Thursday, August 2, 2012

Power of Tool Brought to Light in Cincinnati

"The Tool is critical as we develop our 2013/2014 Budget and will help us analyze programs and services for cost savings, revenue enhancements and budget reductions. It will allow us to more strategically allocate resources, and provide citizens more transparency, as well as a clearer understanding of the budget decision as we move forward."

Download Cincinnati's awesome story from the Ohio City/County Manager's August 2012 newsletter here:

Cincinnati’s Priority-Driven Budgeting Initiative

As we adjust to the “new normal” of limited resources, Cincinnati, like cities across Ohio, has been faced with the dilemma of how to maximize the efficiency of its funding allocations. As part of the solution to that dilemma, the City of Cincinnati has undertaken a Priority-Driven Budgeting initiative with the assistance of the Center for Priority Based Budgeting.

Priority-Driven Budgeting is a structured process that will help our City Council make funding allocation decisions based on analytical data about how programs and services help achieve results. In the past, we established targeted departmental budget cuts while preparing their biennial budgets.
For 2013, we have a projected $34.0 million budget deficit for the General Fund Operating Budget and will need to cut spending and increase revenues to fill this need. To provide context, if the $34.0 million was solely addressed through departmental reductions, a cut of 10% would be required for each department.

The first stage in the process was to identify strategic priorities for the City government. Cincinnati engaged the public in this process using focus groups, open public meetings, and Facebook and Wiki pages to find out what programs and services citizens feel are most important for government to provide. As a result of these sessions, seven priorities were identified -- five community-oriented priorities and two that are governmentoriented.

The second stage was to define “strategy maps” to show the cause and effect between programs and strategic priority Results. Using words and/or images, these maps help viewers understand the cause-effect connection between activities, strategies, factors and the outcome. For example, in order to achieve a Safe Community, the City should (1) Proactively work to prevent crime through holistic, proactive community policing and establish a visible and responsive presence; (2) Offer protection to the community, enforce the law, and respond to emergencies with professional, well prepared, and well equipped resources; (3) Ensure regulatory compliance and enforcement in order to abate nuisances and protect the property and lives of its residents; etc. The maps help to visually relate policing and property and nuisance enforcement in order to achieve the priority of “safe Community.”

The third stage was to identify programs and services within each department. Differentiating programs and services across the entire city organization, as opposed to comparing the departments which provide those services, allowed for better prioritization. We identified all programs and services the City offers and defined discrete decision units for evaluation. Department staff played a key role in creating this list, describing the programs, and estimating the current cost to provide each of these programs and services.

In the fourth stage, departments scored the programs based on several factors, including the effectiveness in achieving each of the strategic priorities, as well as the program’s basic attributes: the degree to which it impacts the strategic priorities, whether or not the City is mandated to provide the service/program; any changes in the demand for the service/program; the level of cost recovery for the service/program; and whether or not other options exist to provide the service/program.

Once each department had completed its self-measurement process, a peer-review Team reviewed each department’s programs to confirm the rankings and correct any discrepancies that may have occurred. Members of the peer-review team could not review their own department, ensuring objectiveness and “quality control” throughout the process.

The fifth stage of the process involved assigned weights to each of the Strategic Priorities. We included a second round of public engagement through a web-based survey, in-person survey, and statistically valid mail survey to find out what is most important to Cincinnati residents and businesses.

In this step, citizens were also asked to rank the community-oriented Strategic Priorities. In the survey, each resident was given a total of $100 to spend on city services. The respondent could spend the $100 on any combination of five categories, with more money representing a higher priority.

The consultants then measured the number of respondents who spent money towards a service and how
much money was spent. This allowed Cincinnati to quantify public sentiment and move forward on a budget process that was representative of the wants of the population. All surveys validated the Strategic Priorities and ranked them in the same order of importance.

The scored and weighted programs were compiled and separated into quartiles in order to compare the programs. This will evaluate how the services/programs achieve the Strategic Priority Results, and to what degree this occurs.

In the sixth stage, we received the Center for Priority Based Budgeting’s Resource Allocation Diagnostic Tool to provide City leaders a way to analyze the quantifiable information about our programs.

We can filter by the Basic Attributes, by Fund, by Department, by Strategic Priority area, etc., and see
the program rankings in quartiles one through four. Those programs that are most relevant to achieving results are in the higher quartiles. The tool presented a visual representation of the results of the Priority-Driven process and allowed officials to more easily compare priorities and allocations.

The Diagnostic Tool provides data to start discussions about the programs and services we provide. The Tool is critical as we develop our 2013/2014 Budget and will help us analyze programs and services for cost savings, revenue enhancements and budget reductions. It will allow us to more strategically allocate resources, and provide citizens more transparency, as well as a clearer understanding of the budget decision as we move forward.

While it is the first year Cincinnati has engaged in priority-driven budgeting to this extent, it provides a foundation for examining the services and programs we provide that are important to the people we serve.

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