these changes and support them even if they result in new policies for which the analyst is professionally responsible.
• No one is born with budget analysis skills.
• No one fully possesses all of these skills.
• Nevertheless, a level of these skills sufficient to be effective can be acquired by dedication and experience.
Dedication
ExperienceAccording to Oscar Wilde, experience is "the name men give to their mistakes."
A dedicated budget analyst should expect to make mistakes, but should recognize that making mistakes is a way of gaining experience.
Silly earthling! I would have paid twice as much!And here is the
deed to our planet
MistakesMistakes"Everyone makes "Everyone makes mistakes, that is mistakes, that is why they put why they put erasers on erasers on pencils."pencils."
The trick about The trick about mistakes, of course, mistakes, of course, is to avoid repeating is to avoid repeating the same mistakes in the same mistakes in the same or similar the same or similar circumstances!circumstances!
JudgmentJudgment
““Not everything that counts Not everything that counts can be counted,can be counted,
And not everything that can And not everything that can be counted, counts”be counted, counts”
- sign in Albert Einstein’s - sign in Albert Einstein’s officeoffice
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