Tuesday, June 4, 2013

Priority Based Budgeting: Through the Lens of a Master’s Thesis

What is the best approach to your local government budgeting process? Performance-based? Outcome-based? Participatory? Priority-based? Of course, the answer depends on what your organization desires to achieve, what your community expects, and what your culture will support.

If we’re to be true to the philosophies of each of these processes, the answer to this question also depends on the evidence and objective evaluation of all options based on measureable criteria. Master’s graduate and advisor to the City of Oakland, California’s Budget Advisory Committee, Natasha Middleton, has recently authored a paper that does just that. To access both the Executive Summary, as well as the comprehensive analysis provided in Middleton’s thesis paper "Priority Based Budgeting: A Model for the City of Oakland's Long Term Fiscal Sustainability," click here.

For the City of Oakland, California, "Four (4) criteria were chosen to categorize and measure the given alternatives (See Appendix E). They are: 1) Political Feasibility: Would it work for the citizens of Oakland; 2) Equity: the overall structure of the budgeting plan and participation (quid pro quo); 3) Efficiency: Maximization of net benefits/public interest; and 4) Effectiveness: The strong potential for achieving long term fiscal sustainability"

Budgeting for Outcomes, Performance Based Budgeting, Participatory Budgeting and Priority Based Budgeting were the four processes evaluated in this study.

The following key quotes were of particular interest to our work at CPBB:

"Choosing Priority Based Budgeting as alternative budgeting model would be the right direction towards fiscal sustainability. Because the City of Oakland’s budget process is also program based, it could invest money for the high civic engagement model in order to focus on long-term fiscal savings. This model increases trust and relationship building and further drives transparency."

"Of the five alternatives, one was rated “High” for the majority of the criteria to merit as most likely to serve as an optimal budgeting model."

            "Choosing Priority Based Budgeting would be the right direction towards fiscal sustainability. Because the City of Oakland’s budget process is also program based “it focuses on the product of the budgeting effort farther than the line items that go into those programs,” it could invest money for the high civic engagement model in order to focus on long term fiscal savings. This model increases trust and relationship building and further drives transparency (Santana, Fiscal Year 2011-2013 Adopted Policy Budget for the City of Oakland, 2011)."

            "The City might consider investing in the high civic engagement option like the City of Cincinnati as an inexpensive investment to long-term savings. The community involvement favors Oakland similar to Cincinnati, Walnut Creek and San Jose where citizen and stakeholder involvement was valued at a very high level. For the City of San Jose, “residents favor reducing employee compensation and benefits rather than reducing City services or raising additional revenue” and “budget balancing strategies that result in minor or nor service reductions. The people of Oakland want to be involved and Priority Based Budgeting allows them to do so."

            "Because the model allows from transparency from beginning to end with mapping, ranking tools, strategic priority setting sessions, along with the involvement of stakeholders and creating a task force, it meets the equity criterion."

            "Since the process is program based and the City of Oakland’s budget is currently the same, the transition to Priority Based Budgeting should be seamless and because they already set priorities, acknowledging them will not be an issue. However, a further deep evaluation of those priorities: defining them extensively from community, staff, stakeholders and leadership perspectives would enhance the priority setting. Making sure that community input is provided at the beginning of priority setting is essential."

            "The benefit of implementing the Priority Based Budgeting model is reduction in costs and over-exertion or duplication of city resources. The more that the public is aligned with this budgeting model, the higher the benefit of understanding the budget and the government’s challenges and the greater incentive to work collaboratively will lessen the burden on city staff, and collectively focus on what city services and programs need to be both assessed and addressed for future financial planning."

            "Using this budgeting model will help the City structure its program based budgeting process. If used by the City, it does have the strong potential of helping Oakland achieve long-term fiscal sustainability this could be achieved across the board and not piecemeal."

While we at the Center for Priority Based Budgeting firmly believe in the philosophy and effectiveness of our Priority Based Budgeting program, and appreciate the conclusions made by the author of this paper, we openly admit that multiple factors are at play when a local government chooses what budget practice works best for their community. The CPBB encourages all readers to thoroughly read the analysis provided in this paper to determine what is the right approach for your community.

Our thanks to Natasha Middleton for sharing her work with us and allowing us to share her work with others!

The report contains the following disclaimer: “This study has been prepared for the Budget Advisory Committee, City of Oakland, CA. The author conducted this study in partial fulfillment of the requirements for the degree of Master of Public Policy at Mills College. The judgments and conclusions are solely those of the author, and are not necessarily endorsed by the Mills College Public Policy Program, the sponsoring organization, or any other agency.”

To learn more about Priority Based Budgeting from CPBB and the nation's leading local government practitioners, be sure to attend the upcoming... 

Center for Priority Based Budgeting 2013 Annual Conference


"A Summit of Leading Practices"

July 9 & 10, 2013  Arlington, Virginia   Hilton Crystal City Hotel




Brought to you by the Center for Priority Based Budgeting (CPBB) and the International City/County Management Association (ICMA), in partnership with the Alliance for Innovation (AFI).


The 2013 "Summit of Leading Practices" is the ONLY conference where ICMA's Leading Practices for Local Government Management come together under one roof. 

The 2013 CPBB "Summit of Leading Practices" Annual Conference is strongly supported by 
Quartile 1 sponsor SAFEbuilt, Quartile 2 sponsor ClearPoint, Supporting Sponsor Beehive Industries and Exhibitors OpenGov and Revelstone Labs. Thank you sponsors!

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