We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Budget Adjustments in Response to Spending Variances: Evidence of Ratcheting of Local Government Expenditures.
- Authors
Lee, Tanya M.; Plummer, Elizabeth
- Abstract
This paper examines the degree to which government administrators incorporate prior year spending variances into current year budgets. Government administrators have incentives to increase their budgets, and constraints on government spending are weaker than those found in the private sector. Therefore, we expect budget increases associated with prior year government overspending (actual exceeds budget) to be larger than decreases associated with underspending of the same amount. This differential response is called ratcheting. We examine budgets for 1,034 Texas school districts (1995 through 2002), and find budget ratcheting in operating expenditures and the subcategories of instructional and non-instructional expenditures. Ratcheting is most pronounced for non-instructional expenditures. We also find that budget ratcheting is more pronounced when controls on government spending are likely to be weaker. Specifically, budget ratcheting is more pronounced for school districts that operate in a less competitive environment and for districts that have less voter influence.
- Subjects
TEXAS; UNITED States; MUNICIPAL budgets; SCHOOL districts; PUBLIC spending; VARIANCES
- Publication
Journal of Management Accounting Research, 2007, Vol 19, p137
- ISSN
1049-2127
- Publication type
Article
- DOI
10.2308/jmar.2007.19.1.137