Budget Analysis for Michigan

Budget Analysis for Michigan State
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The start of the executive budget process is timed in a way that it take into account the date of submission to the Legislature. The budget department starts the planning the budget a year before the start of the financial year of that budget. The director of the state budget set the time limit for the submission of various budget information from the different department.
The director of the state budget holds some meeting with relevant officials before submitting the final budget to the Governor for approval. The aim of the meeting is to determine the budgetary requirement and also to receive the proposal from various department.
The expenses in the proposed budget from the Michigan’s General Fund and School Aid Fund must complement the revenue estimates. In the case of additional expenses are proposed, these proposals must be accompanied proposal on how to generate revenue to cater for the proposed expenditure.
Michigan state government employs the use of consensus method of forecasting revenues. All the econometric models used in forecasting are maintained by the University of Michigan. The trend analysis is used in forecasting all the revenue sources with the exception of the motor fuel sales tax. Instead of the trend analysis, the time series is employed in forecasting motor fuel sales tax. The Management and Budget dept., the tax and revenue analysis division in Treasury dept., and also the state legislature participate in final revenue forecasting with the aim of using the result to develop the budget.

Budget and accounting expert from various learning institution, federal government representative, and individuals from the private sector are present in estimating conference to discuss the forecasting tabled. An individual result from the economist from the treasury department and also the fiscal agencies are presented first and followed by the economic forecast from the team. One of the assumptions made during revenue forecast is that the tax law will remain the same as it is in the next financial year.
The budget officials present in the conference take into account the result of the various team of economist and also any relevant information provided. After consideration of various information, the team agrees on the economic and revenue forecast result to be used as the foundation of the Michigan’s budget.
In Michigan, the regulation requires a consensus to be reached by all the individual contributing in final revenue forecasting. Revenue estimation conferences play an important role in revenue estimation process. The law requires two revenue estimation conferences to be held every financial year. The top official in the Treasury Department and also the governor usually attend these two conferences. The conferences are held in May and January by the House and Senate fiscal agencies Director and the Management and Budget Dept. The aim of the conference that is usually held in January is to assess both the national and local economic indicators. The second conference held in may update the estimates and a consensus on the final revenue forecast among the official members of the conference is a requirement.
In the case of unique issues arises, the law requires that they are addressed using special conferences. A good example of the special conference is that one held in December 2004 to address a possible revenue shortfall of around $355 million in the consequent financial year. Besides, all the department involved in revenue estimation agreed to hold a revenue estimation conference on date 17th August 2005, all the participants agreed to implement the revised revenue estimation for the financial year 2004/15 and the next financial year. Revenue estimates are a revised quarterly while the expenses estimate are updated monthly.
We can concur that Michigan’s revenue estimate are fairly accurate, but in most cases the revenue estimate is usually overestimated. For instance, the total revenue was overestimated by 3 percent in the financial year 2002, by almost 2.6 percent in the financial year 2003, and by more than 4 percent in the 2004 financial year.
A shared budget planning process will provide a framework that can be used by the public to articulate their ideas that can be aligned with Michigan State’s priorities. This planning process can be used to in long-term planning process and also to getting the response from the public. The framework will increase public participation in the budget planning process in term of identifying possible revenue sources and areas that require attention for funding process.
The budget management department requires all member to agree before implementing any revision to budget and also estimation process. Conference are held to curb any conflicts that may arise in the budget process. Thus, implementation of any change can take time from the setting up meeting for the both the executive and legislative member of the budget committee to selling the proposed change to all members.
Apart from developing the Michigan executive budget recommendation, the budget offices are also responsible for presenting the budget recommendation to the Legislature and implementing the budget approved by the Legislature and signed by the governor (Hartmus & Walters, 2015). The Michigan’s budget office comprises of financial management. The budget offices are located in Capital Avenue Lansing.
The qualification of the staff working in the office of the state budget vary depending on the task assigned to them. The budget guidelines for Michigan State are available online. The guidelines specifying the budget process from the revenue estimation to the presentation of the budget to the Legislature after the approval of the budget by the governor. Even guide to Legislature in the budget process are available online.
The guiding philosophy of the chief executive is participatory. The chief executive, in this case, the governor consult with the public and take into account the response received. To facilitate public participation in budget-making, the governor employs the use of groups that obtains information from the public. The team analysis the information collected and forward the result to the governor. Who take into account the information received in the process of making the budget.
One of the most common software used in the budget process is the IBM Analytics. The software makes it possible for the organization to collaborate on strategic plans and in the budget process. The ability to perform the advanced financial analysis is one of the IBM Analytics capability that is essential to the budget process. The IBM Analytics is also flexible meaning that the software can adapt to changing revenue estimate and also economy forecast. Also, the IBM Analytics includes the mobile capabilities and also uses cloud technology in system installation. Thus, the office of the state budget can interact with the Michigan residents regardless of their location.
Most of the users of the IBM Analytics are satisfied with its capability. The capability to perform complex analysis, the software compatibility with both the desktop and mobile devices, and the possibility of being able to install the software from the cloud are some of the positive feedback received from the users.
Public participation
Michigan State employs the use of public participation to gather input from its residents about the budget. Town halls in Michigan are used to hold meetings that are open to the public. The aim of these meetings is to enable the governor to discuss the budget challenges with the public. The governor gets to know the public say on the government priorities regarding the budgeting. Hearings are also conducted across the state and citizens’ reveal the critical relationship between the tertiary education and economic growth of the state. From the past public participation, the following issues have been raised which include: the need to help poor people, jobs protection, health care improvement, and increase the public safety (Neshkova, 2014). The information obtained from the public used in making the budget decision every year.
Based on the information collected during the tour over the Michigan State, changes are made to the budget process and presented to the Legislature. The changes made to the budget process are focused on preserving and protection of the services that the public participations revealed services that are essential to the residents of Michigan State. Public participation is also used to provide feedback to the Michigan States’ residents. The process involves informing the public the top priorities of each and every department, to enable the residents of Michigan State to understand the changes made in the budget. Public participation also gives the governor the chance to clarify to the public that the services are being purchased using taxpayers’ money.
During the consensus conference, individual revenue estimate and also departmental estimate are presented. After the presentations of the estimates, the official member of the conference debate the estimate revenue results provided and also any other relevant information and agreed on the revenue estimate to be adopted through consensus. Use of consensus and not the simple majority in the estimate revenue adoption play an important role in minimizing the chances of conflict occurring. Besides, the use of consensus ensures that the budget process is fair to the departmental heads.
Michigan State prepares the executive budget for each financial year usually a year before the stated financial year begins. The current governor of Michigan Rick Snyder has provided some recommendation in the executive budget for the financial year 2015 and 2016. The governor is committed to improving the Michigan State’s reinvention as the growth of the economy continues (Department of Technology,Management, and Budget, 2014).
The executive budget includes some strategic investment in the education, employment, healthcare, security, and infrastructure sectors. The budget also recommends tax relief to the poor and middle-income residents. From the overview of the 2015 and 2016 financial budget, we can concur that the budget is focused on increasing the rate of economic recovery of the state and also minimizing the expenses to save money for the future generation.
The executive budget for the current and the past financial years provides evidence for innovation. The Michigan State has transformed from the manual collection of public opinion in the year 2003. By then the governor used to hold the meeting in the town halls all over the state get the input from the people to assist in budget making the decision such as prioritization. That has changed, today any citizen can participate in the budget process in the comfort of their homes with the use of the technology. The MiDashboard tool in the official website of the state budget provides a functionality for information collecting from the general public. Once the private citizens submit their opinion, the data is collected and analyzed and used in the budget process. The transformation of public participation is a good example of the innovation that has taken place in Michigan budget process.
One of the documents used in the budget process is the budget briefing. The budget briefing is a PowerPoint presentation, with the single budget area having one. The presentation includes the introduction to revenue forecasting, tables, graphs, figure and other relevant information. The budget briefing provides an overview of the Michigan State’s budget, the sources of revenue, and also the proposed revenue sharing.
The economy view of Michigan and the revenue estimation result from the house fiscal agency document is also available. This document contains agency’s forecast result on the revenue and also the economy. The Michigan’s constitution requires this document to be published a week prior the conference for revenue estimation that is usually held in January and May.
Performance measure
MiDashboard is one of the indicators of the Michigan Governor Snyder’s dedication to ensuring transparency and accountability in his government. The MiDashboard is accessible via the internet its address is www.michigan.gov/midashboard. The MiDashboard tool makes it possible for any Michigan residents from any place to measure the performance of government provided he or she can access the internet. One can measure the performance of the following sectors: economic growth, health, and education sector, the worth of taxpayers’ money, the status of life quality and the safety of the public. Some performance indicators are provided to assist Michigan residents to measure the progress across the above sectors (Ostrom et.al, 2015).
The MiDashboard tool is an indicator of the essential transformation of the budget process in the direction of a new model of the budget process that is founded by managing for results. The MiDashboard tool also assists the individuals involved in the budget process to determine the efficiency and effectiveness of the budget process and reveal if they are delivering the anticipated results.
The MiDashboard provided insight on the Michigan budget process about the nationwide standard of the budget process. Besides the tool plays an important role in identifying not only the strength but also the areas that require improvement in the budget process.
The budget estimate is developed by the State Budget Office and the Treasury Department. One of the assumptions made during the determination of the performance is that the estimate represents what the citizens of Michigan are willing and able to spend on the government. The office of the State Budget performs an analysis of the current spending for each service being provided to the public. The past spending trend is also constructed for each and every service. In some cases, the service being provided to the public are categorized into six groups and each group is analyzed separately from other groups. The comparison of the past trend and the current spending is used to measure the performance, and the process takes into account the revenue estimate.
The MiDashboard is the milestone toward evaluating budget priorities. The MiDashbboard provide a user-friendly interface where one can visualize the trend in various sectors. The use of chart most importantly makes it possible to compare the current situation with the past. Despite the powerful functionality provided by the MiDashboard in measuring performance, there is still room for improvements. For instance, the MiDashboard can be more user interactive where one can edit changes the charts. Besides, the MIDasboard can include functionality that automatically group the various sector regarding the attention they require.
Recommendation
The budget process for Michigan should be centered on a developing a better government that can provide the demand of the citizen in a cost effective manner without wasting the taxpayer’s money. Effective utilization of taxpayers’ dollar will make Michigan a place where the investors want to do business, people want to live, and a place where parents to raise their kids in.
The monetary resource in Michigan just any other government or organization is limited. Thus, there is the need to identify what is most important to the public. Determining the service to be offered to the public and which not to, also the accuracy in classifying various service into want and needs is critical to improving the life of the citizens. Public participation determines how accurately a given service is classified as want or need. Thus, improving public participation is key.
Currently, work groups are used in prioritizing of various services. The number of work groups is five which each is having a unique goal. The work group is tasked with identifying various strategies to guide the budget process in focusing its effort in meeting the demands of the public. Finally, from the information collected from the public, the recommendation from the work groups and guidance of the budgetary team the final decision is made in budget making. Apart, from the system increasing public participation and thus a more informed decision can be made on the budget process, the system will reduce cost and time spent on holding town hall meeting.
For the system to increase public participation in the budget process, the system should analyze the trend in the information technology sector apart from meeting the needs specified by the Office of the State Budget. For instance, the current trend in IT sector is that most people spend most of the time in internet using mobile phones thus the system should be accessible and provide all its functionality if accessed in mobile phone framework.
The MIDashboard system is functioning properly and the system is making possible for the users to measure the performance of the Michigan State government. Improvement can be made to the system to not only indicate the performance but also prioritize various activities depending on the level of performance. For instance, a sector of the economy that are indicating downward trends in term of growth should be given more weight. The priority weight of various sectors of the economy can be calculated by multiplying the level of its performance with the value given to particular sector of the economy by the Michigan citizens.
More training is required to enable the staff to effectively analysis the information provided by the public through the public participation platform.
References
Department of Technology,Management, and Budget. (2014). Execurive Budget Fiscal Year 2015 and 2016.
Neshkova, M. I. (2014). Does Agency Autonomy Foster Public Participation?. Public Administration Review, 74(1), 64-74.
Ostrom, B. J., Kleiman, M., Roth, S., & Davis, A. (2015). Making Continuous Improvement a Reality: Achieving High Performance in the Ottawa County, Michigan, Circuit and Probate Courts. Ct. Rev., 51, 106.
Hartmus, D. M., & Walters, J. (2015). Municipal Bankruptcy and Local Court Funding: What We Can Learn from the City of Detroit, Michigan. Justice System Journal, 1-13.