Course Overview and Requirements:

This course examines the expenditure and revenue decisions of state and local governments and fiscal aspects of intergovernmental relations.  The principal objectives of the course are to describe the fiscal institutions of the U.S. federal system; to develop analytical tools, primarily drawn from microeconomics, for understanding the behavior of voters, public officials, businesses, and other actors affected by state and local policy; and to provide tools that will help students make fiscal policy decisions.  The course is designed for students who plan to be practitioners, that is, who plan to make decisions about state and local expenditures and revenues or about intergovernmental aid.  The emphasis of the course is therefore more on institutions and on applications than on the fine points of theory, and students will be given many opportunities to apply their analytical skills to actual policy problems.

As described in detail in the attached class schedule and reading list, the class will cover the following topics:
 

I.		State and Local Government Expenditures
II.		State and Local Government Revenues
III.		Financing State and Local Capital Projects
IV.		Fiscal Aspects of State and Local Economic Development
V.		Intergovernmental Fiscal Relations

 

Time & Place

             The class will meet from 12:45‑2:05 on Mondays and Wednesdays in Maxwell 108.

 
Class Format

             Class sessions will consist of a mix of lectures, case discussions, and student presentations.  Student participation is encouraged in all classes, and, as discussed below, required in some.

             This class will make extensive use of the internet. Students should expect to make frequent use of the professor's web site.  Many issues in state and local public finance are covered in The New York Times, which is free on the internet (http://www.nytimes.com/). Other potentially useful sites include:
 

Campaign for Fiscal Equity (http://www.cfequity.org/)

Education Finance and Accountability Program (http://cpr.maxwell.syr.edu/efap/)

Education Week  (http://www.edweek.com/)

Government Finance Officers Association (http://www.gfoa.org)

International City/County Management Association (http://www.icma.org/go.cfm)

National Conference of State Legislators (http://www.ncsl.org/)

National Governor's Association (http://www.nga.org/)

National League of Cities (http://www.nlc.org/home/)

National Tax Association (http://www.ntanet.org/)

The Rockefeller Institute at SUNY Albany (http://www.rockinst.org/)

U.S. Census of Governments (http://www.census.gov/govs/www/index.html)

U.S. Conference of Mayors (http://www.usmayors.org/)

           
Prerequisite

             The course is designed for students with previous exposure to microeconomic analysis.  Some background in statistics and regression analysis is also desirable, but not required.  Any student who has taken ECN 601 or PPA 723 with a grade of B or better may take this course.  Other students must receive the instructor's permission in order to enroll.

         
 
Assignments            

All students are required to (1) participate in class discussions, (2) prepare a professional memo based on one of the cases, (3) draft a memo with recommendations for some part of the New York State budget, (4) present their recommendations to the class (after feedback from the professor), and (5) prepare a final version of their policy memo for posting on the class web site.  Students may work in groups for the last three assignments.  Students also may discuss the first two assignments with each other, but each student should work alone in writing the professional memo (the second assignment). All students are expected to meet the highest standards for academic integrity.

These assignments are designed for master's students.  Any PhD students in the class should consult the professor to design alternative assignments that are appropriate for his or her course of study.  Any student requiring special arrangements because of a disability should make an appointment to see the professor. 

(1) The first assignment is to participate in formal class discussions.  As listed on the following class schedule, there are five case discussions in the class.  Each student must play a lead role in one of these case discussions.  The class web page (on the professor's web site) includes a form that allows each student to indicate the cases on which he or she would like to play a lead role.  This form should be downloaded, filled out, and turned in to the professor by e-mail (or delivered to the receptionist at the Center for Policy Research) on or before January 14.  Students will be assigned to a case on a first-come, first-served basis.  The final assignments will be available on the class web page before class on January 21 (with the first case to take place January 26).  Guidelines for each case discussion, including suggestions for students who are playing the lead role, will be discussed in class or available on the class web page at least one week before each discussion takes place.

Students who do not have a lead role for a particular case are still expected to attend and participate in the class discussion.  Students are also expected to attend and participate in all three sessions of the class conference (discussed under the fourth requirement).

A student's grade in class discussion will be based primarily on the case for which he or she plays a lead role.  However, exceptionally helpful (or counterproductive) contributions in other case discussions and in the discussions during the class conference also could influence a student's grade. 

(2) The second requirement is to prepare a short (2‑page), professional memoranda to an imaginary decision maker.  This memo must be based on one of the five case studies.  Instructions for the memos, tips for professional writing, and examples of the professor's professional memos can be found on the professor's web site. A student may select any of the five possible memos, but a memo must be turned in at the beginning of the class during which it is discussed.  Late memos will not be accepted.  Plan ahead!  These memos will be graded on presentation as well as on substance.  Although only one memo is required, a student may submit two memos; his or her grade will be based on the best one.

(3) The third requirement is to draft a professional memorandum on a part of the New York State budget.  As you may know, New York State, like most other states, is facing severe fiscal difficulties due to the national recession.  These problems are particularly severe in New York State because the financial sector of the economy, which provides a large share of the State’s revenue, has experiences such severe difficulties.  Your assignment is to select a revenue source or major expenditure category in the New York State budget and then to write a memorandum that (a) describes this revenue source or expenditure category and (b) makes policy recommendations for this source or category that are appropriate in light of the State’s weakened fiscal situation.  Students are encouraged to consult with the professor if they are not certain whether the topic they select is appropriate.  Extensive information on the New York State Budget and related issues is available on the website of the New York State Office of the State Comptroller: http://www.osc.state.ny.us/.   

The memo should be between two and four pages in length (plus supporting tables and figures, if desired).  Students are strongly encouraged to form groups to complete this assignment (and the following two assignments, which are related).  A memo from a group should be two to four pages per student.

This draft memo is due on March 25.  Unless specifically authorized by the professor, late memos will receive a grade penalty.  The professor will provide comments on each student’s draft memo by April 8.

These draft memos (and their final versions, which are discussed below) will be graded largely on the quality of the analysis on which the recommendation is based.  Students should describe the revenue source or expenditure category they have selected, discuss the issues that arise in changing that source or category, and build a case for one particular change or set of changes.  This recommendation should be made in the context of the state’s current fiscal crisis; that is, each memo should start with the rebuttable presumption that revenues need to be raised and expenditures need to be lowered.  Recommendations that result in more revenue or less spending obviously fit with this presumption, but students are also free to recommend revenue-neutral changes in revenues or expenditures, if they believe that a change in revenue sources or spending priorities is appropriate under the current circumstances.  Students are discouraged from recommending a cut in a revenue source (or an increase in a spending category) unless they also recommend offsetting changes in other revenue sources (or other related spending categories).  Students should provide as much evidence as possible to back up their recommendation or recommendations.  A terrific recommendation that is not backed up by good analysis will not receive a good grade.  The readings for the course provide many examples of the type of analysis that can strengthen a memo and help to back up a recommendation.  Additional material can be found in the National Tax Journal, Public Budgeting and Finance, Public Finance Review, the Economics of Education Review, Education Finance and Policy and other professional journals. 

These policy memos will also be graded on presentation, following the same guidelines as the case-based memos. 

(4) The last four days of class (April 15, 20, 22, and 27) will be run as a conference on the New York State budget.  The theme of the conference will be how to deal with the State’s current fiscal crisis. Each student (or group of students) will present the topic and recommendation in his or her (their) memorandum (the third assignment), as revised in response to the professor's comments.  To the extent that time permits, each student (or group) will also respond to questions from the class.  A schedule for the presentations will be posted on the class website by April 13.  All members of a group should participate in the presentation.  In keeping with the theme of the conference, the class will vote on each recommendation.  At the end of the conference, the class will determine the extent to which the recommendations receiving a majority vote would help the State deal with its fiscal challenges.

(5) The fifth assignment is for each student (or group) to complete a final version of his or her (their) policy memo, incorporating both the professor's comments and issues that arise in the discussion at the class conference.  This final version should not exceed five pages (or five pages per student for groups), plus supporting tables and figures, if any.  The final memo is due on May 4.  Unless specifically authorized by the professor, late memos will receive a grade penalty.

All final memos will be posted on the class website, where they can be viewed not only by other students but by anyone with access to a web browser.

The professor will award a prize to the best memo.  This prize will be announced on the web site.  Several other memos may receive honorable mention, which will also be indicated when the memos are posted.    

Grades

The following weights will be used to determine each student's final grade in the course: 

PART III: FINANCING CAPITAL PROJECTS 

A.       State and Local Bonds (Monday 3/16) 

1.    Bond Markets

PART IV:  FISCAL ASPECTS OF ECONOMIC DEVELOPMENT 

A.        Concepts (Monday, 3/23) 

*Fisher, Chapters 17 and 22. 
 

B.        State and Local Policy (Wednesday, 3/25)