FINAL DRAFT

University of Maryland

School of Public Policy

Management, Finance and Leadership Program
Spring Semester, 2007

Public Finance

Course Number: 670

Tuesdays 7:00 – 9:30 P.M

Instructor

Russell D. Morris, Ph.D.

Phone 410-544-2738

Cell: 443-722-7381

Email: TBD

Office hours: 6:00 – 7:00 Tuesdays, and by appointment

Room 3141, Van Munching Hall

Teaching Assistant

Rui Sun

Email: rsun@umd.edu

Office Hours: Mondays 2:00 – 4:00

Room 3141, Van Munching Hall

Course Description:

Public Finance (PUAF 670) is a survey of topics in public finance, including key concepts linking public finance and public policy as well as analytical techniques commonly used in public as well as corporate and personal finance. The course moves from theoretical underpinnings to practical applications.

PUAF 670 also introduces the key aspects of capital investment, including valuation over time and under uncertainty; net present value analysis; internal rate of return; risk analysis; changing financial markets; debt issuance; and valuation of securities, leasing, and cash management.
 
 
Course Objectives:
 

Upon completion of this course the student should be able to:

1. Describe, define and apply several computational techniques for valuing capital expenditures and capital acquisition
2. Identify and explain the six major processes of public finance
3. Identify and describe the basic standards of tax policy in the United States
4. Define and discuss the pros and cons of the various types of tax applied in the Unites States
5. Define and describe the differences in operating and capital budgets, and explain why these differences are important.
6. Discuss various borrowing methods and strategies.
7. Define and describe investment challenges and strategies for public investors.
8. Explain the relationship between economic development and public finance.

Prerequisites:

In order to enroll in this course students must have graduate level standing in the University of Maryland and have completed at least one semester of college level algebra.

Text:
 

Fiscal Administration, 7th Edition John Mikesell - Indiana University, Bloomington
ISBN-10: 0495007404  | ISBN-13: 9780495007401 © 2007

USE OF BUSINESS CALCULATORS:

This course involves some manipulation of certain mathematical formulas and functions which are pre-programmed into such business calculators as the HP 10B, 12C, and 17B and the TI BA 35, BA II Plus, etc. Use of these types of calculators for solving homework and test problems is encouraged in the interest of time and on the basis that such calculators are used extensively in almost every financial job setting. However, the student will be expected to understand and use the math underlying every concept and problem solution covered in this course. The calculation algorithms are also contained in Excel programs.

COURSE REQUIREMENTS

1. Examinations: There will be two in-class examinations. The examinations will consist of a mix of objective (true/false and/or multiple choice) questions, problems similar to those found in the text, and short essay questions. Students missing an exam will receive a grade of zero unless they have been excused in advance by the instructor or have written evidence of a legitimate emergency.
2. Quizzes: There will be a total of six ten-question, true/false and or multiple choice in-class quizzes covering material from the previous class. The overall quiz score will be the average of the five highest grades received.
3. Paper: A short (five page) research and analysis paper is required. The paper should follow the guidelines provided below. Students are to advise the instructor in writing the topic of the paper no later than class #8. The paper is due May 1 (Class #13).
4. Selected Problems: The course schedule, below, identifies problems assigned as “For Discussion” and “Homework Due.” “Discussion” problems may (or may not) be discussed as part of the presentation of the current assignment. Students should be prepared to present their solution to these problems to the class, but they need not be turned in. Problems identified as “Homework Due” relate to previous class session material, and are to be handed in, in readable form, for grading. There may be grade deductions for late assignments. In the event of absences homework may be emailed to the instructor or posted in the Blackboard site.
5. Participation: You are expected to participate actively in this class, by volunteering problems solutions, posing questions, and offering answers to the instructor’s questions. Prior to each class the instructor will post a list of discussion questions in the Blackboard site (see below). Students are expected to be prepared to answer these questions in class.
6. Grading: Grades will be determined, as follows

Exams 25% each

Paper 20%

Quizzes 10%

Homework Problems 10%

Participation 10%

Total 100%

Letter grades are determined as follows:

90 – 100 A

80 – 89 B

70 – 79 C

60 – 69 D

Below 60 F

Note: There will be no assignments for extra credit to improve grades

Note:

"Plagiarism is the intentional or unintentional presentation of another person's idea or product as one's own. Plagiarism includes, but is not limited to the following: copying verbatim all or part of another's written work; using phrases, charts, figures, illustrations, or mathematical or scientific solutions without citing the source; paraphrasing ideas, conclusions, or research without citing the source; and using all or part of a literary plot, poem, film, musical score, or other artistic product without attributing the work to its creator. Students can avoid unintentional plagiarism by following carefully accepted scholarly practices. Notes taken for papers and research projects should accurately record sources of material to be cited, quoted, paraphrased, or summarized, and papers should acknowledge these sources in footnotes." 

The penalties for plagiarism include a zero or a grade of F on the work in question and a grade of F in the course. The University may take additional actions as well. 

Blackboard

The course will be augmented by the use of an instructional website called blackboard. Students can access this website by pointing their browsers to:

Your signin name is, and your initial password is . You may change your password after you log in.

The Instructor will be using the Blackboard site for various purposes. In particular, the instructor will post his classroom notes in the site and provide other information the students may find helpful.

CLASS SCHEDULE

SPRING, 2007

Class	Topic (s)	Assignment
Class 01 January 30	Introduction to course, Understanding Public Finance Six Major Processes Introduction to Calculations	Mikesell, Chapter 1
Class 02 February 06	Interest Rates Computational Concepts and Methods in Finance Securities Valuation/Pricing Bond Ratings	Handout Homework Due: Problem 1-1
Class 03 February 13	Quiz #1 The Budget Process Public versus Corporate Finance	Mikesell, Chapter 2 For Discussion: Case 2-1 Homework Due: Handout
Class 04 February 20	Quiz #2 Budget Structures and Institutions Federal vs State and Local Budgeting Budget Methods and Practices	Mikesell, Chapters 3 and 4 For Discussion: Cases 3-1, 4-1 Homework Due: Problems 2-1 a, b, and d, 2-3, 2-4
Class 05 February 27	Quiz #3 Budget Classifications, Budget Reform Public Infrastructure	Mikesell, Chapter 5 For Discussion: Case 5-2 Homework Due: Problems 3-1, 4-2, 4-3, 4-10
Class 06 March 06	Project Evaluation Capital Budgeting: Public vs. Corporate	Mikesell, Chapter 6 For Discussion: Case 6-1 Homework Due: Problems 5-3, 5-4
Class 07 March 13	First Exam
Spring Break March 20
Class 08 March 27	Taxation: Concepts and Options	Mikesell, Chapter 7 For Discussion: Case 7-1
Class 09 April 03	Major Tax Structures: Income Taxes Taxes on Goods and Services	Mikesell, Chapters 8 and 9 For Discussion: Cases 8-1, 9-2 Homework Due: 7-1 c and d, 7-2
Class 10 April 10	Quiz #4 Major Tax Structures: Property Tax Miscellaneous Revenue Sources (Fees and Charges)	Mikesell, Chapters 10 and 11 For Discussion: Problems 10-9 & 11-4; Cases 10-4 & 11-1 Homework Due: 8-3, 8-8, 9-3, 9-5, 9-7
Class 11 April 17	Quiz #5 Collecting Taxes Revenue Forecasts, Fiscal Relations, Tax Expenditure Budgets	Mikesell, Chapters 12 and 13 For Discussion: Problems 12-3, 12-4, 13-3, 13-4 Homework Due: Problems 10-3, 10-5, 10-6, 11-1, 11-5
Class 12 April 24	Quiz #6 Fiscal Relations, Diversity and Coordination Debt Administration	Mikesell, Chapters 14 and 15 For Discussion: Case 14-2, Problem 15-8 Homework Due: 13-1
Class 13 May 01	Managing Funds: Cash Management Investment Funds Paper Due	Mikesell Chapter 16 For Discussion: Problems 16-4, 16-7, Case 16-2 Homework Due: Problems 14-2, 15-4, 15-7
Class 14 May 08	Second Exam

Paper

1. Select two public entities of like kind (i.e. two states, two cities, two counties, two school districts) where both have publicly held and rated debt outstanding, but where the ratings of the two entities is different – i.e. AAA and A, etc.
2. Conduct an analysis (financial and other relevant factors) of each entity
3. Compare the two entities.
4. Develop conclusions as to the reasons for the difference in ratings and whether the difference is justified.
5. Submit a paper of Not More Than 5 pages, (plus list of references) describing your analysis, your conclusions and the basis of your conclusions.