Rethinking Budgeting as a Continuous Process

• Author: Daniele Alesani
• DOI: http://doi.org/10.1111/j.1540-6210.2012.02644.x
• Published date: 01 November 2012
• Date: 01 November 2012

Commentary

Daniele Alesani is head of the Statutory

Reporting Unit at the United Nations

Population Fund and lecturer at Bocconi

Univer sity in Milan, Italy. He has been a

United Nations staff member since 2009;

throughout his career, he has worked to

implement accounting change and mod-

ernization in public sector organi zations. He

holds a doctorate in public administration

and management from the University of

Parma, Italy, and a master of business

degree with specialization in intergovern-

mental institutions from the University of

Geneva, Switzerland.

E-mail: alesani@unfpa.org

Rethinking Budgeting as a Continuous Process 885

Public Administration Review,

Vol. 72, Iss. 6, pp. 885–886. © 2012 by

The American Society for Public Administration.

DOI: 10.111/j.1540-6210.2012.02644.x.

Daniele Alesani

United Nations Population Fund and Bocconi University, Italy

In their article “Budgeting and Rebudgeting in

Local Governments: Siamese Twins?” Eugenio

Anessi-Pessina, Mariafrancesca Sicilia, and Ileana

Steccolini address a very important subject for the

community of public sector f‌i nancial practitioners

that is severely underinvestigated in the international

literature.  e article argues that approved budgets

are a starting point for a continuous process of budget

execution and revision, or “rebudgeting.”  e authors

adopt an explanatory perspective and test hypotheses

on the determinants of the rebudgeting process.

 is research speaks powerfully to the professional com-

munity, which is already used to thinking about budget-

ing as a yearlong cycle, far from a one-stop-shop exercise

that culminates with the issuance of an organization’s

budget whose allocations are to be simply monitored

and reported.  e framework and the determinants of

rebudgeting proposed by the authors have the poten-

tial for widespread application to other public sector

systems, where the same analysis could give interesting

comparative results based on the budgeting rules and the

contingent institutional, political, and funding patterns.

 e main dif‌f‌i culty in treating this topic and, at

the same time, its main element of interest is that

rebudgeting is an informal and elusive process. Not-

withstanding the presence of rules and procedures to

propose and approve budget revisions in any public

sector system, a common trait of many rebudgeting

processes is the strong informality that surrounds

them. In my experience as a consultant and f‌i nancial

practitioner in Italian local government and health

care and intergovernmental organizations, I directly

observed how politically and bureaucratically charged

the process of rebudgeting can be. As rebudgeting is

often a “positive-sum” game, it can be characterized by

a power struggle between elected representatives and

managers and represents a relevant space for bottom-up

bureaucratic negotiation. It is also a process in which

a management orientation toward “planning” versus

“emergency response” is displayed.

From a practitioner’s perspective, the hypotheses

developed by the authors on the determinants of the

rebudgeting process and the related f‌i ndings appear

to be very signif‌i cant and well on the radar of budget

directors and comptrollers when managing these pro-

cesses in their own organizations.

For example, in my own experience, it is extremely

common for budgeting processes to be heavily incre-

mental, as budgeting is still perceived as a rational

exercise that moves from past allocations and the

amount of unexpended resources, accounts for margi-

nal increases or decreases of available funding at the

corporate level, and comprehensively consolidates the

departmental budget proposals issued based on ap-

proved programs of work.  e more incremental the

budgeting process, the more the rebudgeting process is

left to tackle emerging needs and development initia-

tives. Because budgets are intended as authorizations

to spend, it is intuitive that internal allocations will be

conservative and that there will be “space” for further

allocations during the year.  ink, for example, how

common it is for chief f‌i nancial of‌f‌i cers (CFOs) to

face emerging priorities or crises during the year by

suggesting the release of resources whose existence was

unknown to most within the organization. Who con-

trols these allocations—elected representatives, top

management, or CFOs—and how in the context of

governance systems, power dynamics, and adminis-

trative settings is a relevant f‌i eld for further research.

Incrementalism is clearly stronger for operating

budgets than for capital budgets, not only because

of the one-time nature of the expenses related

to the latter, but also because of their magnitude.

 is explains the increasing tendency of organiza-

tions to set up separate processes and funding for

capital budgets.

Building on another hypothesis put forward by the

authors, budgets are, by their very nature, conserva-

tive. Soon after receiving their f‌i nancial allocations,

managers start encumbering resources and making

their plans, which could be extremely dif‌f‌i cult to

change at a later stage without signif‌i cant repercus-

sions for programs of activity.  is is exacerbated by

the cost structure of most public organizations, which

is considerably skewed toward f‌i xed costs.

Rethinking Budgeting as a Continuous Process