Budgeting for Success -A Case Study of Jönköping County Council

Abstract

Background: In the second half of 2008 the financial crisis hit Sweden causing higher unemployment rates and bankrupting many organizations. The Swedish County Councils‘ income base is primarily based on taxes and government grants. Hence, during a recession, when unemployment rises, the consequence results in reduced tax revenues. County Councils in Sweden have the right to choose how to regulate their own activities. Thus, they decided to tackle the financial crisis in different ways. Several County Councils had to restrain operations, tighten their budgets and some decided the only way to cope with the recession, was to raise taxes. Budgeting plays a key role in the management control of Swedish County Councils and has the main purpose of planning how to effectively allocate resources, in forms of tax revenue and government grants, within the organization. Research question: How does a successful County Council practice budgeting during a financial crisis? Method: We conducted a qualitative case study, based on interviews with relevant respondents involved in budgeting in Jönköping County Council and Ryhov County Hospital. Conclusion: The budgeting in Jönköping County Council was practiced in the same manner as before the crisis. The County Council took a strategic decision to let activities continue as normal due to their stable financial conditions. Additionally, the County Council‘s strategic decision and their long-term planning, with their interpretation of good economic management, left Ryhov County Hospital unaffected by the financial crisis. Suggestions for further research: Interesting suggestions for further research is a study of Jönköping County Council in comparison to a County Council that faced strained economic conditions. Furthermore, New Public Management caused an increased pressure on County Councils and the Health Care System to become more efficient. During a crisis, the state provides government grants to the County Councils in order to rescue their financial situation, how will this motivate efficiency in the County Councils?