Fall 2017 - 61010 - PA 391 - Public Financial Management

Public Financial Management

Public financial management (PFM) involves the administering, leveraging and optimizing of government fiscal resources. In this sense, PFM draws on several disciplines including economics, accounting, political science and finance. This course can be broken down into three sections: expenditure policy, revenue policy and financial condition analysis. The course begins with the expenditure of fiscal resources for day-to-day activities through the operating budgeting process. It then proceeds to capital budgeting which involves spending on long-lived assets like roads, buildings and bridges. Within capital budgeting the course delves into the ways federal, state and local governments finance their capital activities mainly through the sale of treasury and municipal securities. Following the expenditure topic, the course focuses on the myriad ways governments raise revenues including a discussion of income, sales and property taxes as well as grants and various user fees. The final section details the manner in which one can assess a government’s financial condition. This section involves analyzing government financial statements and thus relies on the application of financial and accounting principles to a government’s financial reports.

Requirements and Expectations

The course format will primarily be lectures, but extensive student participation is expected. It will require reading and written assignments prior to each class meeting. Student progress will be evaluated on the basis of performance along four criteria: 1) problem sets; 2) midterm examination; 3) final examination; and 4) class participation. In order to understand financial management, one needs to practice it. As such, in addition to developing a conceptual understanding of the various substantive topics of the field, students in PA 391 should be prepared to perform extensive computations such as construction of a pro-forma budget, bond pricing, various tax rate calculations and financial ratio calculations, to name a few. Such computational activities serve to deepen one’s understanding of the various core concepts of public financial management.


Because the field of PFM is so wide, students should expect a significant reading workload in this course.  The required textbook for this course is “Fiscal Administration” by John Mikesell (Wadsworth Cengage Learning), 9th Edition (2013). The course will also rely on additional textbook chapters, journal articles, research reports and newspaper articles to illuminate various course concepts. These additional readings will be made available via Canvas.

SRH 3.122