John L. Mikesell
Indiana University, Bloomington
The management of financial resources, including the analysis of the fiscal impacts of policy options.
Public financial management seeks to create and preserve value in society by helping public decisionmakers and managers (1) to make choices about how large government should be within the capacity of the overall national economy and according to the preferences of the citizenry; (2) to raise resources from private hands so that they may be put to public use, but doing so in a fashion that minimizes social and economic damage; (3) to allocate and control resources carefully when they have been moved to government supervision so that they suffer neither waste nor misappropriation ; and (4) to report periodically on the financial and program results to the public, and to legislative and executive bodies, and external observers.
The aggregate resources of society are mostly in the hands of private owners. They are used in the market economy but some resources are transferred to public use by the coercive power of taxation which democratic societies allow the sovereign only under limited circumstances. Public financial management helps to see that these resources are managed at the margin to achieve the maximum benefit to society. Financial administration choices include balancing the private and public use and the alternate use and timing of use of economic resources, the manner in which the revenue system allocates the cost of public operations among