Personal Bias in Budgeting

In the cliche terms and phrases the public is exposed to during political campaigns, there is a heavy dose of truth, honesty, and credibility. Every time someone hits the campaign trail, the same robotic slogans are uttered. It is usually something that everyone can agree with absolutely – it is not a debate, an interview, or light research that a candidate’s true aims are discovered. What happened between the slogans and the actual position? Once the candidate is in office, the public may experience a completely different set of policies and slogans leaving them to question: what happened? The answer is found stuck between truth in budgeting and human nature.

Truth in budgeting is an idea that the budgeting office should be dependable and credible source of analysis and work (Bland, 164). That is, the budgeting office needs to have clear, rational, and reliable outputs and quality to work effectively and efficiently. But, far too often, agencies, managers, and governments act in a way that is confusing. Everyone can agree with the idea of having truth in budging, but the outcome seems to stray off course at times.  Human nature shows that people have inherent cognitive biases that create and error in thinking and can corrupt their decision making abilities (Cherry, 2018). Many philosophers, psychologists, and of course public administrators such as Herbert Simon, have pointed out the flaw in human ability to act and decide rationally. Additionally, humans do not always have the perfect information or time to make the best decisions. In A Budgeting Guide, Robert Bland lists four measures managers can take to promote truth in budgeting: eliminating political (personal) influence (bias); evaluate budget information; having qualified analysts; and having institutional expertise (Bland, 164-165). The budget office needs to have unbiased leadership “committed to using research and evaluation to guide policy decision making” – in other words, an evidence based, rational budgeting process is needed to make the best decisions.

There are ways to create a more rational and empirical budget set apart from personal biases: the line item budget. All budgets have a line-item format because it is easy to prepare, understand, and adjust – all attributing to more transparency with the public. But perhaps most importantly, “this format shifted power away from political bosses to legislative bodies, which were more accountable to voter” that is, the line-item format is less biased and subject to the whims of political parties. A line-item format also creates a good foundation for more framework in the budgeting system.

Once the line-item budget ensures an agency is working within its means, it can then focus on performance and outcome. Hill mentions that “there are two ways to measure and plan for objectives: through outputs and outcomes” and with the budget settled, managers can then focus on the agencies objectives. Frameworks like Planning, Programming, and Budgeting Systems can then be implemented to create a framework connection strategic goals with resources. Outcome Based Budgeting is the bridge between line-item formats and performance creates a solid and unbiased budget focuses on the agencies desired outcomes. Sigler says it best when asserting that “Outcome Based Budgeting not only uses performance measures but also financial data to develop budget plans”.

With a line-item foundation and a outcome-based budgeting framework, governments become more responsible in that it stays in budget and makes decisions in the public’s best interest; not by employing their own personal biases, but by focusing on the agencies objectives. Governments “must choose among disparate commodities” and will make comparisons based on evidence and fact rather than bias and values (Lee et al., 199)

Works Referenced

Bland, Robert L. A Budgeting Guide for Local Government. 3rd ed. Washington D.C.: ICMA Press, 2013.

Kendra Cherry. “How Cognitive Biases Influence how you Think and Act”. Verywellmind.com November 6, 2018. Access February 21, 2019 from https://www.verywellmind.com/what-is-a-cognitive-bias-2794963.

Lee, Robert D., Ronald Wayne Johnson, Philip G. Joyce. Public Budgeting Systems. 9th ed. Burlington, MA: Jones & Barlett Learning, 2013.

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