Public financial management is the administration of funds used to deliver public services. Depending on the level of government and the specific nation, these can range from water and sewage service in a city to a national health plan. This is a special field within the larger discipline of financial management, focused on delivering services as effectively and efficiently as possible to maximize benefits to residents. Specialists in this subject can participate directly in agency administration as well as legislation, policy development, and enforcement of regulatory frameworks used to control public expenditures.
Governments provide a variety of services to citizens to improve quality of life and the function of society. These can include emergency services like firefighting, law enforcement, and medical care, along with infrastructure such as roads and an electricity grid. Education, business grants, and other measures to improve communities are also part of public finance. Vast sums of money can be involved and managing these responsibly ensures that funds will continue to be available while the greatest number of citizens possible benefits from government activities.
In the discipline of public financial management, people look at documented needs and expenditures for different public services. They can perform analysis to identify areas of greater or lesser efficiency. Some programs may be ranked by importance to prioritize spending. For example, a government may want to allocate funds to law enforcement before arts programs to ensure that social order is maintained.
Sources of revenues for public finance activities can include taxes, fees, and fines. In public financial management, analysts prepare revenue projections and discuss ways to increase or manage revenues more effectively. These can include auditing or investigating for signs of fraud if these activities are likely to pay off in terms of higher revenue or less waste. Governments can also make investments to grow their revenues, under advice from financial directors who can decide how and where investments should be made.
There are some special concerns with public financial management that aren’t present with spending in the private sector. One is public accountability. Members of the public expect to see accounting to show how their money was collected and spent. They may participate directly in policy making at the polls, through petitions, and in lobbying measures targeted 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 public financial management.
Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.