Public financial management in the 1990s: new directions for research and pedagogy.

Budgeting is the cornerstone of productivity enhancement and policy planning in public entities. Unfortunately, significant evidence shows that practitioners no longer look to academic public administrators for assistance in the budgetary process specifically or public financial management in general Grizzle, 1985; Grizzle & Yu, 1990; Slack, 1990). Although some in the public administration academic community (Stallings, 1986) believe that the field has damaged itself by being too concerned with practitioner needs, others might view this monastic approach as an important abdication of responsibility. Moveover, as Thomas Lynch (1989) states, public financial management research can inform practice and still be theoretically and methodologically sound. This essay is based on the premise that as we enter the '90s a redefined public financial management can better inform practice and reinvigorate itself intellectually.(1)

This redefinition likely requires an intellectual tripod for implementation. The first leg of the tripod is reducing the attention paid in research and teaching to the intermediate level theories designed to explain budgetary behavior and outcomes. The second leg entails engaging in research normally thought of as lying in the purview of public personnel. This research would center on the question of bureaucratic incentive structure, especially the "accepted wisdom" (Frank, 1990, p. 362) of public employee motivation, which holds that public employees are less extrinsically motivated than their private counterparts. The third leg of the proposed tripod is normative and substantive. I argue that public financial management is the branch of public administration that can and should heighten the discipline's concern for Economic Man (defined later). In addition, public financial management should address the savings, consumption, investment, and human capital imbalances in America which recent commentators (Thurow, 1985; Carroll, 1989; Reich, 1991) have noted and that often fit under an umbrella of American competitiveness,

Recasting public financial management is not an easy task. Changing the bounds of any discipline is difficult. Adherents in any field are likely to have intense attachment to the substance and methods of the status quo (Ritzer, 1975). This is particularly true in public administration, where unusual deference is shown to an intellectual heritage long after its relevance to theory or practice has been questioned (Sherwood, 1990).(2) Deference, however, should not thwart constructive efforts at painting a redefined field in broad brush strokes. I believe that exemplars exist that can serve as cornerstones for the redefinition. Guidance, too, shows what should be de-emphasized in the reconstituted field, with cues on this score coming from the so-called public administration-public management dichotomy.

The Public Administration-Public Management Dichotomy: Limiting the Study of Intermediate-Level Budget Theory

To public management exponents, the public administration-public management dichotomy is more than semantics. According to Hal Rainey (1989), ". . . they |adherents~ tout public management as a new departure, emphasizing proactive management in government and better behavioral research and management training on this topic" (p. 231). Public management emphasizes the need for managers' proactive stance for strategic planning, motivation, monitoring, and oversight in organizations. Its advocates believe that public administration as a discipline spends too much time on political processes at the expense of furthering managerial capacity. Similarly, public management adherents contend that traditional public administration tends to be overly concerned with democratic values and social equity while neglecting efficiency (Kettl, 1990).

The public management orientation clearly places an obligation on academic public administration to conduct research that has the intent of informing practice. It also suggests significant changes in the ideological outlook of the discipline--a topic returned to later in this essay. In the current context, the most significant impact of the public management philosophy is its call for de-emphasis of intermediate-level budget theory and its intellectual stable mate, budget format research, from the canon of work generally associated with public financial management research.

Content analysis suggests that intermediate-range theory testing--most notably incrementalism--and the closely related question of whether budget format (e.g., line-item, zero-base, program) affects resource allocation, have displaced research at the micro and macro levels in public financial management research. At the micro level, topics such as debt management, capital budgeting, risk management, forecasting, and the like receive short shrift. As we shall discuss later, little is written at the macro-level that addresses the reasons behind cutback management that has become part and parcel of public budgeting.

Joseph Pilegge (1989) recently content-analyzed nearly a decade of financial management articles in leading public administration journals and found that 34.7 percent of the 150 articles came under the "budget behavior and politics" heading and another 9.3 percent fit into the "budget format" category. Only 32 percent of the articles dealt with operational concerns in "financial management", with the remaining 24 percent devoted to "public finance, taxation, and economics." Frank and McCollough (in press) performed a similar content analysis of the leading financial management texts--ostensibly the core of financial management training--and found that only 15 percent of the total pagination was spent on operational concerns such as debt management, forecasting, and the like, while 53 percent was devoted to budget theory and process.(3)

In short, content analysis of what is written in public financial management and what gets taught in public financial management classes, suggests that micro-level areas, the "nuts and bolts" of daily operation, receive relatively little attention. At the macro level, the fact that America's economic performance is beginning to show disturbing parallels to that of post-World War II Great Britain and the notion that our low savings rate may be an extraordinary threat to long-term competitiveness and economic well-being (Hormats, 1990) remain unlikely candidates for inclusion in public financial management research or teaching.(4)

From a public management vantage, this bias in research and pedagogy is disturbing. The shortage of nuts-and-bolts information suggests a limited concern for informing practice. The shortfall of macro-level information is equally disquieting. By failing to address the import of savings to economic growth or the linkages between investment in human capital, infrastructure, and economic growth (Juffras & Sawhill, 1991), public financial management research and pedagogy may unwittingly be placing public managers in a loop that presumes their efforts at resource allocation can do little to arrest the cutback mode in which most operate.(5)

Research and teaching in these practitioner-relevant areas has been displaced by the intermediate-level budget allocation problem that has largely centered on the predictive utility of the theory of incrementalism as related to budgetary decision making. The research in this area, conducted primarily by political scientists (Pilegge, 1989), has been voluminous. At this juncture, a relevant question to ask may be if quality and relevance are on par with quantity.

Defining quality and relevance of research in public administration is not an easy task. McCurdy and Cleary (1984, p. 50) made a preliminary effort at this six years ago. At that …