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 sewage 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 for residents. Subject matter experts may be directly involved in the administration of the agency, as well as in the legislation, policy development, and enforcement 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 like firefighting, law enforcement, and medical care, along with infrastructure like roads and a power grid. Education, business grants and other measures to improve communities are also part of public finances. Large sums of money can be involved and responsible management ensures that funds remain available while as many citizens as possible benefit from government activities.
In the discipline of public financial management, people examine the needs and documented expenses of different public services. They can perform analysis 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 rather than arts programs to ensure that social order is maintained.
Sources of revenue 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 be worthwhile in terms of increased revenue or less waste. Governments can also make investments to increase their revenues, under the guidance of CFOs, who can decide how and where the 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 raised and spent. They may be directly involved in policymaking at the ballot box, through petitions, and in lobbying efforts 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.