Thursday, January 15, 2015

Town of Bourne, MA Exploring Different Method To Budgeting through Priority Based Budgeting

This is a way to really get to know your municipality as to where your dollars are going.” Town Administrator Thomas Guerino

Looking for a better way to analyze and develop Bourne’s annual budget, town administrator Thomas M. Guerino has introduced town leaders to a different approach to the budgeting process.

Mr. Guerino said that the new process, known as priority based budgeting, is a way of “drilling deeper” to determine where budget cuts would be most effective. He said the system would not be a part of this year’s budget planning process, but he would like to incorporate it in the near future.

“If we can implement this over the next two to three years, it will become a matter of course on how we do business, and I think you’ll see that we are able to really hone down on expenditures,” he said.

Mr. Guerino said he first became aware of priority based budgeting when he attended a town managers conference in Seattle, Washington, last year. Members of the Bourne Board of Selectmen, Bourne Finance Committee and the Bourne School Committee were introduced to the new budgeting approach Tuesday night, January 13, during the first part of a two-night workshop at Bourne Middle School.

The workshop was taught by Christopher E. Fabian, co-founder of the Lakewood, Colorado-based Center for Priority Based Budgeting. Mr. Fabian and his partner, John M. Johnson, founded the organization back in 2010.

Mr. Fabian explained that there is a five-step process to priority based budgeting that begins with the simple question: Why is a given organization, in this case the Town of Bourne, in business? In essence, what would be the result of the town not being in business? Subsequent questions include how to determine if the town is achieving its desired results; what to do to achieve those results and how much does it cost; and which programs and services have the greatest impact on the results the town is trying to achieve?

The questions are applied to each department and each program or service provided by that department. A score is then applied to that offering. After the department does it own self-review, programs go through a peer review process that results in a final composite score. With all the programs scored, a four-line bar graph is then created which displays the number of programs having the highest impact on the town’s desired results down to those having the lowest impact. Decisions can then be made as to which programs are crucial and which may have become obsolete.

Mr. Fabian said that priority based budgeting is a more effective alternative to measures towns often resort to when crafting a budget, including implementing an across-the-board cut. Admittedly, the advantage to an across-the-board cut is that no one department feels more pain than another. It is also easier than attempting to justify why one department or program should get more money than another, he said.

However, an across-the-board cut on a municipal level would be the same as a homeowner applying a similar cut to their household expenses. The example he drew would be cutting the amount paid to a monthly mortgage bill by the same amount as the Netflix bill. That, he suggested, is not something the average homeowner would do.

"If we would never do it in our own house, why do we do it in our organizations?” he said.

The idea behind priority based budgeting is to determine which services provided by the town are “mortgage” expenses versus “Netflix.”

“What we’re trying to do with priority based budgeting is understand your best investments, understand the Netflix, where you can perhaps rechannel some of the resources to something that’s getting better results,” he said.

Mr. Fabian said the process does allow for identifying programs or services that are mandated by either the federal or state government, or the town itself. In those cases, if the mandated program falls within the category of lowest impact, the suggestion would be to seek an outside, independent source of funding, he said.

He also noted that priority based budgeting can reveal misperceptions that all the programs offered by a single department, such as police and fire, are of highest priority. He mentioned programs in both Boulder, Colorado, and Chandler, Arizona, that the police chiefs in each city felt were not achieving the desired results. Funding for each was rerouted to other programs, he said.

Mr. Guerino said he does not know the cost of the program yet, but “we’re not talking huge money.” Whatever the cost is, however, it will be shared by all the town’s departments. He admitted that it is a very involved process, and that it would take anywhere from three to five years before it is up and running fully. During the first several years, it would be a continual process of evaluation. After that, department heads would examine programs on more of a quarterly basis to see how services are matching up with expectations and needs, he said.

“This is a way to really get to know your municipality as to where your dollars are going,” he said.

This article was originally published in

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