Abstract
Teaching public finance is often one of the more difficult classes in public administration to teach. Not only do students struggle with the challenges of applying public finance to their careers, but they are often apprehensive in the classroom due to the involvement of numbers. For faculty, the question becomes how do we then effectively engage with our students? I believe that the new book by Maher, Park, McDonald, and Deller provides an avenue to do just that.
In Understanding Municipal Fiscal Health, the authors set out on a lofty aim of bringing the full body of literature on fiscal health together and using that literature to develop a single model that can be used to explain the financial condition of a government. The intent is that by fully understanding the condition that a government is experiencing, public administrators will be able to take proactive steps to improve the condition. And with improvement comes better outcomes, more public services, and lower taxes.
The book opens with a discussion of what fiscal health is and why it matters. Simply stated, the authors argue that fiscal health reflects the ability of a government to pay its bills given the resources that it has at its disposal. Although this may seem like an easy topic of discussion, it is the root of all public finance. In order to then build a comprehensive model of fiscal health, Maher et al. consider the financial inputs that a government has available, the outputs that it produces, but also the outcomes that it is trying to achieve. While a good balance of the three is reflected in a strong financial position, an incorrect balance of the three can lead to fiscal stress for a government. What we learn as we read is how to identify the considerations as we experience them and then how to balance them.
Although the book is written from the perspective of municipalities in the United States, it can easily be applied to any government on the globe. On the side of inputs is the fiscal environment of the government. This includes not just the socioeconomic conditions of the community, but its institutional setting. It is here that the flexibility of the model and the book really begins to shine. As demonstrated by the case studies, every government experiences its own unique set of economic constraints and institutional dynamics. Also impact the inputs are the external and internal pressures that the government faces. In order to understand the fiscal health of a government, we must first understand the particular basket of inputs are impacting the government. The basket for Kenya, for example, will be different than the basket for New York City, but it will also be different than the basket for Titusville, Florida.
Once we understand the inputs that are impacting the government of interest, the book directs us to understanding its outputs. i.e., the decisions that it makes regarding its revenues, expenditures, and long-term financing. The inputs and outputs are then brought forward to the outcomes of the government. Notably, outcomes reflect the fiscal condition of the government and whether the government is healthy or stressed. Included in the books discussion on outcomes is the development of fiscal indicators that reflect the fiscal status but also help us to understand future conditions by showing us what changes in inputs and outputs to watch for.
Although the book gives the impression of being written with the practitioner in mind, I believe its strength lies in its ability to be used in the classroom. The writing team is impressively strong. Not only are Maher and McDonald the leading scholars on the fiscal health of governments, but McDonald is also easily the leading scholar on the scholarship of teaching and learning within the discipline across the globe. Their involvement in the project provides assurance of the value and contribution of the book to the practice of public administration while also ensuring that it has a place within our classrooms.
What makes the book a value contribution to the classroom is that as the authors discuss the mechanics of fiscal health, they do so slowly and in accessible language. Furthermore, rather than just providing numbers that the reader is meant to grasp, they discuss where the numbers come from, why they are important, and only then do they discuss their meaning and interpretation. For a public budgeting or public finance course, many of the issues that are discussed in the class are also discussed in the text itself. This includes financial practices, budgeting principles, and governmental accounting, among others. The principles taught throughout the book come to a point with the introduction of case studies in which the authors used qualitative interviews to show how the model of fiscal health operates in real instances. All of this contributes to the accessibility that students are looking for. Through the accessibility of the book, students can learn the principles we need them to and then see them in practice. This is demonstrated by the books creative use of Figure 1.4, which lays out the model in an easy to follow pattern, but also directs the reader to the sections of the book needed to understand the application of the different aspects.
What I find particularly useful for teaching about the book is Chapter 14, which considers the academic and professional approaches to fiscal health. Academic studies have a history of developing large, complex models that are challenging for those in practice to apply. The literature on fiscal health is by no means and exception to this. In Chapter 14, however, the authors discuss how the approaches of academics and practitioners differ and then discuss the use of their approach to resolve the gap. In my own teaching experience, this chapter has proven itself popular with students. When combined with the case studies of Chapters 9 through 13, the chapter helps students to understand the difference between academic and practitioner dynamics while giving them a process for working through how to resolve the differences. Furthermore, the chapter gives students a way of understanding the books model of fiscal health that can be applied by anyone working for a government, not just those with advanced statistical training.