It’s Time to Sharpen those Budget Skills
July 7, 2016
Category: Budgets and Budgeting
In a recent survey conducted by the Association of Washington Cities (AWC), public officials identified budget topics as the number two area of interest. (The top topic of choice was economic development.) This aligns with our experience over the last 25 years as we’ve worked with elected and appointed officials across the state on improving our budget skills. In this article we’ll explore these survey results more deeply and see how they align with the efforts of organizations like MRSC, AWC, and others to help you create your best budget.
Why all this Fuss?
The budget is where our communities sort out what we want from what we can afford. The list of interests and desires sought after by staff, boards and councils, community advocates and others is always longer than what the resources available will provide for. As a result, creating a budget becomes an important part of determining which types and amounts of services and facilities your government will provide.
Whether you are preparing an annual budget or a biennial budget, this summer and fall will be “budget time.” If you are a larger organization, you’ve already started building your budget. For all of us, we should have already begun to lay a foundation for the budget. As you’ll find in the guidance from MRSC, your budget needs to be completed and to your council or board by the end of October. The summer flies by and those budget deadlines will sneak up on you quickly. So, now is a great time to double-check that budget calendar and make sure you are ready to build a great budget for your community.
Anatomy of a Great Budget
The Government Finance Officers Association (GFOA) has had a peer review program for budgets since 1984. While the specific criteria have evolved a bit over the years, the basic elements have remained the same. These are:
Financial Plan – At its core, a budget should describe the sources of revenues and the authorized uses of those revenues (expenditures and capital improvements). This can take various forms, but the financial plan should be easily understood by all the potential users of the budget document. This should be especially true of the elected officials who will need to quickly get up to speed on the financial plan, make any desired changes and then approve the final product. The resources (revenues) should be described to enable an understanding of past trends, current issues and changes in tax or major fee rates (such as utility rates).
Operations Plan – This is where the document illustrates how those resources will be deployed. Included in the operations element are: the number of staff authorized within each part of the organization, an organization chart for the entity as a whole, and descriptions of the organizational units along with goals and performance measures. This is where you will also find a description of the major capital projects authorized by the budget as well as any debt obligations.
Policy Document – the budget should describe the strategic goals, strategies and action steps to delivering the right outcomes for your community. In addition, the budget should describe the “guardrails” that you want used in the management of your government’s finances. The budget should describe the big issues facing the government and how the proposed budget plan addresses them (examples may be growth, decline or societal issues such as homelessness).
Communications Device – The budget pulls from the policy, operations and financial elements to present a cohesive picture of the government’s plan to provide for community needs with community resources. You can describe major accomplishments, your community’s unique demographics or other information to provide context for your budget.
Together, the budget should read like a well-designed novel. The policy is a great foundation and lead (a good budget message will work wonders in this regard). As a result, this is a good place to start your budget process and in your budget document. Finances are often addressed next with operations and communications elements rounding out the story. But to be able to describe the budget in this way you’ve got to start with a thoughtful budget process. This brings us back to your current budget efforts.
Sharpening Your Budget Skills
As we said, the survey referenced above identified a keen interest in understanding how to do this difficult work well. Here is a snapshot of the results regarding specific areas of interest:
These are the topics that we recently spoke to at the AWC annual conference in Everett and that we’ve focused on during the upcoming Municipal Budget and Fiscal Management Workshops. In fact, we will be revising the agenda a bit in order to accommodate the feedback we have seen from this survey. We will be conducting two workshops this year to accommodate the high number of newly elected officials in local government. The first will be in Tukwila on July 28-29 (they run the full day on Thursday and half-a-day on Friday). The second will be in Leavenworth on August 25-26. You can register at the links associated with each location.
In addition, you can browse the MRSC website, attend the WFOA conference in Spokane, browse the GFOA website (they have resources, best practices and several training opportunities).
MRSC is a private nonprofit organization serving local governments in Washington State. Eligible government agencies in Washington State may use our free, one-on-one Ask MRSC service to get answers to legal, policy, or financial questions.