Finance in Public Administration

One of the important components towards the successful delivery of services to the public is management of financial resources. Financial management in public administration basically entails budgeting as well as budget execution, monitoring, and accounting with respect to planning and programming of public administration. In essence, public finance administration basically entails raising revenue from the public, allocation of public funds and other financial resources, and managing public assets. These processes are usually carried out to help ensure that the government has adequate money to finance all its activities. In this regard, proper financial management in public administration is crucial towards preventing misuse of public money or resources as well as ensuring compliance with the relevant financial regulations. This paper examines finance in public administration in relation to the budgeting process and on the fundamental principles of public finance.

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Fundamental Principles of Public Finance

The management of finance and other financial resources in public administration is governed by some fundamental principles of public finance. According to Mikesell (2011), there are several fundamental principles of finance management in public administration including operating under public trust and controlling the proper use of public resources. Secondly, management of public finance should be guided by on the use of public funds and resources, which provide a in organizing options. Third, managers of public finance should ensure that money does not run out before the delivery of necessary services to the public. The other principles include understanding the case being made by other managers, provide suitable cases to legislative and executive bodies for resource allocation to provide essential public services, and prevent/avoid misuse of public resources. Additionally, non-profit organizations often have abysmal financial management practices and government crises usually have underpinnings that have been avoided with better budget systems and finance mechanisms. The management of public finance is also governed by the principle that those who work in an organization have better understanding of the financial aspects of the organization and understanding that budget planning and execution is key towards funding and understanding what is happening in public organizations.


Equimarginal Principle, Pareto Criterion, and Justification for Government Action

The other important aspects of public finance administration include the equimarginal principle, pareto criterion, and government action. Equimarginal principle suggests that people will choose a mixture of goods to maximize their overall utility. In public finance, public officials utilize this principle to evaluate the various alternatives and courses of action, and in turn identify the most suitable measure for resource allocation that will have lasting impacts on the public. These officials utilize pareto criterion to examine the needs of the public in terms issues they consider important. They utilize such information to determine areas that require huge amounts of attention and financial resources. Justification for government action is when elected and/or appointed public officials demonstrate how their policies will impact communities. These policies in turn become the basis for allocation of public funds and resources to meet the needs of the community.


Public Choice and Political Processes

Public choice plays a crucial role in management of public finance since they have a choice on who they elect to represent them and how various services are provided to them. In this regard, the public will choose people who are closely aligned with their beliefs and can meet their broader objectives (Ekstedt, 2013). On the other hand, political processes entail open discussions on resource allocation and how services should be provided by the government through public officials. Through the process, the public determines the most suitable candidate who can meet their goals with respect to formulating policies that are geared towards appropriate allocation of finance and other resources as well as delivery of essential services (Holzer, 2011).


In conclusion, the management of public finance as part of public administration is a . This process basically entails budget planning, execution, and monitoring in a manner that ensures equitable resource allocation towards meeting the needs of the public. This process involves various stakeholders who and ensure their implementation including policymakers, public officials, and the public. A proper framework for management of public finance requires utilization of fundamental principles of public finance and consideration of public choice and political processes in decision-making and implementation procedures.




Ekstedt, H. (2013). Money in economic theory. New York, NY: Taylor & Francis Group.

Holzer, M. & Schwester, R.W. (2011). Public administration an introduction. Armonk, NY: M.E. Sharpe.

Mikesell, J.L. (2011). Fiscal administration: analysis and applications for the public sector (8th ed.). Boston, MA: Cengage Learning.