Public finance management is the administration of funds used to deliver public services.
Public finance management is the administration of funds used to deliver public services. Depending on the level of government and the specific nation, they can range from water and sewer services in a city to a national health plan. This is a special field within the broader discipline of financial management, focused on delivering services as effectively and efficiently as possible to maximize benefits to residents. Subject matter experts can participate directly in the administration of the agency, as well as in legislation, policy development, and the application of regulatory frameworks used to control public spending.
Governments provide a variety of services to citizens to improve the quality of life and the functioning of society. This can include emergency services such as firefighting, law enforcement and medical care, along with infrastructure such as roads and an electrical grid. Education, business grants and other measures to improve communities are also part of public finances. Vast sums of money can be involved and responsible management ensures that funds will remain available while as many citizens as possible benefit from government activities.
In the discipline of public financial management, people look at the documented needs and expenditures of different public services. They can perform analyzes to identify areas of greater or lesser efficiency. Some programs can be ranked by importance to prioritize spending. For example, a government may want to allocate funds to law enforcement ahead of arts programs to ensure that social order is maintained.
Revenue sources from public finance activities may include taxes, fees and fines. In public financial management, analysts prepare revenue projections and discuss ways to increase or manage revenue more effectively. This may include auditing or investigating evidence of fraud, if these activities are likely to pay off in terms of higher revenue or less waste. Governments can also make investments to increase their revenues, under the guidance of CFOs, who can decide how and where investments should be made.
There are some special concerns with public financial management that are not present in private sector spending. One is public responsibility. The public expects to see the accounting to show how their money was collected and spent. They can participate directly in policymaking at the polls, through petitions and in lobbying measures directed at specific agencies or legislators. Another issue is the need to balance the public good, and what will benefit most people most of the time, in managing public finances.