Financial Planning and Management in Public Organizations. (Book Reviews).

Alan Walter Steiss and 'Emeka O. Cyprian

New York, NY: Marcel Dekker, Inc., 2001. (408 pp)

Financial Planning and Management in Public Organizations synthesizes the wide range of issues in public finance into three broad categories: cash management, financial planning, and management control. It addresses public organizations as a whole, with a specific emphasis on local government. Throughout the chapters, theory is followed by discussions of the practical issues facing managers who implement the various strategies and methods. The authors assert that private-sector planning and analysis techniques, adapted to meet the public-sector environment, are necessary to make governments more efficient and effective. The book is a comprehensive treatment of all of the major topics in public finance and, as such, makes a good desk reference for practitioners or an introductory text for students of public administration.

The authors begin with what they term the "planning-control continuum." As public-sector organizations seek to become more responsive and dynamic, their systems are evolving from tools of organizational control into systems that also incorporate a strong planning perspective. The authors argue that without solid planning, control mechanisms cannot "reduce the uncertainty surrounding many organizational activities. While programs may be carried out more efficiently, more important issues of effectiveness--the ability to achieve long-range objectives--will be left largely unresolved." The authors explore planning and control techniques at both the strategic and implementation levels.

Cash Management. These chapters summarize the typical revenue base for a local government, explore why local governments seek revenue streams beyond the property tax, and detail the cash management and investment processes. Through an examination of the elasticity of revenues and expenditures, the authors assert that local governments cannot deliver the services that citizens demand with the revenues generated through the traditional property tax, and that unilateral efforts to raise non-property taxes create a disincentive for economic activity. The chapter concludes with a brief look at revenue and expenditure estimation.

Next, the authors explain the tools and techniques of the standard cash management process: forecasting, mobilizing, and managing the cash flow, maintaining banking relations, and investing idle funds. They also address the legal and political constraints on some of these techniques--particularly those imposed by state government--and strategies to cope with the constraints. The chapter concludes with a discussion of initiatives to enhance revenue, including diversifying revenue sources and the revenue base, tax amnesty programs, tax exportation, utility service charges, taxes on services, and commercialization options.

Financial Planning. This may be the most useful section for practitioners. It is a brief but thorough treatment of the analytical techniques for financial and cost data, including cost-benefit and cost-effectiveness analyses. The authors draw attention to the weaknesses of financial reporting generated from accounting systems, most notably their inability to measure quality ...