Evidence Continues to Mount - Priority Based Budgeting Supports Strong Ratings from Credit Rating Agencies

Here at the Center, we have been extremely interested for some time in how credit rating agencies (CRA's) would evaluate the Priority Based Budgeting (PBB) efforts of the communities we're working with.

Communities are seeking every possible means to prevent downgrades in their ratings. And the credit rating agencies are facing immense pressure to substantiate the ratings they report - strong or weak. We are keeping a close eye on this, and we'll continue to be publishing blog updates as we learn how the CRA's perceive how PBB can provide evidence that a community is taking a sustainable and responsible approach to resource allocation, basing decisions on the long-term health of the community in light of its values and priorities.

We're so pleased to share this report from the City of Chesapeake, Virginia upon city manager William Harrell's announcement that the rating agencies confirmed the City's strong ratings, based in part on the evidence of their long-term view.

"There is no question these are difficult times for governments at all levels," said Harrell. "The Chesapeake City Council has said time and again that we must keep our focus on our long term goals, while still maintaining the best quality of life for our citizens. These ratings provide clear evidence that we are indeed charting a sustainable course for the City's future."

"The three ratings are a testament to the conservative and forward-looking fiscal management leadership of Chesapeake's City Council and staff," said Harrell. "Achieving a ‘stable outlook,' given the current economic challenges facing cities locally and across the nation, speaks volumes to the hard work our staff and elected officials have done to strategically position Chesapeake for continued success."

See the full announcement at: http://www.cityofchesapeake.net/News-Room/Rating-Agencies-Reconfirm-City-Bond-Ratings_s1_p6025.htm

And read the coverage in the Virginian Pilot at: http://hamptonroads.com/2011/08/chesapeakes-bond-ratings-remain-stable-manager-says

Boulder's Ideal Application of Priority Based Budgeting Process Results in Citizen Support for Specific Fee Increases

http://www.dailycamera.com/boulder/ci_18671062

The City of Boulder is applying Priority Based Budgeting in the absolute ideal way in order to hone in on programs ideally suited for a discussion of fee increases; and they're succeeding! PBB's relentless focus on programs, the relevance of those programs, and the costs of providing the programs allowed the City to isolate and filter-in on a select group of programs that weren't fully covering their costs AND which the customers of such programs would entertain a discussion of a fee increase.

Congratulations to the City - these kinds of reactions from citizens, as the Daily Camera published today, are remarkable!


Martin Long, a Boulder resident who was using the East Boulder Community Center on Friday afternoon, said he doesn't mind paying a little more to get into the center next year.


"It's a wonderful facility," he said. "I like it a lot. I'm willing to pay for what I use."


Sara Hahn, who was splashing in the community center's pool with her kids, said she wouldn't even notice a 25-cent increase.


"I'm from California, so everything is like half the price here," she joked.


Renting a shelter at the Eben G. Fine, Foothills, North Boulder and Martin parks is expected to double in cost next year, from $50 to $100. Special event permits at city parks would increase exponentially -- anywhere from 50 percent to 3,700 percent, depending on the number of attendees.

Priority-based budgeting demands results : Municipal Association of SC

Priority-based budgeting demands results : Municipal Association of SC

The Municipal Association of South Carolina has published a great summary of Priority Based Budgeting, drawing from our White Paper with GFOA ("Anatomy of a Priority Based Budgeting Process, http://www.gfoa.org/downloads/GFOA_AnatomyPriorityDrivenBudgetProcess.pdf) and the observations of City Administrator of Greer.

As local governments across the nation adapt to the economy’s “new normal,” they have begun to turn away from traditional budgeting techniques and adopt a new budgeting philosophy: priority-based budgeting. Instead of incrementally raising revenue and expenditure estimates every year, priority-based budgeting advocates deciding upon then funding those services that are most valuable to the community. This process recognizes that there may not be funding resources available for everything the city or town would like to do, or even to fund everything they have previously done.

City of Seaside Launches 2011-2012 PBB Process - Council Establishes Fiscal Health and Wellness Among Policy Goals

http://www.ci.seaside.ca.us/Modules/ShowDocument.aspx?documentid=3942

In recognition of the need to focus on the City's priority services and invest shrinking resources on those areas that will help advance economic development over the long-term, the City Council set forth Fiscal Wellness (Priority Based Budgeting) among their 2011-2014 goals.

Continuing to focus on these strategic goals will be important to ensure that the City can survive financially and position itself for the economic upturn. The Strategic Plan and the associated fiscal health process can be considered when making the difficult decisions associated with the immediate need to keep the budget balanced. In the long-term, the City's ability to accomplish its strategic goals will lead to the fiscal stability needed to restore and enhance services for the community.

In 2011-2012, the scoring of programs will be reviewed and the public will be invited to join the process in preparation for the 2012-2014 two year budget development.

In recognition of the need to focus on the City's priority services and invest shrinking resources on those areas that will help advance economic development over the long-term, the City Council set forth Fiscal Wellness (Priority Based Budgeting) among their 2011-2014 goals.



Continuing to focus on these strategic goals will be important to ensure that the City can survive financially and position itself for the economic upturn. The Strategic Plan and the associated fiscal health process can be considered when making the difficult decisions associated with the immediate need to keep the budget balanced. In the long-term, the City's ability to accomplish its strategic goals will lead to the fiscal stability needed to restore and enhance services for the community.



The goal of fiscal health was established in consideration of the need to adjust the budgeting process to more effectively align resources with the City's priorities.' Fiscal health and wellness provides a basis for the allocation of the City's resources based on priorities. In order to achieve fiscal health, an organization must:

• Spend within its means

• Establish and maintain reserves

• Understand variances (budget vs. actual)

• Know the true cost of doing business

• Include economic analysis and long-term planning in decision-making



In early 2010, the City Council engaged in a process, based on a proven fiscal health and wellness model, to identify all of the City's programs. The programs were then scored based on the desired results identified by the City Council consistent with the Vision Statement for the City. Programs were categorized as operational or governance to reflect that there is a structure needed to provide services to the community.



The process was then used to identify the range of services offered by the City and determine if resources are going to the highest priority projects. In Seaside, the process demonstrated that the City is generally spending it funds on those programs determined to be the highest priority and that even those with lower scores were considered worthwhile.



In 2011-2012, the scoring of programs will be reviewed and the public will be invited to join the process in preparation for the 2012-2014 two year budget development. The challenge will continue be the City's limited resources and that the City does not have the staff or the funding to continue to do what it has done in the past. In order to balance both the 2011-2012 budget and the 2012-2014 budget, it may be necessary to reduce or eliminate programs that while valuable, are not mandatory or required to meet the City's primary municipal responsibilities.

City of Boulder's Second Year Implementation of PBB Streamlines the Process

http://www.bouldercolorado.gov/files/City%20Council/Study%20Sessions/2011/2011SS/04262011SS/SSApril_26.pdf
The city is now in its second year of Priority-Based Budgeting (PBB). PBB is the iterative process of prioritizing city programs in terms of their influence on achieving defined “results” which are the high level, overarching objectives that represent the priorities of City Council and the community. These results were developed as a part of the 2011 budget process, and incorporated City Council and community feedback and input.

The focus this year has been on achieving greater consistency and internal improvement to the PBB process, specifically in the areas of program definition, score assessment, and communications with departments, as well as on better aligning the PBB timeline with the Budget Process timeline.