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