What are the attempts used in the budgeting literature to answer V.O. Key’s famous budgeting question?


On what basis shall we allocate resources to Program A instead of Program B, is the perennial statement in public sector budgeting. Identify and discuss at least five attempts, found in the budgeting literature, used to answer V.O. Keys famous budgeting question. In your professional judgment, which type of budgeting system is most appropriate for public administration? Why do you feel this way?

Public sector budgeting is a critical process that requires proper allocation of resources to programs that will ultimately result in the greatest benefit to society. One of the most vital considerations in this process is the allocation of resources between Program A and Program B. This is a complex task that requires a thorough understanding of the budgeting literature and the principles that govern effective budgeting. In this article, we will identify and discuss five attempts found in the budgeting literature that can be used to answer this perennial statement in public sector budgeting.

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The allocation of resources between different programs is a perennial statement in public sector budgeting. Whether it’s allocating resources to Program A or Program B, public administrators have to rely on a range of different techniques in order to make the best decision. In the budgeting literature, there have been several attempts to address this question. Some of the most common include cost-benefit analysis, performance-based budgeting, zero-based budgeting, outcome-based budgeting, and program budgeting.

Each of these budgeting techniques has its advantages and disadvantages. Cost-benefit analysis, for example, is useful for determining the net benefit that a program provides. Performance-based budgeting, on the other hand, emphasizes achieving measurable outcomes that can verify program effectiveness. Outcome-based budgeting makes use of outcome indicators to measure the success of a program, while program budgeting focuses on developing and improving programs that provide the greatest social benefit.

In deciding which budgeting system is most appropriate for public administration, it ultimately depends on the unique circumstances of the organization and the individual programs. Public administrators and policymakers need to assess their specific needs and objectives when deciding which approach to use. Ultimately, the success of any budgeting system will depend on the quality of the data, the level of transparency, and the degree of accountability.

– To identify five attempts found in budgeting literature to answer the question of why resources should be allocated to Program A instead of Program B.
– To discuss the appropriateness of different budgeting systems for public administration.

Learning Outcomes:
By the end of this article, readers will be able to:
– Describe at least five different methods used in budgeting to allocate resources between competing programs in the public sector
– Analyze the pros and cons of different budgeting systems for public administration
– Evaluate and recommend the most appropriate budgeting system for a given scenario based on its goals and objectives.

1. Introduction
2. Attempts to Answer V.O. Keys Famous Budgeting Question
a. Cost-benefit analysis
b. Performance budgeting
c. Zero-based budgeting
d. Program budgeting
e. Priority-Based Budgeting
3. Analyzing the Appropriateness of Different Budgeting Systems
a. Traditional Budgeting
b. Performance Budgeting
c. Zero-Based Budgeting
d. Program Budgeting
e. Priority-Based Budgeting
4. Evaluating and Recommending Budgeting Systems for Public Administration
5. Conclusion

Solution 1: Five Attempts to Answer the Perennial Statement in Public Sector Budgeting

1. Outcome-Based Budgeting: This approach focuses on the outcomes and the objectives of the budget rather than just the activities. It tries to align the activities with the objectives and plans by measuring the results of each program and service offered by the government. Therefore, it provides evidence-based justification for allocating resources to Program A instead of B.

2. Zero-Based Budgeting: Here, the budget starts from zero, and each program must justify its funding based on its efficiency and effectiveness compared to other programs. This method helps to eliminate redundant and ineffective programs that do not achieve sufficient output, thus providing a basis for allocating resources to Program A.

3. Performance-Based Budgeting: This technique seeks to allocate resources based on the expected performance of each program and service. Therefore, it focuses on quantitative and qualitative measures of efficiency, efficacy, and effectiveness. It provides a holistic approach to allocate resources to Program A.

4. Activity-Based Budgeting: This budgeting approach allocates resources to the most significant activities or core functions that align with the government’s objectives. Therefore, it reduces funding for less significant activities, making it easier to allocate resources to Program A.

5. Priority-Based Budgeting: This method requires the identification of priorities and ranking them based on their importance in achieving the government’s objectives. Therefore, it becomes easier to allocate resources to Program A, which ranks high in priority.

Solution 2: The Most Appropriate Budgeting System for Public Administration

In my professional judgment, the outcome-based budgeting system is the most appropriate budgeting system for public administration. It is because this budgeting system aligns all activities with the government’s objectives and provides quantitative and qualitative measures to evaluate the results achieved. This alignment ensures that resources are allocated to programs that provide the most significant outcomes, which is the primary objective of public administration. Furthermore, outcome-based budgeting improves accountability, transparency, and performance management, making it easier to identify areas that need improvement. Therefore, the government can use this information to allocate resources to Program A, which yields the most significant results. Overall, Outcome-Based budgeting provides the most objective and evidence-based justifications for allocating resources to Program A.

Suggested Resources/Books:

1. “Public Budgeting in America” by Robert D. Lee and Ronald W. Johnson
2. “The Budget Puzzle: Understanding Government Finance” by Michael Parkin and Robin Bade
3. “Handbook of Public Budgeting” edited by Jack Rabin, Thomas D. Lynch, Jr., and W. Bartley Hildreth
4. “Public Finance and Public Policy” by Jonathan Gruber
5. “Budgeting and Financial Management for Nonprofit Organizations: Using Money to Drive Mission Success” by Lynne A. Weikart, Gregory F. Price, and Ed Sermier

Similar Asked Questions:

1. What are some common challenges faced in public sector budgeting?
2. How does the budgeting process differ in government organizations compared to private sector organizations?
3. What are some different types of budgeting systems used in public administration?
4. How do budgetary decisions impact different stakeholders in the public sector?
5. What role does performance measurement play in public budgeting?


1. Incremental Budgeting: This approach is based on the idea that budgets from previous years can serve as a baseline, with incremental changes made according to the level of funding available. It is a common approach for public sector budgeting since it allows for stability and predictability in budgeting.

2. Zero-Based Budgeting: Unlike incremental budgeting, zero-based budgeting starts from scratch every year, requiring managers to justify all expenses from the previous year as if they were new. This approach may be more time-consuming, but it allows for more scrutiny and prioritization of expenditures.

3. Performance-Based Budgeting: This approach seeks to connect budget allocations to specific outcomes and performance measures. By aligning budgets and performance metrics, organizations can gain insights into whether they are achieving their strategic goals and optimize resource allocation towards programs or initiatives that are showing the most success.

4. Activity-Based Budgeting: This approach focuses on specific activities or processes to identify cost drivers. By understanding the cost of each activity, managers can make informed decisions on the allocation of resources and reduction of costs through process improvements.

5. Priority-Based Budgeting: This approach prioritizes expenditures based on specific criteria, such as urgency, impact, or alignment with strategic goals. By setting priorities, organizations can reduce budget waste and allocate resources towards programs or initiatives that make the greatest contribution towards their goals.

In terms of recommending a budgeting system for public administration, there is no one-size-fits-all approach. The type of budgeting system adopted depends on the organization’s size, goals, and resources. However, a performance-based budgeting approach is often considered the most appropriate since it allows for the allocation of resources towards programs that demonstrate the most success. Furthermore, by aligning budgets and performance metrics, it also promotes greater transparency and accountability in the budgeting process.

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