Ethics in Fiscal Administration

An Introduction

Angela Pool-Funai

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781351806091
• Edition: 1
• Topic: Politica e relazioni internazionali
• Subtopic: Affari pubblici e amministrazione

Ethics in Fiscal Administration: An Introduction integrates ethics into the public administration curriculum by weaving ethical dilemmas into the financial management and budgeting process of the public and nonprofit sectors. Inquiry-based discussion prompts challenge students to examine scenarios that they are likely to encounter in professional public service careers.

Critics of the public sector often use the analogy that government should be run more like a business. Issues such as profitability versus social value preclude the public sector from becoming a mirror image of the private sector; however, ethical decision making in fiscal administration is an important concern across sectors. Using examples drawn from the public and nonprofit arenas, Ethics in Fiscal Administration: An Introduction will help prepare future budget managers and other public administrators for the important work of upholding the public financial trust.

PART I

Government ≠ Business

1

Historical Underpinnings Of Public Administration

In the late 19th century, a scientific feud of epic proportions commenced between Nikola Tesla and Thomas Edison over electrical systems. Patents, bragging rights, and legacies were all on the line as the intellectual battle raged between Tesla’s alternating-current (AC) and Edison’s direct-current (DC) electrical systems. Even today, any diehard science geek holds an opinion on whether Tesla or Edison was the real Father of Invention. In much the same way, the field of public administration has a complicated and conflicted genealogy.

The “Edison” of the public sphere, to continue with the illustration above, is arguably Woodrow Wilson. Wilson is largely considered to be the father of public administration, primarily as a result of his essay on the topic published in 1887. By contrast, the “Tesla” of public administration is none other than Alexander Hamilton. As a co-author of the Federalist papers, Hamilton made a case for the structure and function of public administration, even as the Constitution was under deliberation.

Although the focus of this book is on the ethical utilization of funds in the public sphere, it is important that we delve into the history of public administration first, because the structure of government determines how public budgets will be treated, and forerunners like Hamilton and Wilson espoused different approaches to the bureaucracy. This introductory chapter will cover the history of the American public sector and functions of government.

Development of Public Administration

James Madison, co-author of the Federalist papers alongside Alexander Hamilton and John Jay, introduced the term “public administration” in at least two of his own essays. In Federalist 10, Madison used the phrase with regard to prevailing distrust of the operation of governments, and in Federalist 48, he mentioned the term again in the context of balancing government power through the use of checks and restraints.

Hamilton expounded on the discussion of administration in several of his contributions to the Federalist papers. Notably, he shared that he held “… a conviction of the utility and necessity of local administrations for local purposes.”¹ In other essays, he commented on the administration of power,² the structure of the federal administration,³ and the powers of administrative taxation.⁴ Perhaps even more fitting, given the subject matter of this text, was Hamilton’s role as Secretary of the Treasury under George Washington. Hamilton understood the structure of the administration in terms of managing people and processes, and he also had a strong grasp on managing resources necessary to keep the government running efficiently and with checks and balances on power.

Deserved or not, President Woodrow Wilson is widely credited with exerting influence over the development of public administration as a discipline and practice. In his famous 1887 essay, Wilson defined public administration as the implementation of public policy, or “government in action.”⁵ This landmark paper addressed the discipline and practice of public administration and served as a precursor to formal study of the field.

Wilson purported that geographic isolation, agrarian self-sufficiency, the absence of threats to national security, and limited demands for public services allowed the United States to get by without a need for public service organization or administration. An influx of immigrants seeking respite from government overreach, coupled with the country’s buffered geography and largely rural population meant that Americans had little need for social services or enlarged government. In fact, the vast majority of the federal payroll prior to the Civil War were simply postal workers.

Freedom means freedom from servitude to systems too, and popular sovereignty made it harder to organize administration in the newfound land than for a monarchy, such as those present in Europe with which the founders were intimately familiar. Early Americans embraced public opinion, and inviting public scrutiny necessarily makes organizing rule-making more laborious than decisions made behind closed doors. In Europe at the time, a sovereign leader’s opinions were only his or her own, and there was no populace to contend with, as far as solicited feedback was concerned. Before the transition to a constitutional government could be fully implemented, however, the citizens of the United States needed to want some kind of change. They looked at familiar models in France and Germany and acknowledged that they were not in search of mirroring political principles that resulted in ecclesiastical oversight and a disenfranchised middle class. One deal-breaker to adopting the European model was the relative absence of self-government at the local level. European local governments were not fully self-government; instead, the bureaucrat served an appointed minister of the monarchy rather than the will of the public.

Federalism and the Complexity of Administration

Federalism is a key aspect to the American political structure, in that authority is divided between the national government and states. Federalism stands in stark contrast to unitary and confederal systems of government. First, imagine a unicyclist pedaling a single-wheel contraption; this individual represents a unitary system, led by a single leader. A totalitarian regime run by a dictator would fall under this model because authority is heavily concentrated and centralized.

Next, picture a bicycle race such as the Tour de France: teams of cyclists ride along the same path toward the same overall goal, but each team is in the race for their own benefit. Every rider wants the prize, and the race is not designed to encourage cooperation between teams. The Articles of Confederation framework adopted by the Continental Congress fits this illustration, since the original states held autonomy for most aspects of government, with little collaboration across state lines.

Lastly, consider a tandem bicycle with two riders pedaling in sync. The person in front navigates the route but relies on the rear rider for assistance powering the bicycle. The person in back contributes muscle and helps balance the bicycle, but must rely on the front rider to guide the way. There exists a give and take – a balance of authority, if you will – between the two tandem riders. This cooperative exchange of power represents a federal system: the national government is the front rider with steering authority, while the states are the rear rider helping to keep the bicycle balanced and moving forward.

Wilson defined public administration as an “eminently practical science,” born out of a sense of state. Wilson’s milestone essay called for the “running of the Constitution” and encouraged the development of public administration for the Constitution’s survival. Wilson responded to concerns about public administration by dividing government into two spheres: 1) Politics – choices regarding what the government should do are determined by majority electorates; and 2) Administration – dictates of the populace should be carried out through efficient procedures, relatively free from political meddling. Most modern scholars reject the possibility of drawing a hard line between politics and administration – as if the two can be completely severed – which became known as the politics-administration dichotomy. This concept will be described in more detail later in this chapter.

Written at a time when government was under scrutiny for corruption, Wilson’s essay contended that public administration could be separated from politics. A reform movement was underway to combat rampant cronyism at the state and local levels during the time of Wilson’s writing, and since Wilson wanted to expand the capacity of government in terms of its scope and capabilities, he realized the necessity of separating politics from administration in the readers’ eyes: “If to keep his office a man must achieve open and honest success, and if at the same time he feels himself entrusted with large freedom of discretion, the greater his power the less likely is he to abuse it, the more is he nerved and sobered and elevated by it.”⁶

There is not a single form of government that once appeared simple that is not now complex, argued Wilson. In addition to organizational structure, public administration required some measure of formal accounting. Administrators, Wilson explained, are to implement policies but not have decision-making authority like policy makers. Critics of Wilson’s perspective argued that administrators are capable of value judgments that boil down to political choices, yet Wilson asserted that administrators simply discern choices using discretion, which he viewed as distinct from political decision-making. “The field of administration is a field of business. It is removed from the hurry and strife of politics; it at most points stands apart even from the debatable ground of constitutional study.”⁷ Under Wilson’s model, administrative functions involved minor, incremental decisions within the big, policy picture painted by Congress. He rationalized that the former, simple functions of government had given way to complexities.

Case in Point: You Decide

You are the Chief Financial Officer (CFO) for a state agency. Due to budget constraints, the state legislature has not authorized pay increases for the past two fiscal years. Several department chairs within your agency have voiced concern about not being able to hire quality staff because of the low base salaries offered by the agency. In addition, longstanding pay inequities exist throughout the agency, with certain departments standing out as hot spots, as they lose personnel to parallel moves (but higher-paying positions) in other agencies. The attrition rate within these offices is becoming a serious human resources problem.

As the legislative session concluded recently, you learned that the state has allocated a three percent raise for personnel, and each CFO must decide how to allocate the funds within their own agencies. How do you propose addressing the recruitment and retention needs within your agency in a way that best suits the agency, as a whole, and also boosts employee morale?

Wilson’s essay crafted the environment for the bureaucratic development of the United States: “The principles on which to base a science of administration for America must be principles which have democratic policy very much at heart.”⁸ Administration was not a new concept in Europe, which included several countries with established, complex frameworks of public administration, as noted above. Wilson’s concept was popularized in the United States in the early 1900s – an era when the merit system and civil service were in their infancy. Contrary to some opinions at the time, Wilson sought input for his public administration model from overseas, reasoning that the United States could borrow what was good and proven and negate what was not.

Richard J. Stillman demonstrated, in his own essay, how public administration has evolved over more than a century since Wilson’s writing. Stillman began his explanation with a statement that the study of public administration necessarily involves an antistatist political outlook.⁹ In short, statism is a school of thought that upholds the core organizations within a state, while antistatism is contrary to central government and advocates its limitation. The U.S. Constitution is rife with limitations on government, which serves as evidence of the founders’ antistatist leanings. Even Hamilton, who was an avid proponent of a strong central government, recognized the role of states in thwarting tyranny.¹⁰

The history of public administration has seen significant changes with each new generation. Author Leonard White, whose first textbook on public administration hit the shelves in 1926, is credited with developing “a logical sequence of steps for practicing ‘good’ administration”¹¹ that steered the field for two decades until the Cold War. An acronym for this sequential model is POSDCORB:¹² Planning, Organizing, Staffing, Directing, Coordinating, Reporting and Budgeting (see Figure 1.1). In Wilsonian fashion, POSDCORB provided a framework for public administrators to conduct the work of government in a methodical, apolitical manner.

FIGURE 1.1 POSDCORB Visualized

In response to the burgeoning civil service and growing interest in scientific and applied research, Robert Dahl’s influential text in 1947 infused a scientific, analytical approach into the public administration field. Dahl imbued a scientific perspective into addressing what he considered to be three intermingled problems of values, behavior, and culture.¹³ The Reassertion of Democratic Idealism movement – with its politics-forward approach to administration – paralleled the rebellious 1960s and 70s generation in its “cry for relevancy”¹⁴ and fragmented subfields of public administration. The intellectual underpinning of this period of public administration development held that politics were superior to – and separate from – the day-to-day work of the administration.

The end of the Cold War and the call of President Ronald Reagan to rid ourselves of big government prompted the next phase of public administrative thought, known as the Refounding Movement. As with earlier schools of thought, the Refounding Movement was not a single, universally accepted doctrine; rather, several influential clusters gained traction within the movement. Decades later, the definition and practice of public administration remains far from soli...