Transcript Planning Implementation and Monitoring

Lecture Series #4
Budget Planning, Implementation and Monitoring
Last Step: Budget Implementation and Monitoring – Government Approach
Chris Droussiotis
September 2011
Table of Contents
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Distinguish Mandatory Spending Vs Discretionary
Discipline on Discretionary – The IRR/Payback approach
Implement and Revaluate – Set up Performance Ratios
Moody’s Rating Approach
These slides could be obtain via the Instructor’s Web page at
www.celeritymoment.com
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Spending Drives Revenues
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Can the U.S. outgrow the problem?
Spending Drives Revenues
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Spending Drives Revenues
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Revenue Discretion
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The 2011 U.S Budget – Case Study - Lessons Learned
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2011 Budget of the United States federal government
Submitted February 1, 2010 by Barack Obama to the Congress
Congress Passed Public Law 112-10
Total revenue $2.17 trillion (estimated)
Total expenditures $3.82 trillion (estimated)
Deficit $1.65 trillion (estimated)
The 2011 U.S Budget – Case Study - Lessons Learned
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President Barack Obama proposed his 2011 budget during February 2010.
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He has indicated that jobs, health care, clean energy, education, and infrastructure will be priorities.
Obama's
Initial Plan
(2/2010)
Obama's
Revised
Plan
(2/2011)
New
Projections
4/2011
2011
3.83
2.56
1.27
2011
3.71
2.21
1.50
2011
3.82
2.17
1.65
Debt
Revenue / Debt Ratio
15.10
5.90x
15.10
6.84x
15.10
6.95x
15.10
GDP
Deficit % of GDP
Debt % of GDP
15.31
8.3%
98.7%
15.31
9.8%
98.7%
15.31
10.7%
98.7%
13.51
Request Spending
Projected Revenue
Budget Deficit
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Congress
Initial Plan
(4/2010)
2011
111.7%
The 2011 U.S Budget – Case Study - Lessons Learned
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It was widely anticipated that a government shutdown on April 8, 2011 was possible if a budget resolution or a
seventh continuing resolution was not passed by the expiration of the sixth continuing resolution on April 8, 2011,
which would have caused the furlough of 800,000 out of 2 million civilian federal employees.
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However, a deal was reached with just hours remaining before the deadline, averting the shutdown.
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The deal included $38.5 billion in cuts from what had been budgeted for 2010, in addition to another $10 billion
in cuts that had been imposed in some of the continuing resolution.
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However, the April 13 Congressional Budget Office estimate showed that, compared with then-current spending
rates, the spending bill would cut federal outlays from non-war accounts by just $352 million through Sept. 30.
About $8 billion in immediate cuts to domestic programs and foreign aid were offset by nearly equal increases in
defense spending
The 2011 U.S Budget – Case Study - Lessons Learned
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The 2011 U.S Budget – Case Study - Lessons Learned
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The Moody’s Rating Approach
 Moody’s general obligation bond ratings are forward-looking assessments of an
entity’s relative credit strength, and reflect our analysis of four rating factors – Economic
Condition and Outlook, Financial Position and Performance, Debt Profile, and
Management – as measured against a combination of qualitative and quantitative criteria.
 The rating outcome reflects a weighting of these assessments according to the
following weighting system:
 Economic Strength 40%
 Financial Strength 30%
 Management and Governance 20%
 Debt Profile 10%
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