A Quarter Century of State Budgeting Practices

In this article, I examine trends in state budgeting practices that have developed over the last quarter century and particularly those changes that have materialized between 1990 and 1995. One would expect state budgeting practices in 1995 to be markedly different from those of 1970 given the passage of time and the waves of budget reform efforts occurring during that time (Botner, 1985; Howard, 1973; Lauth, 1993; Rubin, 1992; Schick, 1971). Four main topics are considered here: budget preparation and budget documents, program analysis, accounting, and budget office personnel. The analysis is based on surveys of state budget offices conducted in 1975, 1980, 1985, 1990, and 1995. Information also is available for 1970 because the first survey asked about that year as well as 1975. (1) Responses from the states and the District of Columbia were high-50 in 1970, 50 in 1975, 48 in 1980, 43 in 1985, 47 in 1990, and 51 in 1995. This study is perhaps the longest running one on public budgeting (Lee, 1991a). Although survey data suffer from the necessary subjectivity of respondents, this set of surveys provides insights into how state budget offices perceive their operations and those of other state agencies operating in the realm of budgeting and finance. As will be seen, noticeable trends emerge from the data, and it is significant that these trends are the result of different budget directors and political administrations responding over time to the same set of questions. (An alternative to the survey method is the case study; see Clynch and Lauth, 1991.) Budget Preparation and Budget Documents Preparing a budget proposal that suggests a set of recommended policies and stays within whatever financial limits are considered politically realistic has been a prominent issue in public budgeting (Bunch and Straussman, 1993). One approach is to set specific dollar ceilings on budget requests. This approach has the distinct advantage of making agencies prepare requests that include only financially feasible options (Lee, 1992). This method is often called fixed-ceiling budgeting. The opposite approach is to provide no ceilings of any sort, allowing agencies to recommend funding programs at levels they consider appropriate. Table 1 shows these two approaches (first and last rows). The dollar-level-ceiling technique has been steadily gaining in popularity. Nearly half of the states now report using such a method. The no-ceiling approach, in contrast, has gone up and down in popularity but the general trend is downward. No-ceiling budgeting was reported in 59 percent of the states in 1970 and only 28 percent in 1995. Table 1 Budget Ceilings Issued by Governor for Use by Agencies in Request Preparation, Selected Years, 1970-1995 Percentage Providing Ceiling Type of Ceiling 1970 Specific dollar-level ceilings 0 Policy ceilings, which encourage or retard the growth of certain types of programs 16 Instructions to maintain only a minimum level of services -- Instructions to maintain the current level of services -- Instructions to include necessary program improvements -- A requirement of a ranking of priorities among programs -- No ceilings of any kind 59 Type of Ceiling 1975 Specific dollar-level ceilings 18 Policy ceilings, which encourage or retard the growth of certain types of programs 42 Instructions to maintain only a minimum level of services 0 Instructions to maintain the current level of services 17 Instructions to include necessary program improvements 26 A requirement of a ranking of priorities among programs 28 No ceilings of any kind 43 Type of Ceiling 1980 Specific dollar-level ceilings 23 Policy ceilings, which encourage or retard the growth of certain types of programs 45 Instructions to maintain only a minimum level of services 20 Instructions to maintain the current level of services 44 Instructions to include necessary program improvements 50 A requirement of a ranking of priorities among programs 73 No ceilings of any kind 28 Type of Ceiling 1985 Specific dollar-level ceilings 37 Policy ceilings, which encourage or retard the growth of certain types of programs 49 Instructions to maintain only a minimum level of services 24 Instructions to maintain the current level of services 56 Instructions to include necessary program improvements 61 A requirement of a ranking of priorities among programs 68 No ceilings of any kind 33 Type of Ceiling 1990 Specific dollar-level ceilings 45 Policy ceilings, which encourage or retard the growth of certain types of programs 60 Instructions to maintain only a minimum level of services 24 Instructions to maintain the current level of services 61 Instructions to include necessary program improvements 65 A requirement of a ranking of priorities among programs 89 No ceilings of any kind 11 Type of Ceiling 1995 Specific dollar-level ceilings 48 Policy ceilings, which encourage or retard the growth of certain types of programs 63 Instructions to maintain only a minimum level of services 26 Instructions to maintain the current level of services 62 Instructions to include necessary program improvements 61 A requirement of a ranking of priorities among programs 78 No ceilings of any kind 28 -- These questions were not asked for 1970. …