Monday, October 27, 2014

High Five to Boulder, CO! The City Unveils 2015 Budget Based Upon 5th Straight Year of Priority Based Budgeting!

"Priority based budgeting contributes to the city's long-term financial sustainability and allows the City of Boulder to serve its residents in the most effective, efficient and fiscally responsible manner possible."

At the Center for Priority Based Budgeting, we pride ourselves on being dependable long-term partners with the communities we work with across the nation. We have strived to develop our core concepts of Fiscal Health through Priority Based Budgeting (PBB) to be the most effective local government budgeting, planning and economic forecasting tools available.

We are often asked if our tools are scalable and replicable from one community or public entity to another. While we have always been confident that priority based budgeting truly is the most effective, scalable and replicable public finance budgeting tool available, the real proof is demonstrated by the size, diversity, geographic location and sheer variety of the over 70 communities who have implemented PBB.

And now we have yet another case study that demonstrates the long-term effectiveness and sustainability of priority based budgeting. The City of Boulder, Colorado first implemented PBB in 2011. And now in their fifth straight fiscal year of utilizing priority based budgeting to develop their annual budget, Boulder depends upon PBB as "the cornerstone of the city's budget process," and "the framework within which all budget decisions are made."

These are powerful statements from a city that is consistently listed as one of the top 10 best communities to live in in the US. We at the CPBB are so proud of how effectively the city's staff, leadership and elected officials have developed PBB into their work, and are honored to be partners with the City of Boulder, Colorado.

To learn more about the city's utilization of PBB in their 2015 budget read the summary (below) or click here for their full 2015 Budget Overview document.

Priority Based Budgeting

Purpose of Priority Based Budgeting

Priority Based Budgeting (PBB) builds on the city's prior Business Plan, which separates goals and actions into near term versus long term frames. PBB harnesses the policies and values of the Boulder Valley Comprehensive Plan and department strategic and master plans. As the cornerstone of the city's budget process, PBB gives the city three central benefits:
  • Identifies key Council and community goals (see the next section on PBB Results and Attributes)
  • Evaluates the impact of these goals of city programs and services
  • Provides a tool for strategic decision-making in funding, adding and/or eliminating programs and services, and making more effective use of the city's limited resources  

 2015 PBB Outcomes

Now integrated into its fifth consecutive year of budget development, PBB is the framework in which all budget decisions are made. In the 2015 budget process, the city engaged in a streamlined PBB process, recognizing the significant work that had been done in prior years, as well as the demands on staff due to flood recovery and the implementation of an integrated Finance and Human Resources business solutions software package. The 2014 budget invested primarily in enhancing existing high priority programs, with the goal of an increased impact on achieving the PBB identified results. As a result, the 2015 PBB process was able to maintain the quartile information previously identified and the 2015 budget process focused on continued investment in high quartile programs and services, reflecting community priorities.

The city continues to have a favorable distribution of resources between the highest priority (Quartile 1) and lowest priority (Quartile 4) programs. Fewer resources are invested in programs yielding lower impact on community values. A listing of all 2015 programs by quartile is included in the following section (page 55). Community programs are those providing direct service to residents and businesses, while governance programs are those providing support services within the city to other departments.

Strategic Planning

This graph shows the distribution of proposed 2015 budget additions by Quartile. The largest amount of investment is in Quartile 1, with a decreasing amount in Quartile 2, 3 and 4 respectively. Taking into account inflation, the actual dollar increase in Quartile 4 funding actually represents flat to decreased investment levels.

Another way to look at the resource shifts achieved by using PBB is shown in Table 2-01 below. The use of PBB in the 2015 budget process achieved a reduced proportion of city resources being allocated to Quartile 3 and 4 programs, little to no change in the proportion of resources allocated to Quartile 2 programs and an increased proportion of resources being allocated to Quartile 1 programs.

Budget Allocation By PBB Quartile

Final program scores created four Quartiles. The highest rated programs are rated Quartile 1. Figures 2-03 through 2-05 below demonstrate that the city is recommending an allocation of greater financial resources to programs identified as highly influential in achieving city results (Quartiles 1 and 2). Priority Based Budgeting provides the city with an additional tool to identify efficiencies and ensure that the city provides priority services to residents and businesses.

To better understand how the City of Boulder utilizes priority based budgeting as the "framework in which all budget decisions are made," click here!

Congratulations again to the City of Boulder, Colorado! You remain a true priority based budgeting all-star and a leading PBB practitioner in local government fiscal stewardship! 

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

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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.


Thursday, October 2, 2014

Long-Term Financial Sustainability through Priority Based Budgeting in the City of Bainbridge Island, WA

Starting in the spring of 2014, the City of Bainbridge Island partnered with the Center for Priority Based Budgeting (CPBB) to change our budgeting process to a priority based budgeting (PBB) approach.

Priority Based Budgeting (PBB) provides a way to compare community values with the programs and services that a government entity provides. PBB helps the City and community:

• Identify key Council and community goals
• Evaluate the impacts of these goals on city programs and services
• Engage in strategic decision-making regarding funding for services, and/or changes to service levels for current programs and services.

PBB helps the community and city employees understand the City’s use of its limited resources. This method of budgeting contributes to the city’s long-term financial sustainability by encouraging explicit choices. These choices help the City develop a strategic budget that reflects our community values and ensures a high level of city service to residents.

Community and Governance Results

Based on Council discussions, staff input, and consultant review, six strategic priorities have been identified for the City of Bainbridge Island. The following critical areas are where the City will focus its efforts:

• Safe City
• Green, Well-Planned Community
• Reliable Infrastructure and Connected Mobility
• Healthy and Attractive Community
• Vibrant Economy
• Good Governance

 Results Maps show how the City is working to achieve each result.

Department Program Inventories

Each department develops a comprehensive list of programs and services offered by that department. These program inventories build a common understanding of what the City is offering to the community.

The citywide Program Inventory is a list of 447 programs.

Program Scoring

Each department then evaluates each program in its inventory, and indicates how much each program contributes to achieving each result. Departments also score other attributes of each program, such as the level of mandate to provide the program, the amount of cost recovery of the program, change in demand for the program, and portion of the community served by the program.

CPBB provides scoring guidelines for community and governance programs.

After departments score the programs, other departments review, validate, and cross-check the scores through a peer review process.

Program Costing

In addition to scoring each program against the Results identified through the PBB process, departments also provide estimated cost information for each program. Through this process, departments estimate the level of staff effort and other department budget dedicated to each program.

CPBB combined the Inventory, Costing and Scoring information in a Scorecard, one for community programs and one for governance programs.  

What we learned and the Resource Alignment Diagnostic Tool

Reviewing the list of 2014 programs offered by City departments shows the wide variety of programs and services offered by the City of Bainbridge Island. This initial effort to present the City’s information through the Priority Based Budgeting lens resulted in a list of over 300 community programs and over 100 governance programs. By adding costing information, the City can see how much it budgets to provide each program.

The Center for Priority Based Budgeting reviewed all the information it had requested from the City and compiled it into the Resource Alignment Diagnostic Tool. This presentation allows for multiple methods of sorting the information. Initial feedback indicates:

• The City’s overall spending pattern indicates a positive distribution across quartiles, with the most spending in Quartiles One and Two.

• The spending distribution by department differs somewhat, based on the programs offered by each department and the outcome of the program scoring.

• Program costing data indicates that we spend more on programs that align most closely with some Results than others. For example, the 2014 data indicates that the City budgets $7.2 million for programs supporting the Safe City Result, while budgeting $1.5 million for programs supporting the Vibrant Economy Result.

Next Steps:

The City is committed to work in early 2015 to begin next iteration of the Priority Based Budgeting process. In advance of that effort, City staff will be going back to complete some identified housekeeping from the initial round of analysis:

1. Affirm and document the level of mandate. The City will provide specific reference to source of mandate for all programs scored 2 or higher.
2. Review the program inventory lists from all departments to ensure a consistent level of detail on program inventory across departments.
3. Review program inventory to compress cross-departmental functions into a single program (for example, Public Notary).
4. Review program inventory to provide complete and meaningful descriptions for each program.

Further detail on the Priority Based Budgeting process as it has been implemented at other cities is available from the Center for Priority Based Budgeting or the International City Managers Association (ICMA) Center for Management Strategies Leading Practices web page. 

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

Follow Us on FacebookFollow Us on Google+Follow Us on TwitterFollow Us on LinkedInFollow Us on RSS

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.