Managing Local Governments

Designing Management Control Systems that Deliver Value

Emanuele Padovani, David W. Young

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781136515637
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Business allgemein

Local Government is an area where management skills are tested to the extreme. With political considerations evident both locally and nationally, managing resources can be complex and subject to change.

This book introduces new concepts and new ways of doing business that can greatly enhance the value of the services a local government provides to its citizens, without putting a greater financial burden on taxpayers. Padovani and Young present out-of-the-box thinking based on solid research and experience to discuss topics such as:

• Incorporating outcome indicators into strategic planning and budgeting
• Building a LG's budget with 'cost drivers'
• Expanding the concept of 'enterprise funds'
• Assessing and better managing the risk associated with outsourcing
• Using the concept of 'shadow pricing' to compare public with private sector costs for services

This book is a must-read for students of public administration and management, senior and middle managers in local governments around the world, and citizens who are concerned with more effective management of their local government's programs and services.

A list of suggested extra case studies for each chapter, and a description of the process to follow for ordering them, may be obtained by sending an email to [email protected]. You should request the document "Case Study Suggestions for Managing Local Governments".

Chapter 1

The context for management
control systems in local
governments

LEARNING OBJECTIVES

At the end of this chapter you should:

Be able to recognize the many different types of local governments (LGs) that can exist across the globe.

Understand the general characteristics of LGs that affect their ability to develop good management control systems, such as the absence of a profit measure and the difficulty they face in measuring performance.

Know the boundaries of a management control system in an LG, and understand why it will never provide as good a basis for planning or measuring performance as a comparable system does in a for-profit organization.

KEY POINTS

LGs function at one of three levels: (1) basic (e.g., municipality, borough, city, urban district), (2) intermediate (e.g., province, county, metropolitan district), and (3) regional or state. In general, the number of levels in a given country varies depending on the country’s size and political structure.

Pure LGs have (1) jurisdiction over a given local territory, (2) decision-making bodies elected by citizens, (3) a mandate to provide for multiple public services, and (4) a degree of autonomy in imposing their taxes and policies. Municipalities and similar forms of LGs in both Europe and the United States fall into this category.

Ten percent of the countries in the world have over 83 percent of the LGs. In 20 countries, LG expenditures are 20 percent or more of GDP.

LG programs and services can include urban planning, housing, road construction and maintenance, transportation, education, vocational training, cultural activities, museums, libraries, leisure services, health care, welfare and social services, public safety (police and fire protection), economic development, water provision, sewage disposal, natural gas distribution, electricity, tourism, and environmental protection.

Regardless of the form they take, or the country in which they exist, LGs typically face a similar set of constraints: (1) absence of a profit measure, (2) difficulty in measuring performance, (3) political influences in decision making, (4) restricted sources of financial support, (5) dominance of professionals in some services (e.g., health and education), and (6) external influences on decision-making.

LGs have played, and continue to play, a key role in the provision of services to citizens in almost all countries As Table 1.1 indicates, there are over 700,000 LGs in the world, over half of which are in the Asia Pacific region. Of these some 250,000 (35 percent of the total) are in India.

An LG is an entity that provides services to meet a variety of needs in a specific community. According to one view, an LG provides services “that households and enterprises cannot as economically provide by themselves” (Asian Development Bank and Ministry of Finance, China, March 2000). In Latin America, where they often are called “sub-national,” LGs’ expenditures as a percentage of total national public expenditures have increased over the past decade from 13 to 19 percent (Bliss and DeShazo, 2009). Globally, as Table 1.2 shows, this percentage ranges from a low of about 4 percent (in Nicaragua and Panama) to 81 percent (in China). As Table 1.2 also shows, the average percentage for those regions with available data ranges from about 23 percent in North America to 33 percent in Eurasia.

Table 1.1 Distribution of local governments by region of the world

	Number	% of Total
Africa	15,565	2.2
Middle East-Western Asia	42,533	6.0
Europe	95,524	13.4
Asia Pacific	373,697	52.3
Eurasia	78,438	11.0
Latin America	16,641	2.3
North America	91,455	12.8
Total	713,853	100.0

Source: Adapted from World Bank and United Cities and Local ...