• Medical expenditures are now over $14 million • Retiree medical contribution up to $6 million… needs to be $10 million • Workers compensation exceeded $2 million last year • Overtime ballooned to over $8 million in 2008
To balance the 2009 budget We had to…
• Eliminate general wage increase • Eliminate all general fund capital projects • Hold all non-salary expenditures to 2008 levels • Draw down $1 million in sales tax stabilization funds (note: January 09 sales tax was down 17%)
This is not sustainable
So what do we do?
A new way to budget That requires us to…
• Look at our services with the eyes of a citizen • Reach outside our bureau/ department box • Focus on priorities and measurable outcomes • Relentlessly find and implement efficiencies
Budgeting for Outcomes
The art of leadership in today’s world involves orchestrating the inevitable conflict, chaos, and confusion of change so that the disturbance is productive rather than destructive Harvard Business Review July-August 09
Long term solution to financial crisis Budgeting for Outcom es ( BFO) High Departm ent Outcom e Focus on Outcom es Budgeting Output/ Outcom e I nput Budget Reporting Low Low High Com m unity Perspective
Why do we need a different approach to budgeting? • Permanent fiscal crisis? (tax reform, rising costs, increasing demand) • Cynical public • Perception that government is broken – citizens don’t receive results for the taxes they pay • Shift focus to delivering results at a price citizens are willing to pay
Typical budget balancing techniques are not sustainable • Shift funds from other accounts • Borrow – shift costs to next generation • Pension contribution holiday • Use reserves/sell assets • Temporary cost cuts (freeze vacancies) • Defer capital replacement and maintenance • Across the board cuts
The future ain’t what it used to be. Yogi Berra
Why Budgeting for Outcomes? • Provides structured process for linking spending to outcomes • Provides logical methodology for prioritizing activities and programs • Facilitates collaboration and flexibility • Gives managers opportunities to innovate • Avoids gimmicks like across-the-board cuts
Priority Driven Budgeting takes a comprehensive perspective “The usual, political way to handle a projected deficit is to take last year’s budget and cut. It is like taking last year’s family car and reducing its weight with a blowtorch and shears. But cutting $2 billion from this vehicle does not make it a compact; it makes it a wreck. What is wanted is a budget designed from the ground up.” Seattle Times editorial, Nov. 17, 2002 on Washington State’s use of a BFO process.
Budgeting for Outcomes Process Choose priorities of government Create requests Invite offers Rank the for results from sellers offers Present the Allocate funds Decide what Outcome to priorities to buy Budget Establish the price of government
What Results Matter Most? How to choose priorities • Ask your citizens – Surveys – Focus groups – Internet surveys • Build on existing work – Vision or priority statements – Strategic plans • Elected leaders make the final decisions 64
Mesa County Citizens Priorities I want Mesa County to manage I want to feel safe anytime, and preserve public resources. anywhere in Mesa County. Continue to efficiently and effectively protect and Continue to promote and protect public safety manage all public resources Mission Statement In partnership with citizens, Mesa County will maintain and enhance quality of life by effectively providing community services that ensure public health, safety, and well being in a transparent and equitable way. I want Mesa County to have a I want a community where Variety of industries that will citizens of all ages can be Slogan promote a healthy economy. healthy and successful. Mesa County—Creating a community of opportunities for all residents Continue to promote and protect public Promote economic vitality in Mesa County with a focus on the future. health and the success of all citizens. I want plans and infrastructure that maintain quality of life in the face of rapid growth. Create well-planned and developed communities 65
I want to live in a city that encourages & supports I want to be safe and feel appropriate economic growth safe from crime, fire and that creates jobs, expands city other hazards anywhere in revenue and improves the City P u neighborhoods and b l i c S commercial corridors a Economic f e t y Growth I want to live in a community I want to live in a city of that reduces poverty by strong and vibrant empowering motivated neighborhoods that are people to become Poverty clean, safe, and Reduction economically self ‐ sufficient N encourage a sense of e i g h community b Savannah o r h o will be a safe o d V environmentally healthy i t a l i t High Performing Gov’t y and economically thriving community for all its I want a fiscally responsible, Recreation citizens accessible and responsive government that maximizes use of public resources for & services I need Culture Health & Environment I want to live in a community that provides recreational and cultural opportunities that will keep my I want to live in a community mind and body active and that that promotes health recognize the diversity of its through good infrastructure citizens (e.g., water, sewer) while preserving the environment for future generations Budget Priorities
Roanoke Priorities • Education • Safety • Economic Development/Job Creation • Good government • Human Services • Infrastructure • Livability
Budgeting For Priorities Mayor & Aldermen City Manager City-wide Value Team City-wide Priorities Team R Position Review High Performing Gov’t e T Buildings & office space E s Public Safety a f u Vehicles & Equipment s f Neighborhood Vitality l k i GIS services t c Poverty Reduction s F Technology i o e Economic Growth T Mowing & Litter Coordination r n e c c Automatic vehicle locators Health & Environment a e y m s Customer Service Coordination Culture & Recreation s Stormwater Utility
Pricing the priorities: Allocating funds • How much is each priority worth? • What are their relative values? • This is not a cost question (the old budget game) • It ’ s a value judgment, not science • Citizen input valuable, not determinative • Two conditions will be true: Total has to add to 100%, and that will not be enough. 69
Results Teams • Multi-disciplinary employee team • Tasked with… – Refining priority statement – Developing indicators to measure progress in achieving priorities – Researching causal factors of their priorities – Developing strategy maps – Developing requests for offers – Ranking offers – Negotiating cost reductions with departments
I want to live in a community that reduces poverty by empowering motivated people to become economically self-sufficient Primary Factor 1: Primary Factor 2: Primary Factor 3: SKILLED AND EDUCATED SUPPORT SERVICES WEALTH DEVELOPMENT WORKFORCE ▲ Education/GED ▲ Childcare ▲ Financial Education ▲ Workforce Development ▲ Housing ▲ Bank the “unbanked” ▲ Entrepreneurial Programs ▲ Family Planning ▲ Home Buyer Programs ▲ Food ▲ Free Tax Preparation ▲ Transportation (EITC application) ▲ Healthcare INDICATORS • Poverty rate • Self-sustaining wage rate • Unemployment rate • Wealth accumulation
Health & Environment Primary Factor1: Primary Factor 2: Safe Drinking Water Clean Rivers and Streams •Water Treatment •Storm water Treatment/Maintenance •Protect Raw Water Source •Pollution Control •Distribution System •Watershed Management •:Public Education/Training •Public Education/Training I want to live in a community that promotes health through good infrastructure while preserving the environment for future generations Primary Factor 3: Primary Factor 4: Clean Streets and Clean Air Neighborhoods •Sanitation Management •Greenhouse Gas Emissions Reduction •Street-sweeping •Solid Waste Diversion (Landfill Diversion) •Blight Eradication •Waste Reduction •Training/Community Outreach Indicators: •Public Education/Training • Improve Citizen Satisfaction • Meet Regulatory Requirements • Sufficient Capacity to Meet Citizen Needs • Improve Environment for Future Generations
High Performing Government Primary Factor 1: Leadership Primary Factor 4: • Accountability and Integrity Human Resources Management • Long Range Strategic Planning • Transparency I want a fiscally • Competitive Recruitment responsible, accessible • Intergovernmental Advocacy and responsive • Workforce Development government that • Creativity and Innovation maximizes use of public resources for services I Primary Factor 2: • Succession Planning and Engagement need. Fiscal Responsibility • Balanced Budget Primary Factor 5: • Long Range Fiscal Planning • Professional Best Practices Public Resources Management Primary Factor 3: Indicators: • Asset Planning and Management Citizen Engagement • Capital Strategy and Investment • Credit Rating and Customer Service • Sustainability • 311 Center / Std Response Time • Collaboration • Communication • Per Person Cost of Government • Accessibility • Employee Retention Rate • Responsiveness • Citizen Satisfaction Survey • Professionalism
City of Savannah / Department Name / Title of Presentation
Culture & Recreation Request for Result • CR-02 We seek offers that provide a variety of meaningful education and enrichment opportunities for all citizens. Specifically offers that: – Expose citizens to local and international art and heritage – Integrate with school curriculum to help citizens gain comprehensive understanding within and across various subjects – Develop practical work skills to build a more competent and multi-faceted local workforce – Provide accessibility across a number of parameters, including ADA compliance, cost, and amenities 76
Neighborhood Vitality • NV-02 We seek offers that promote and integrate the careful development and maintenance of public realm and open space throughout the community. Specifically offers that: – Increase the safety, calmness, and accessibility of public streets and facilities, signage and open spaces, integrating pedestrian and cyclist friendly amenities where possible – Create, enhance and maintain facilities, parks and squares for the recreation and enjoyment of residents of all ages – Ensure public infrastructure is maintained at a “standard condition” level 77
Teams Invited Offers • Departments (and some outside agencies) developed responses to the Requests for Results • Their offers were proposals on how to contribute to achieving the desired results - a performance commitment at a certain price 78
The offers… • Promise a specific level of performance at a specific price. • Offers of services not departments • Include proposed measures of performance. • Are opportunities for departments to propose new, innovative practices. • Assume no guarantee of funding based on historic funding levels 79
Neighborhood Vitality Offers • Home Purchase Program • Housing Improvement Program • Park Maintenance • Sidewalks/Curb & Gutter • Flood Mitigation ADA • Urban Forestry • Playground equipment • Tree Ordinance Admin maintenance • Sanitation Code • CDBG Planning/ Enforcement Implementation • Property Maintenance Code • ROW Vegetation Enforcement Maintenance • Development Permitting & • Historic Preservation Inspections • Neighborhood • Assistant City Manager – PD Documentation Project • Clean Sweep/Derelict Rental 80
Ranking offers – Results teams seek the best outcomes for the money • Forced ranking process (e.g.,15 offers only 5 can be “excellent”, 5 “very good” and 5 “good”) • First round ranking ignore mandates and revenue sources • Start buying from the top and draw a line when money runs out • Send offers back to “ sellers ” after round one with suggestions for improvement 81
Good Nutrition Priority (Example) • GN-01 We seek offers that provide vegetables for neighborhood children. Specifically vegetables that: – Have a high vitamin and fiber content – Are locally grown – Are versatile (can be used in soups, salads, cooked, or eaten raw) – Children will eat (e.g., they taste good) 82
Forced Ranking Process Score Bob Rochelle Willie Stephanie Charles Joe Chris G V E E E E E Broccoli V G V V V V V Squash E G G E V V V Tomatoes E V E E E E E Carrots V G G G G G E Brussel Sprouts E E V V G G G Celery G V E V E E G Parsnips V E G G G G V Peas G E V G V V G Onions E = Excellent; V = Very Good; G = Good
Forced Ranking Process Round 1 Score Bob Rochelle Willie Stephanie Charles Joe Chris 1 Carrots 3 2 3 3 3 3 3 20 2 Broccoli 1 2 3 3 3 3 3 18 3 Parsnips 1 2 3 2 3 3 1 15 4 Tomatoes 3 1 1 3 2 2 2 14 5 Squash 2 1 2 2 2 2 2 13 6 Peas 2 3 2 2 1 1 1 12 7 Celery 3 3 1 1 1 1 2 12 8 Onions 1 3 2 1 2 2 1 12 9 Brussel Sprouts 2 1 1 1 1 1 3 10 E = 3; V = 2; G = 1
Forced Ranking Process Round 2 Score Bob Rochelle Willie Stephanie Charles Joe Chris 1 Carrots 3 2 3 3 3 3 3 20 2 Broccoli 1 2 3 3 3 3 3 18 3 Parsnips 1 2 3 2 3 3 1 15 4 Tomatoes 3 1 1 3 2 2 2 14 5 Peas 2 1 2 2 2 2 2 13 6 Squash 2 3 2 2 1 1 1 12 7 Celery 3 3 1 1 1 1 2 12 8 Onions 1 3 2 1 2 2 1 12 9 Brussel Sprouts 2 1 1 1 1 1 3 10 E = 3; V = 2; G = 1
86 86
Spokane Example: Buying Learn and Grow Offers 87
Purchases - Keeps and Cuts (Washington State) 88
Savannah 2010 Funding by Priority
Public Safety Primary Factor: Primary Factor: Reduce Risk Prevention Preparedness • Safe Neighborhoods • Effective Plans • Well-Designed & • Trained, Equipped & Maintained Infrastructure Practiced Responders • Public Education • Effective Emergency I want to be safe and feel safe from • Successful Children Warning Systems • Multi-Agency Engagement • Public Education crime, fire and other hazards • Inter and Intra-Agency anywhere in the community. Cooperation Primary Factor: Primary Factor: Increase Protection Responsiveness Enforcement Indicators: • Effective Communication Systems • Enforcement of Codes & Laws • Appropriate & Timely Deployment • Offender Accountability • Response Time to Calls for Service • Interagency Cooperation • Auxiliary Services for Emergencies • Capable Response & Recovery • Perception of safety on Citizen Survey • Part I Crime Rate (by type & by neighborhood) • Casualties and Value of Property Loss from Fire and Other Hazards Public Safety Results Team Other Hazards include natural & man-made disasters, structural Revised 21 April 2009 hazards, vehicular & pedestrian hazards, and mass public gatherings.
Public Safety Results Team Members • Jerry Cornish, Information Technology • Gerry Long, Metro • Ben Morse, SF&ES • Carol Bell, Central Services • Jennifer Payne, Citizens’ Office • Barry Baker, Recreation Services • Luciana Spracher, Research Library • Martin Fretty, Housing • Brian Hollis, Risk Management • Julia Durrence, Budget
Rank Offer Number Offer Name Amount 1101-4210-01 Police Patrol Operations $28,268,243 2101-5140-07 Fire Operations $21,186,088 3101-5101-04 Fire Training $344,933 4241-4251-02 Consolidated 911 Emergency Dispatch Center $5,294,148 5101-4262-02 Police Training Unit $932,060 6101-5101-01 Fire Administration $752,772 7101-4201-01 Police Bureau Management $755,062 8101-4220-01 Police Investigations $6,518,370 9101-4220-02 Police Forensics Services $1,620,188 10101-5101-02 Fire Prevention Program $581,251 11101-4240-01 Police Support Services $3,202,742 12101-1120-01 Recorder’s Court Services $2,026,029 13101-4210-03 Police Traffic Enforcement $641,561 14104-5155-06 Fire Hazardous Materials Unit $404,944 15101-1109-01 Emergency Management Coordination $105,412 16101-4261-01 Counter Narcotics Team (CNT) $3,149,888 17101-4231-01 Police Traffic Investigations Unit $1,499,325 18101-2103-01 Vehicular/Pedestrian Traffic Flow & Safety $2,465,852 19521-3104-02 Fire Hydrant Testing & Maintenance Program $457,951 20561-1113-04 Red Light Camera Management and Enforcement $427,325 21101-4201-03 Police Public Information Service $212,542 22101-2103-03 Street Lighting Maintenance and Operation $3,446,193 23101-2104-02 Stormwater Conveyance Systems Maintenance $2,849,037 24101-4264-01 CrimeStoppers $227,429 25101-4201-02 Police Savannah Area Regional Intelligence Center $1,400,344
Priority List continued 26101-2104-04 Stormwater Pump Station Maintenance $1,099,598 27101-2104-03 Stormwater Conveyance System Repair $772,263 28101-4201-04 Police Court Liaison $89,068 29101-4262-01 Police Internal Affairs Investigations $798,123 30101-4235-01 Police K-9 Unit $538,538 31101-4233-01 Police Marine Patrol $728,973 32101-4237-01 Police EMS Coordinator $95,390 33101-4230-01 Police Special Operations Administration $579,145 34101-4250-02 Police Records Service $1,330,808 35101-2105-03 Street Repair and Maintenance $1,342,320 36101-4262-03 Police Recruiting/Hiring Unit $426,531 37101-4236-01 Police Animal Control $820,052 38561-1113-01 Public Transportation Regulation Program $344,933 39101-4250-03 Police Customer Service Desk $498,914 40101-4210-02 Police Crime Prevention $421,686 41101-5101-03 Fire Public Education/Public Information $86,333 42101-2104-01 Stormwater Capital Projects Engineering $538,894 1 st 43101-4263-01 Offender Reentry Services $1,270,162 44101-4265-01 Offender Re-entry-Job Development $288,002 Round 45101-4234-01 Police Mounted Patrol $530,537 Final 46101-0150-02 Neighborhood Traffic Calming Program $54,500 Cuts Cuts 47101-4232-01 School Crossing Guards $256,240 TOTAL $101,705,666
2010 Enhanced Purchases
Partially Funded Services • Significant reduction in funding for both SIP and Work Ventures from 2009 to 2010 • No impact in Level of Service due to creative application of Dept of Labor stimulus grants • 7 sworn officers will move from SIP to the street • School Crossing Guards • Service will be provided by School Board with subsidy from the City during transition of service provision responsibility
Items to Evaluate Next Year • Take home vehicles • Increase fiscal responsibility in Precincts and Fire Stations • More effective Overtime systems • Cost-sharing for events • Combine Police front desk with 311 • Fuel efficiency
Lessons Learned • Get governing board bought in early • Determine level of outside help you need • Build off existing foundations where you can (e.g. performance measurement, citizen input) • Put the “best & brightest” on teams – don’t choose by titles • Communication is key throughout process • Must continue to challenge the status quo • You can’t do it part way 97
Assessing BFO Readiness • Do you have the time? • Do you have the talent? • Are your elected officials on board? • Do you have support of top management? • Do you have the technology? • Can your organization deal with change? • Do you have a communication strategy? • Can your organization deal with the fact that it is an art not a science? 98
Unanticipated Consequences • New leaders emerged • The level of discussion and debate in the organization was elevated • Finally linked performance measures directly to results • Built tremendous capacity throughout the organization • Level of understanding and cooperation between departments increased substantially • Elected officials felt much more involved in budget process 99
There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Nicolo Machiavelli
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