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 CapeNews.net

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.

 

Web-Based Fiscal Health Diagnostic Tool

What Makes Local Government Managers (and their Council) Sleep Well at Night

"What assumptions do we hold so firmly and that so calcify our thinking to convince us that changing fiscal conditions represent our crisis?"

 

"...the crisis facing local governments is not fiscal. It's the choices we make to address the fiscal challenges."

In a recent Governing article, national experts in government management and policy Katherine Barrett and Richard Greene co-authored the article What Keeps Government Managers Up at Night. In this piece, the authors discussed polling senior city and county leaders at the recent International City/County Management Association (ICMA) Annual Meeting last Fall.

Barrett and Greene asked several questions to approximately 200 of the nations top local government leadership. These include, "When you think of the future financial stability of your government, what worries you the most?” And question two asked, “What routes to the future financial stability of your government are you most optimistic about?”

Barrett and Greene go on to say, "We got 127 responses. While we aren’t pretending that this was any kind of scientific survey, the results seemed more than sensible and worth sharing. To begin, the biggest worry in the crowd pertained to revenues. Even though about half the states have seen their revenues return to pre-recessionary levels, the number is far smaller among municipalities. In fact, 1 in 4 who sent us their responses indicated that oncoming revenue problems and shortfalls are significant sources of concern to them.

As you would expect, a fair number of attendees are placing their faith in a steady return of the economy to set things right again and put revenues neatly in line with expenditures. But the theory of rising tides lifting all boats wasn’t enough to keep the audience from coming up with a schooner full of concerns.

Other major elements mentioned by our respondents regarding revenue instability included decreasing state and federal funding, overreliance on property taxes given the potential of the housing market to crash again, and increasing demands for new programs.

But that’s just the beginning of the story. Many attendees were concerned about escalating employee costs, largely from pensions and other post-employment benefits. A good number of respondents told us that they were worried about pressing infrastructure needs and costs -- more pointed us in that direction than those who brought up health costs, the next most commonly mentioned item. Finally, though they described the phenomenon in a variety of ways, many respondents were concerned about rising citizen expectations in their cities for additional services now that the recession is allegedly over.

Inasmuch as we’ve spent the majority of our adult lives researching and reporting about state and local management, we found it particularly intriguing to note that the causes for optimism cited by the group largely fell into the area of managerial changes. More than 1 in 5 suggested that they were hanging their hopes on a variety of ways to prioritize services, control spending and inaugurate efficiency improvements. Tom McCarty, county administrator of Eau Claire County, Wis., was one of a number of people who recommended a focus on results-based performance measures to decide priorities. Others suggested that shared services and local government consortiums “will,” in the words of Caitlin Humrickhouse, a consultant at Baker Tilly Virchow Krause LLP, “provide a new operating environment that can help relieve some fiscal pressures.”

While we at the Center for Priority Based Budgeting certainly understand why so many local government managers remain sleep deprived (the challenges facing today's local governments are massive), what's so interesting about Barrett and Greene's findings is the revelation that the nightmare of the great recession still plagues so many of us. We have not yet awakened to the possibility that our crisis is not a fiscal crisis, but instead a crisis in the way we frame and define the challenges before our communities - the way we redefine the very role of local government. This is what keeps us at the Center for Priority Based Budgeting awake all night - working to solve this problem so that organizations like the nearly eighty who have implemented Priority Based Budgeting, their elected officials leadership, staff and citizens can rest a little easier.

These city and county leaders are able to rest because of the tools they use to utilize economic forecasting, economic scenario building and budget prioritization. Otherwise known as Fiscal Health and Wellness through Priority Based Budgeting.

The Crisis is Not Fiscal

What assumptions do we hold so firmly and that so calcify our thinking to convince us that changing fiscal conditions represent our crisis? Would higher revenues and lower expenses allow us to operate crisis free? Or does the true crisis exist when, despite our fiscal realities, we don’t focus on those priorities and objectives that ensure the success of our communities?"

Perhaps the biggest concern we face is not a fiscal crisis. Fiscal trends and conditions are by and large out of our control and simply represent a reality with which we need to cope. The real crisis on our hands is whether our organizations have the capabilities to address current fiscal realities and still meet the objectives of government and the expectations of our constituents.

The budget book, the certified annual financial report (CAFR), and reports out of the financial system are great tools for finance professionals, but they prove insufficient to clearly and simply answer the question: is the organization in "good shape" or is there trouble on the horizon? Furthermore, in a world of rapidly changing economic variables, the answer to that question today might not be the answer to that question tomorrow.

First and foremost, local governments must be clear and transparent about what truly is their picture of fiscal health. Communicating that picture simply and clearly without volumes of numbers, spreadsheets, tables, and an endless series of charts is frankly a challenge that has plagued financial managers for years. If local governments 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.

The key breakthrough in this area has been "data visualization" which allows for the easiest way of creating a common view, a common perspective that is simple and that everybody can agree on. Part of the reason that financial problems can be obscured or hidden is because many times decisions makers have no idea how to understand finances to begin with. 

Data Visualization allows us to create a common view of the financial situation that is simple to understand and interpret, describes the clearly defined variables that can impact the financial situation, allows for "live" and "real-time" changes in these variables, and offers the ability for "dynamic" modeling of "what-if" scenarios - this is how transparency is created, and this is the essential first component of the paradigm shift required.

                                                                                  CPBB "Fiscal Health" Espresso Blast

Innovative and proactive communities are implementing much more strategic and proactive budgeting methods

The second component of the paradigm shift is changing the way that resource allocation discussions take place. Financial problems are also effectively hidden and obscured because the budget process allows for it. Line item budgeting, incremental budgeting, zero-based budgeting were each attempts to better understand "how" money is spent, but these methods fail to address a more fundamental question: "why" money is spent.

The question of whether or not public dollars are being used effectively is not answerable with the tools currently available to elected officials, decision makers, staff and citizens.

Priority Based Budgeting provides 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 is the community truly mandated to provide? What does it cost to fulfill those mandates?
• 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?

Only the most innovative public entities have made strides in changing their structural approach to long-term fiscal health. And with the economy showing some signs of improvement, many will continue to operate as if to preserve the status quo and vainly wish for increased revenue. This approach represents a philosophy of wishful thinking that will only lead to failure.

The "New Wave" represents efficiency and innovation in this Era of Local Government. The new wave represents a golden opportunity for local government communities. Finding creative, clear, and transparent ways to demonstrate what the next 5 to 10 years might look like is a must if local government professionals 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.

Local government communities must 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 (economic) vision of the future.  

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.

 

Web-Based Fiscal Health Diagnostic Tool

Priority Based Budgeting Implementation.... Asheville, NC Style!

The City of Asheville, North Carolina became the fifth Priority Based Budgeting community in the State last month. What is remarkable about Asheville's PBB process is that the City's elected officials had established a starting place for the City's "Results" by way of an extensive strategic planning effort they'd completed, focusing primarily on the role of local government in their community. This Strategic Operating Plan ("SOP") provides a solid foundation for the PBB process to build upon.

On November 18, 2014, the City of Asheville, NC kicked off their Priority Based Budgeting process with a day-long workshop led by Jon Johnson and Chris Fabian from the Center for Priority Based Budgeting in Colorado. Jon and Chris presented City staff with an overview and history of PBB and led staff through a brainstorming exercise to define the City of Asheville’s Community and Governance Results. Jon and Chris ended the day with a session on defining programs and services (Program Inventory), which is the next step in the PBB implementation process. 

City staff are currently working through creating Program Inventories for their departments. Departmental Program Inventories are due to the Budget Office by Wednesday December 17, 2014. Work on PBB implementation will continue into the spring of 2015, and Finance staff will work with Jon and Chris to define a timeline for the next steps in the process. So stay tuned for further updates!

Below are links to materials presented at the November 18 Priority Based Budgeting workshop:

Governance Results Validation Exercise Template
PBB Orientation Slides
Program Inventory
Program Inventory Workshop
Summary of Programs by Department

If you would like to read more about Priority Based Budgeting, please click on the links below:

PBB Center
Priority Based Budgeting - ICMA CMS Leading Practices 

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

Pioneering Douglas County, NV Brings Back Priority Based Budgeting!

Douglas County, Nevada has been one of the most successful implementers, and now practitioners, of Priority Based Budgeting. In fact, they were the first county in the nation to implement Priority Based Budgeting. Douglas County has also implemented a game-changing approach to citizen engagement. In 2012, the County embarked on the Priority Based Budgeting process with one of the primary objectives being to bring their community into an ownership position with respect to decision making. What unfolded in their groundbreaking use of an online tool to engage citizens sets the bar at a whole new level in participatory budgeting (see story here). Not only that, but the County's bond rating was affirmed as a result of their work. 

Now Douglas County is continuing their pioneering work with priority based budgeting and citizen engagement. The following article was recently published by The Record-Courier.

 

From The Record-Courier-

 

It’s rare that a county budgeting process is referred to as pioneering, innovative or award-winning, but Douglas County’s priority based budgeting has been called all those things. 

Key to the process is online input from county residents, who are being asked to visit a website

through Dec. 19 to share what their priorities are.

“Everyone’s voice matters,” said Christine Vuletich, finance director and assistant county manager. “We want to hear what is most important to our citizens in terms of the services we provide as a county,” 

On the website, participants divide $500 between six major areas, including safe community, economic vitality, well maintained infrastructure, financial stability, preservation of natural environment, resources and cultural heritage and managed growth and development.

To access Manage the County Checkbook, residents can visit: http://nv-douglascounty2.civicplus.com/989/Open-Douglas-County

Residents may also text “subscribe” to 775-309-4358. The online registration will ask for your name, email address and physical address. Your registration information is secure and will not be shared with any outside party. The physical address will allow responses from geographic areas within the county to be viewed, but the county and public will not be able to see the names of individual participants unless the participants chose to display their names. 

Any residents who do not have internet access may come to the Minden Inn and complete online or obtain access at the Douglas County Library. In addition, computers will be available in the lobby at county commissioner meetings.

The county received the Cashman Good Government Award for the process.

In 2012, Douglas County became the first county in the nation to implement priority-based budgeting, which shifts the annual budget process from across the board allocations to investing in the community’s highest priorities. Priority-based budgeting has since been adopted by the International City-County Management Association and the Alliance for Innovation as a leading practice in local government.

Douglas County has used the process since to increase its bond rating for the first time in 10 years to the highest level in history.

Congratulations again to Douglas County, NV. We at the CPBB couldn't be more proud to partner with such an innovative group of local government professionals! Keep up the excellent work!

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

Cobb County, GA Publishes Budget, Wins Public Service Award, through a Foundation of Priority Based Budgeting

Cobb County, Georgia recently published their 2015-2016 biennial budget book. This comprehensive budget document represents the ethics, goals and priorities of one of the largest counties in Georgia.

The Center for Priority Based Budgeting (CPBB) is proud to partner with Cobb County in their implementation of priority based budgeting (PBB). CPBB launched PBB with Cobb County in January 2014, with a 2-year process. In the first year, we established Results and defined the Results, completed the Program Inventory and Program Costs – this information was used in the development of Cobb County's 2-year biennial 2015-16 budget. Beginning this month, the County will be embarking on Program Scoring, which will be followed by Peer Review and the ultimate development of the final PBB Model for 2015.


County Manager Honored for Leadership

Cobb County Manager David Hankerson was honored with the 2014 Jerry R. Griffin Excellence in Public Service Award by the Association of County Commissioners of Georgia. This prestigious award recognizes an individual who has worked toward achieving a lasting positive impact on his or her community.

“His county government track record is extensive with numerous contributions and achievements that include the implementation of priority-based budgeting system, operating a county budget with seven Triple A rankings, the completion of the East-West Connector, and most recently, the relocation of the Atlanta Braves stadium to Cobb County,” ACCG officials said in a statement.

Priority Based Budgeting as Centerpiece to Biennial Budget Book

The following excerpts from Cobb County's 2015-2016 biennial budget book reflect the impact PBB has had on the county thus far. Congratulations to Cobb County on their leadership in bringing priority based budgeting to their citizens and County government!

 

 

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

The Crisis is not Fiscal! The Ongoing Financial Struggles of America's Big Cities

 "...the crisis facing local governments is not fiscal. It's the choices we make to address the fiscal challenges."

"States and cities have deep structural problems that will not go away just because the country is coming out of the recession that started in 2008." - Volcker-Ravitch Report

Recently, the PEW Charitable Trusts published Recovering from Volatile Times: The Ongoing Financial Struggles of America's Big Cities through their American Cities Project. The findings of this analysis are explored in detail in PEW's report, but briefly:

Revenue Declines

• 18 of 30 cities saw government revenue fall between 2011 and 2012, double the number from 2010 to 2011. In 2012, eight cities recorded their lowest level of revenue since the start of the recession.

Property Taxes and State and Federal Aid

• 4% average decline in property tax and government aid across the 30 cities between 2011, 2012

Revenue Rebounds

• 10 of 30 cities had recovered their prerecession revenue peak by 2012
• Four of the nine cities that had surpassed their pre-downturn revenue peak in 2011 fell back below that level again in 2012.

Spending and Reserves

• 17 of 30 cities increased overall operational spending and 18 of 30 cities increased reserves in 2012

While there is some reason to be positive, and clearly some cities (and geographic areas) are thriving, the overall impression is one of continued fiscal challenges. In local government, unlike the federal government, we don't have the luxury of operating in an environment of unbalanced budgets. Cities and counties are mandated to present balanced budgets each and every fiscal year. For as challenging as it is for local governments to continue to present balanced budgets in the face of years of revenue shortfalls and painful service cuts, they simply must.

In January 2014, the New York Times recently reported on the release of the Volcker-Ravitch report in their article Task Force Urges Local Governmens to Stop Obscuring Fiscal Troubles. The State Budget Crisis Task Force released its final report, calling for an end to the longstanding practice of using one-offs and opaque accounting methods that make budgets appear balanced even when fiscal problems are worsening. "Local governments must stop using budget gimmicks that obscure the true extent of their money problems." The task force was led by a former chairman of the Federal Reserve Board, Paul A. Volcker, and a former New York lieutenant governor, Richard Ravitch, who have warned that states and cities have deep structural problems that will not go away just because the country is coming out of the recession that started in 2008.

Now, so many of us who "are in the business" of trying to balance budgets, understand and appreciate the dangers and fallacies of applying budget gimmicks. But then, why do these practices still prevail? Why do many resort to these types of solutions knowing they deny transparency, mask problems at worst, and at best, trick decision-makers into a false sense of security? Perhaps at least part of the answer is that it's difficult to conceive of any other way to solve the financial problems of the day - perhaps, for lack of another solution, budget tricks are the best solutions we have? For as fundamentally sound and true and correct as the Volcker and Ravitch report is, it's most significant achievement is pointing out where government is falling short. This begs the next question: what can be done to fix these pressing problems?

A new paradigm is required - a "New Wave" in local government Fiscal Health.

The Crisis is Not Fiscal

In part due to the recession that started in 2008, and in part to attempt a departure from the exact same types of practices outlined by Volcker and Ravitch, CPBB co-founders Chris Fabian and Jon Johnson published their first local government fiscal health and prioritization report Getting Your Priorities Straight in ICMA's PM Magazine. This paper was published prior to the existence of the Center for Priority Based Budgeting.

During this time, Jon and Chris both worked for Jefferson County, Colorado as Budget Director and Internal Business Consultant respectively. It was at Jefferson County where Jon and Chris had first started to conceive of the creative and innovative concepts of Fiscal Health and Wellness through Priority Based Budgeting.

As if predicting the New Wave, in Getting Your Priorities Straight the authors emphasize the point that the recession isn't the only driver causing local government fiscal challenges. They state, "why do local government professionals believe that this is the crisis? What assumptions do we hold so firmly and that so calcify our thinking to convince us that changing fiscal conditions represent our crisis? Would higher revenues and lower expenses allow us to operate crisis free? Or does the true crisis exist when, despite our fiscal realities, we don’t focus on those priorities and objectives that ensure the success of our communities?"

The authors went one step further, and just like Volcker and Ravitch, made a critical leap: the crisis facing local government is not fiscal. It's the choices we make to address the fiscal challenges. Volcker and Ravitch make the same argument when observing that the end of the recession alone will not result in better financial management.

In Reengineering the Corporation, Michael Hammer writes that organizations suffer from “inflexibility, unresponsiveness, the absence of customer focus, an obsession with activity rather than result, bureaucratic paralysis, lack of innovation, and high overhead.” Why?

“If costs were high, they could be passed on to customers. If customers were dissatisfied, they had

nowhere else to turn.” Should we in government only now be concerned with flexibility, responsiveness, customer focus, and results because we can no longer afford not to be?

Perhaps the biggest concern we face is not a fiscal crisis. Fiscal trends and conditions are by and large out of our control and simply represent a reality with which we need to cope. The real crisis on our hands is whether our organizations have the capabilities to address current fiscal realities and still meet the objectives of government and the expectations of our constituents.

The Imperative of "New Tools" in Creating Financial Transparency - "Data Visualization or How I Learned to Stop Worrying (and Obscuring Financial Problems) and Love Financial Transparency"

The Volcker-Ravitch report places special emphasis on the harmful impacts that budget gimmicks create when the intention is to mask or obscure financial problems. But what would true financial transparency look like?

CPBB co-founders faced the exact same dilemma when the principles of Fiscal Health were created to address these very issues. The budget book, the certified annual financial report (CAFR), and reports out of the financial system are great tools for finance professionals, but they prove insufficient to clearly and simply answer the question: is the organization in "good shape" or is there trouble on the horizon?

Furthermore, in a world of rapidly changing economic variables, the answer to that question today might not be the answer to that question tomorrow. (A recent ICMA report on this very subject appeared on the CPBB blog recently.

 

First and foremost, local governments must be clear and transparent about what truly is their picture of fiscal health. Communicating that picture simply and clearly without volumes of numbers, spreadsheets, tables, and an endless series of charts is frankly a challenge that has plagued financial managers for years. If local governments 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. 

 

The key breakthrough in this area has been "data visualization" which allows for the easiest way of creating a common view, a common perspective that is simple and that everybody can agree on. Part of the reason that financial problems can be obscured or hidden is because many times decisions makers have no idea how to understand finances to begin with. 

 

Data Visualization allows us to create a common view of the financial situation that is simple to understand and interpret, describes the clearly defined variables that can impact the financial situation, allows for "live" and "real-time" changes in these variables, and offers the ability for "dynamic" modeling of "what-if" scenarios - this is how transparency is created, and this is the essential first component of the paradigm shift required.

CPBB Web-based Economic Modeling Tool Overview

 

Shifting the Paradigm Part 2: Resource Allocation through Priority Based Budgeting

The second component of the paradigm shift is changing the way that resource allocation discussions take place. Financial problems are also effectively hidden and obscured because the budget process allows for it. Line item budgeting, incremental budgeting, zero-based budgeting were each attempts to better understand "how" money is spent, but these methods fail to address a more fundamental question: "why" money is spent.

 

To the point of the Volcker-Ravitch report, the question of whether or not public dollars are being used effectively is not answerable with the tools currently available to elected officials, decision makers, staff and citizens. 

 

Priority Based Budgeting provides 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 is the community truly mandated to provide? What does it cost to fulfill those mandates?
• 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?

Incredibly, earlier this year, as if to accelerate the ushering in of the "New Wave," the credit rating agency Standard & Poor's upgraded the bond rating of Douglas County, Nevada by two levels, from A+ to AA, citing evidence of the County's efforts "to implement several fiscal health practices, including long-range financial forecasting, revenue and expense stabilization, and priority based budgeting." 

The New Wave - Over 70 Communities

It is of utmost importance that all local government communities take to heart the warning and recommendations outlined in the Volcker - Ravitch report. Only the most innovative public entities have made strides in changing their structural approach to long-term fiscal health. And with the economy showing some signs of improvement, many will continue to operate as if to preserve the status quo and vainly wish for increased revenue. This approach represents a philosophy of wishful thinking that will only lead to failure.

The "New Wave" represents efficiency and innovation in this Era of Local Government. The new wave represents a golden opportunity for local government communities. Finding creative, clear, and transparent ways to demonstrate what the next 5 to 10 years might look like is a must if local government professionals 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.

Local government communities must 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 (economic) vision of the future.

Local governments choosing to implement the concepts of Fiscal Health as a treatment regiment are making substantial progress because they are doing the analytical work required to more accurately diagnosis the reasons behind their fiscal issues and then determining the best treatments that lead to a viable cure. Once an organization is on the road to being fiscally healthy, it can then become more financially sustainable by implementing a Fiscal Wellness regimen centered around the principles of Priority Based Budgeting.

The mission driven Center for Priority Based Budgeting (CPBB) believes that every local government community has the potential to achieve fiscal health and wellness. We proudly offer our technical and advisory services to help any local government organization address its fiscal realities both in the short term (Fiscal Health) and long term (Fiscal Wellness) through innovative and creative leading practices that are actively being implemented across the country.

The Center for Priority Based Budgeting has developed the Fiscal Health and Wellness© process to help cities, counties, school districts and other non-profit agencies find answers to the most relevant questions of the day:

• How can we best address our "budget crisis"?
  
• How can our organization "spend within its means"?
  
• How do we allocate scarce resources to top priority programs?
  
• How can we link the budget with our strategic goals/objectives and with performance measures?
  
• How does our organization head down a path of long-term financial sustainability?

The most innovative public entities managed to take advantage of the economic downturn, almost as if it were an opportunity to seize instead of a problem to overcome. These organizations leveraged a state of crisis to obliterate the status quo, ushering in new ways of doing business and achieving better results for their citizens, despite a scarcity of resources. In short, they've revolutionized how community's leverage resources to embrace a "new wave" in local government. 

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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.

 

"DATA VISUALIZATION" for Local Government