Innovations in Public - Private Partnership's

American City and County recently published a new article entitled "Public-Private Partnerships: The New Breed."   This article reflects the increasing trend in local governments turning to the private sector as a viable partner in providing quality services to their citizens and stakeholders.

American City and County states, As state and local governments face challenges to operate more efficiently and cost-effectively, public-private partnerships (PPP's) are a promising tool to enhance essential public services, operations and facilities - without having to increase taxes.

PPP's, also known as P3S, have existed for centuries. In 1652, the Water Works Company of Boston was the first private firm in America to provide drinking water to citizens, according to the National Council for Public Private Partnerships (NCPPP).

"We're just now catching up with the rest of the world,"says Richard Norment, NCPPP executive

director. He explains that state and local governments in the past may have been hesitant to form partnerships with the private sector after hearing stories about bad deals. "Money was pretty fast and loose prior to 2008: a lot of investments were made prior to that where they didn't do the proper due diligence on contracts." Consequently, "in the past four to five years, private sector investors are performing closer analyses on 'Why would we want to invest in this project the way it's structured?' Projects are also providing closer quality control measures to help both the public and provide sector make sure they're getting into sound deals in terms of how effective PPP's are and how well they perform."

There is so much truth to this. Whether it comes through partnerships between multiple public agencies (public-public partnerships), partnerships with the private sector (public-private), consolidation, or even (in the right situation) letting one partner take over a service entirely while ensuring that the right outcome is achieved (alternative service delivery, or in/out-sourcing), there are immense opportunities to tap. (We previously wrote on this blog about the incredible small business incubator project Rocky Mountain Innosphere in the City of Fort Collins, CO – very much a public-private partnership).

To Share, or Not to Share

But where do you look to find these partnership opportunities? What type of criteria would help you figure out where a partnership could exist?

Among the success stories you can read about from ICMA and Alliance for Innovation case studies, you’ll find out about SAFEbuilt and the way they’ve revolutionized the entire approach to a Building Department through shared services; or you can turn to CH2MHill and discover public-private partnerships at their best in terms of running city/county services. For some services, there are proven successes that can provide a ready made blue-print for how to implement them in your community.

In our work in Priority Based Budgeting, one of the greatest outcomes of the work is the ability to shed light on where to find opportunities for shared services. What if a program was of the highest priority for your citizens, and you found out you were one of several providers of this service in your community? Perhaps a partnership would be an incredible opportunity to produce efficiency in the provision of that program. On the other hand, what if you found a lower priority program for which there were other service providers? Maybe the best approach there would be to consolidate services or even allow the other service provider to take on the program entirely.

In the City of Cincinnati, Ohio, City Council identified opportunities for partnership using PBB as a policy priority. In Douglas County, Nevada, the Board of County Commissioners did the same. In our story from the City of Fort Collins, CO, about the Rocky Mountain Innosphere (RMI), the City’s share of funding to support RMI scored well in the PBB process – it was a high priority. However, using the filters of the PBB Model, it was clear that this was a program that others could offer and were offering in the form of business support (in other words, the City need not be the only player in providing this service), that the City wasn’t mandated to do, and was unlikely to pay for itself.  

Through the lens of PBB, this points precisely in the direction of a partnership. The role of government, even in a high-priority program, is not always to be the direct service provider; it can be a key partner!

Priority Based Budgeting and Shared Services

Central to PBB is the idea that all local government organizations can determine the role they're suited to serve best within a community, and amongst all potential service providers within a region - identifying the overlap, the potential for partnerships, consolidated services, and spinning off of services between city, county, school district, non-profit and private sector organizations. The end goal is nothing short of the most efficient use of a community's resources as a whole, to achieve the results of a region – it’s "bang for the buck" for the provision of public services.

 

In Priority Based Budgeting we’re attempting to provide a comprehensive review of the entire organization, identifying every program offered, identifying the costs of every program offered, evaluating the relevance of every program offered on the basis of the community's priorities, and ultimately guiding elected and appointed officials to the policy questions they can answer with the information gained from the Priority Based Budgeting process, such as:

•       What is the local government uniquely qualified to provide, offering the maximum benefit to citizens for the tax dollars they pay?

•       What programs are most appropriate to fund by establishing or increasing user-fees?

•       What programs are most appropriate for establishing partnerships with other community service providers?

•       What services might the local government consider "getting out of the business" of providing?

•       Where are there apparent overlaps and redundancies in a community because several entities are providing similar services?

•       Where is the local government potentially competing against private businesses within its own community? 

To ultimately see a new way of determining which services our local government is best suited to provide—services that have the greatest impact for the resources within the community’s means.

Untapped Potential

According to the State Department, approximately 1.5 million non-governmental organizations (NGO’s) operate in the United States. There are 87,453 units of local government as recognized by the US Census. Local government no longer needs to be everything to everybody. We heard Bill Clinton give a speech recently where he said the single thing he’d love to “do-over” from his Presidency would be to understand all of the NGO’s and non-profits out there, what they’re doing, and how government could partner better. It’s more efficient, there’s less duplication, and we must find the best providers of services who have the greatest chance of achieving great outcomes. We feel the same thing about local government. Some of the best things taking place in a community are coming about from partnerships, where local government is the leader, the facilitator and often times a key partner, but not always necessarily the only possible service provider.

To read the full American City and County article click here.

To read the follow-up PPP article from Cheryl Hilvert, ICMA Center for Management Strategies Director, click here. 

Keep an eye on the CPBB blog for further updates. Sign-up for our social media pages so you stay connected with TEAM CPBB!

    

If you're thinking of jumping into the world of Fiscal Health and Wellness through Priority Based Budgeting we would certainly like to be part of your efforts! Contact us to schedule a free webinar and identify the best CPBB service option(s) to meet your organization's particular needs.

 

"DATA VISUALIZATION" for Local Government

 

CPBB + Michigan Municipal League = Better Michigan Communities!

The Center for Priority Based Budgeting is in the business of assisting local government explore their role in successful economic development, understanding better where public sector investment could inspire a greater private sector contribution and better influence economic health (and clarifying the role of local government).

It’s not an easy issue, and yet it is one of the most important issues of our time. In our work facilitating the identification of community priorities, economic development and job creation are clearly among the very top in every place we've applied the Priority Based Budgeting process. From the City of Edmonton, Alberta (where they espouse the necessity of a “Diverse Economy”) to the Town of Cary, North Carolina (“Economic Vitality and Development”) to Lehigh County, Pennsylvania (“Economic Health”), what we do in government to strengthen the local economy could not be of more critical importance.

With this in mind, The Center for Priority Based Budgeting is proud to partner with the Michigan Municipal League for a full-day presentation in Ann Arbor, Michigan on April 9th. We'll be presenting Achieving Fiscal Health and Wellness through Priority Based Budgeting. Register here.

During this workshop, you will be introduced to two key concepts: Fiscal Health and Priority Based Budgeting. First, you will learn about the five (5) basic principles of “Fiscal Health” and then learn how to use proven tools and techniques to help ease your organization’s fiscal stress for the short-term and improve its financial sustainability for the long-term.  You will learn how to “self-assess” your own financial situation through a series of diagnostic questions that will validate where your organization is “healthy” and pin-point where your organization can improve. The workshop will also demonstrate the use of a simple, interactive diagnostic tool that can help any organization more effectively communicate its fiscal position to all interested stakeholders (including staff, elected officials, bargaining units, and ultimately, citizens) as well as serve as a monitoring tool to ensure that the organization remains the “picture of Fiscal Health”.    

Priority Based Budgeting

Local governments continue to face previously unknown financial and political pressures as they

struggle to develop meaningful and fiscally prudent budgets.  Revenues are at best stable (or even declining), while demand for services continues to increase.  Citizens believe that government budgets are “fat” and that this is ample waste to “cut”.  Civic leaders more often than not, focus on “across the board” cuts that spreads the pain equally – but also encourages mediocrity rather than excellence. Priority Based Budgeting is a unique and innovative approach being used by local governments across the Country to match available resources with community priorities, provide information to elected officials that lead to better informed decisions, meaningfully engage citizens in the budgeting process and, finally, escape the traditional routine of basing “new” budgets on revisions to the “old” budget.   This holistic approach helps to provide elected officials and other decision-makers with a “new lens” through which to frame better-informed financial and budgeting decisions and helps ensure that a community is able to identify and preserve those programs and services that are most highly valued.

The CPBB is no stranger to Michigan. CPBB Co-founder Chris Fabian and CCO Erik Fabian are both Michigan natives. In late Summer 2013, we spent a week in Detroit immersing ourselves in the trenches of critical local government issues, and went straight into perhaps the most interesting experiment in economic development we could imagine: the complete economic redevelopment of a City.

Our first article, focusing on the neighborhoods of the City of Detroit, Reversing the Trend: Might Corktown Hold the Key to a Greater Detroit Neighborhood Resurgence?, provided background context on the city's challenges and how entrepreneurship is playing a driving role in reshaping the downtown core and, slowly, the inner city neighborhoods. Our second article, Detroit: Bankrupt, but Not Broken, cast a spotlight on city governance through an interview with Nolan Finely of the Detroit Free Press. Our third article, Opportunity Detroit? Future City USA?, focused more on Detroit's burgeoning entrepreneurial start-up and tech sector, and how this explosion of new business development is having a transformative effect on the city.

We look forward to another return trip to Michigan and hope you'll join us. Register here.

Keep an eye on the CPBB blog for further updates. Sign-up for our social media pages so you stay connected with TEAM CPBB!

    

If you're thinking of jumping into the world of Fiscal Health and Wellness through Priority Based Budgeting we would certainly like to be part of your efforts! Contact us to schedule a free webinar and identify the best CPBB service option(s) to meet your organization's particular needs.

 

"DATA VISUALIZATION" for Local Government

"Moneyball" for Local Government - The CPBB Video Espresso Blast #4

"Based on our rough calculations, less than $1 out of every $100 of government spending is backed by even the most basic evidence that the money is being spent wisely. As former officials in the administrations of Barack Obama (Peter Orszag) and George W. Bush (John Bridgeland), we were flabbergasted by how blindly the federal government spends. In other types of American enterprise, spending decisions are usually quite sophisticated, and are rapidly becoming more so: baseball’s transformation into “moneyball” is one example. But the federal government—where spending decisions are largely based on good intentions, inertia, hunches, partisan politics, and personal relationships—has missed this wave." Can Government Play Moneyball? - John Bridgeland & Peter Orszag

What? "Less than $1 out of every $100 of government spending is backed by even the most basic evidence that the money is being spent wisely." How can this be? In an environment of extreme fiscal challenges across the country; unprecedented civic bankruptcies; significant unemployment; a national transportation infrastructure catastrophe; record national debt; a broken national health care system; and a failing education system, how can the Federal government, and state and local government as well, continue to blindly spend without prioritizing outcomes or measuring performance? At the Center for Priority Based Budgeting we are strong supporters of utilizing tax dollars to efficiently achieve community results!

This Decade of Local Government  obligates local governments to "lead the way in developing creative solutions to extraordinary problems. There are a number of reasons to be optimistic about this coming decade of local government." Against this backdrop of Federal and State ineptitude and paralysis, the CPBB never been so optimistic!

"Moneyball" - The CPBB Espresso Blast #4

At the Center for Priority Based Budgeting, we're all about creativity and innovation in all forms. Whether it be through expanding and improving our core concepts of Fiscal Health and Wellness through Priority Based Budgeting, migrating our Fiscal Health tool to a web-based Fiscal Health Diagnostic Tool, or finding transformative new ways to communicate how local government communities are implementing these revolutionary tools and concepts, we're never satisfied with the status quo in this Decade of Local Government.

With this in mind, we're rolling out the third of many breakthrough CPBB Video Espresso Blast(s).

The Espresso Blast is designed to provide a fundamentally new platform for the CPBB to explore innovative new trends in local government and further exhibit how CPBB communities are successfully transforming the way they deliver services and conduct business. These videos are short, concise and chock full of entertaining and valuable content. 

Our first Espresso Blast, titled "How it All Started", explored the genesis of the Center for Priority Based Budgeting and the formulation of our core concepts. Our second Espresso Blast "The Decade of Local Government" dived deep into the enormous opportunities available for local government communities in this new era. Our third Espresso Blast "Resource Liberation"  promotes the idea that more and more communities are finding ways to free valuable resources and re-allocate them to new and extremely important programs and initiatives.

This new video expands upon these opportunities by diving deeper into the concept of "results" and defining what every local government organization should be asking: "What are the clearly defined results this community seeks to achieve?" "How will this program significantly contribute to these results?" "Are there alternative shared-service providers that can administer this program more efficiently and successfully?" And "How can we measure whether the program is meeting the results the community wishes to achieve?".  Check out our video Espresso Blast #4 and supporting articles below!

"Moneyball"

CPBB Espresso Blast #4

 

Supporting Articles:

Can Government Play Moneyball? Priority Based Budgeting Communities Say Yes! 

Are You Running Government Like a Business? 

A Dazzling Portrait of the Power of Priority Based Budgeting!
 

Keep an eye on the CPBB blog for further updates. Sign-up for our social media pages so you stay connected with TEAM CPBB!

    

If you're thinking of jumping into the world of Fiscal Health and Wellness through Priority Based Budgeting we would certainly like to be part of your efforts! Contact us to schedule a free webinar and identify the best CPBB service option(s) to meet your organization's particular needs.

 

"DATA VISUALIZATION" for Local Government

Why Municipal Fiscal Health Modeling Matters!

In a recent article from CFO Magazine Cities on the Brink, author Russ Banham identifies several challenging factors that are pushing (and have pushed) many municipalities into bankruptcy protection. Banham writes, "Prior to its incorporation in 1850, Stockton, Calif., was known as Fat City, and later Mudville. Prophetically, its financial fortunes followed this progression in names from boom to bust. Stockton filed for bankruptcy in 2012, and until Detroit went bankrupt earlier this year, it had the dubious distinction of being the largest city in the country to seek Chapter 9 protection. The cities are two of 12 other municipalities that have petitioned for bankruptcy protection since 2008, among them Jefferson County, Alabama; Harrisburg, Pennsylvania; and Vallejo, California. Eight of these filings occurred in the last three years.

To be sure, the Great Recession was a big factor in these bankruptcies, but it wasn’t the smoking gun. The fiscal distress plaguing dozens if not hundreds of municipalities nationwide are hinged to past sins, and today their finance managers are desperately trying to set them on a straight and fiscally responsible path."

Banham continues with a brief case study on Stockton - "Take Stockton, which city manager Bob Deis calls “a cautionary tale.” Brimming with property-tax revenues in the early 2000s, the city issued millions of dollars in bonds to build a marina and the 12,000-seat Stockton Arena. The booming stock market bolstered city pension funds, giving it the confidence to provide high-paying salaries and free health care for life to city workers. (One month on the job as a courthouse janitor and free health insurance was guaranteed for life — to the spouse, too.) Money flowed into multiple projects to rebuild the downtown core and spruce up the riverfront.

Then the recession rained on the parade, and Stockton was back in the mud. Deis and other Stockton

leaders did their best to forestall bankruptcy, until there was nowhere else to turn. “It was the only thing left we could do,” he concedes. “We had cut services radically, to the point where any more cuts would have been dangerous, affecting public safety.”

That’s how bad things are for many municipalities — trim one more cop off the force and it’s the Wild West. For cities like Detroit, with its $18 billion in debt, the fiscal fissures are too deep to patch. Half the population is gone in a generation, their tax dollars in some other municipality’s coffers.

U.S. cities, counties and states can learn volumes from what went wrong in places like Stockton and Detroit. Chief among the lessons is the need for municipal finance leaders — CFOs, controllers and comptrollers — to stand up and be counted. “It takes a CFO to say, ‘Wait a second. Let’s get an actuary to cost these things out and see where we’re going before we dive in,’” says Deis.

His message to other cities in trouble? “Do an honest inventory, admit mistakes were made and fix them now.” 

A New Environment

The recession may officially be over according to economists, but unlike the normal ebb and flow of the past, the picture is dramatically different than anything managers have experienced during other economic cycles. Local governments are realizing that they will not simply return to the status quo that existed before the recession.

Managers are coming to grips with an environment in which:

• Revenues will at best remain flat or continue to decline.
• Costs associated with energy, fuel, health care, and basic supplies will continue to grow.
• Taxpayers can't afford to pay more because of the recession’s impact on their own personal finances.

Taxpayers are perhaps expecting local government to provide even more support in meeting their social, physical, environmental, and economic needs, especially with the declining assistance in these same areas from federal and/or state sources.

How does local government continue to offer the important, even vital, services required by communities in a responsive and timely fashion?

How will finance chiefs address significant debt obligations while maintaining enough resources to provide prioritized services?

What can managers do to successfully navigate these challenging waters so that their communities become better, stronger, and more relevant than ever before.
Let’s consider a completely different perspective. In order to achieve success and accept the challenges that are ahead, we must see more clearly how to manage, use, and optimize resources in a much different way than has been done in the past. This new environment demands a new vision of the future.

For managers, resources can appear to be scarce because of our tightly clenched grasp on some commonly held assumptions from which they need to break free. Perhaps there is a different way to see things.

Fiscal Transparency

First and foremost, local governments must be clear and transparent about what truly is their picture

of fiscal health. Communicating that picture simply, clearly, and understandably without volumes of numbers, spreadsheets, tables, and an endless series of charts is frankly a challenge that has plagued managers for years. If managers are going to be able to demonstrate financial reality internally to elected officials and staff, and externally to residents, they have to find better ways to make fiscal situations understandable and transparent to everyone.

Finding creative, clear, and nontechnical ways to demonstrate what the next five to 10 years might look like is a must if people are going to address fiscal concerns. All too often, local governments are unable to make sound, timely decisions regarding investing in new resources, starting new programs, or initiating major capital projects because elected officials, local government managers, and staff members are paralyzed by the uncertainty of whether they actually have enough money to appropriate for these purposes. Developing a long-term financial forecast is key to gaining a better understanding of what the future might hold.

Differentiating between one-time and ongoing revenues and expenditures to clearly understand how finances are aligned and where they might be out of alignment is a critical element in eliminating this uncertainty. Managers understand this principle but rarely make a concerted effort to be deliberate about depicting this separation in financial forecasts or budget documents. The need for this separation is understood but without actually “seeing it,” managers may not be aware of its impact on the ability to manage and maximize resources. Not clearly separating the picture into these two revenue categories may obscure some serious looming fiscal problems.

How many officials, for example, have approved a capital project without considering the implications of the associated ongoing costs? Newly constructed public facilities have sat vacant because of a failure to separately identify and depict the impact of ongoing operational costs.
Adhering to this philosophy of differentiating between one-time and ongoing revenues and expenditures also helps ensure that an organization “spends within its means.” This concept is not just about balancing the budget but allows managers to be clear that ongoing operational expenses are funded through ongoing revenue streams. Using such one-time monies as fund balance or grants to support ongoing operations is an unsustainable practice. “How much do you need?” Isn’t this the question that leads off most local government budget discussions? It’s certainly a far easier question to answer, but shouldn’t the conversation begin with the more difficult and oftentimes nebulous question of “How much do we have?”

Devoting more time to revenue analysis is a critical element in gaining a clearer understanding of 1) what factors truly drive our individual revenue streams; 2) how to develop more meaningful and accurate multiyear forecasts, and, most important; 3) how much is actually available to spend. If managers have more clarity about what factors might impact revenue sources, they can improve their ability to foresee those changes before they happen and react to them before they arrive on the doorstep. By taking a more diagnostic approach, it isn’t terribly difficult to determine where revenues specifically come from and assess what internal or external forces might cause them to grow and shrink.

At the Center for Priority Based Budgeting, we're the first to admit we don't have all the answers. However, we do offer unique and innovative concepts and resources that allow local government communities to better understand their fiscal position and comprehensively model a multi-year variety of financial scenarios that provide options and solutions based on each individual communities unique goals and challenges (something very few municipalities perform to their detriment).

As author Banham summarizes his piece, "Still, cities must carefully weigh the risks of bankruptcy. It can tarnish a municipality’s reputation, steering businesses in other directions. It also affects the ability to attract bond investors, potentially scaring them away for good. “I wish we could go back and ask Moody’s, Standard & Poor’s and the other rating agencies why they gave AAA credit to these places years ago, when they were making these risky promises and deals,” Pagano muses.

It’s too late to do that, of course. But it’s not too late to do something. “If municipal finance leaders don’t take charge of these problems now, they’re aiding and abetting the equivalent of a Ponzi scheme,” Deis charges. “Finance is either a part of the solution or part of the problem.”

"But it's not too late to do something." And that "something," as we've previously stated in this article, is to consider a completely different perspective. In order to achieve success and accept the challenges that are ahead, we must see more clearly how to manage, use, and optimize resources in a much different way than has been done in the past. This new environment demands a new vision of the future.

For managers, resources can appear to be scarce because of our tightly clenched grasp on some commonly held assumptions from which they need to break free. There is a different way to see things.

Keep an eye on the CPBB blog for further updates. Sign-up for our social media pages so you stay connected with TEAM CPBB!

    

If you're thinking of jumping into the world of Fiscal Health and Wellness through Priority Based Budgeting we would certainly like to be part of your efforts! Contact us to schedule a free webinar and identify the best CPBB service option(s) to meet your organization's particular needs.

 

"DATA VISUALIZATION" for Local Government