Public Budgeting in Search for an Identity

Fiscal slack, budget shocks, and performance in public organizations: evidence from public schools

Abhisekh Ghosh Moulick and Lori L. Taylor

 

 

ABSTRACT Some scholars equate fiscal slack with organizational inefficiency, while others argue that it is a useful environmental buffer. This study takes the first step in reconciling these opposing views, by classifying fiscal slack as absorbed and unabsorbed slack in public organizations. In a sample of 1,000 Texas public school districts over 17 years, fund balance (unabsorbed fiscal slack) does not seem to affect student performance, unless there is a major downward budget shock. In the absence of a negative budget shock, non-instructional spending per pupil (absorbed fiscal slack) has a negative ...