Building the Budget around the Community it Serves
June 23, 2015
Category: Budgets and Budgeting
Allocating scarce community resources across the wide range of public need is one of the more important responsibilities of public agencies. After all, this is “other people’s money” that we are entrusted with to use in a way that provides for the common good. In my more than 35 years of experience of helping with the creation of budgets, I’ve seen the quality of the work improve dramatically. Most recently budgets have evolved to clearly focus on the priorities of the community, including accountability elements that connect the investment of public funds to the delivery of public good. This article will describe one such way that we have made this connection in Redmond – We call it “Budget by Priorities” (or “BP” for short).
Mayor John Marchione was the chair of the council’s finance committee back in 2006 when the city faced another challenging budget. Together with then-Council President Richard Cole, he and his council colleagues were intrigued by a new community-based budget approach recently used by the state of Washington (and documented in the book, The Price of Government, by Osborne and Hutchinson). As councilmembers they could not compel the city to use this approach to construct the budget. When elected mayor in 2008, John announced that the city would indeed be using this citizen-centric approach with its next budget process – which was already underway!
The city has budgeted on a biennial basis for several years already and 2008 was a budget building year for the 2009-2010 budget. There was little time to understand this new approach, put the necessary pieces in place and have a truly community based budget. The city hired a consultant to help understand the new process better and to help conduct some of the early community meetings. This was the same consultant that assisted Washington State with its 2002 budget (the one described in the book referenced above). So, how is this process different than most and how does it connect community interests with delivered public benefits?
The BP Process
The goals of the BP process are:
- Align the budget with citizen priorities.
- Measure progress toward the priorities.
- Get the best value for each tax dollar.
- Foster continuous learning in the city.
The community met in the early spring of 2008 and through town hall meetings and focus groups came up with seven community priorities that they wanted from their city. These were: Vibrant Economy, Clean and Green Environment, Diverse and Connected Community, Infrastructure’s Keeping Pace with Growth, Safety and Responsible Government (in the form of “I want” statements – such as “I want be safe where I live, work and play”). A seventh priority was also identified – education and schools – but the school district has responsibility for that priority so we did not include it in our work. The city council reviewed and refined the community input and adopted these six priorities for the 2008 budget. They remain the priorities today after being affirmed prior to each of the subsequent four budget cycles.
These priorities may not seem profound, but the key is that they are what evolved from what a group of about 200 community members had identified as their priority needs from their city. This “north star” has been a key navigation element when budget deliberations get difficult and hard choices need to be made (like others, we reduced the workforce by about ten percent in 2010). These priorities are the basis for our community input efforts around the budget. For example, the city had an online budget input tool (developed in partnership with DigiPen Institute for Technology) for its 2015-2016 budget. Citizens were able to “vote” with tokens as to where to invest public funds. Interestingly the top choice was the “Clean and Green” priority, followed by Infrastructure, and then Safety. These six priorities have also been revalidated for each budget cycle through the annual citizen survey.
Using these priorities, teams of city staff and community members developed budget guidance in the form of strategies to make progress within each of the priorities. For example, within the safety priority, the strategies have included prevention, planning, partnerships, response and recovery. The emphasis on each of the strategy elements has shifted a bit over the four budgets, but the broad strategies have remained fairly static. Beneath each strategy are specific elements that should be addressed in budget proposals (we call them “offers” for service) for funding consideration under that priority. Initially the cross-departmental staff teams had citizens embedded in each. Schedules, different levels of experience with city activities, and other challenges made this difficult at times. In our most recent budget, we created a cross-departmental staff team for each priority and a community team to consider all the city priorities.
Budget proposals (again, offers) use these strategies (we call them strategy maps) as their guidance. The teams that created the strategy map actually evaluate each of the budget offers. They provide objective feedback about the programs being proposed as well as the measures of success (we’ll come back to measures in a bit). The teams then actually rank the offers in order and recommend a funding amount to the mayor within the priority. The mayor uses these recommendations in developing the budget that he eventually recommends to the council in October.
A few technical notes as no two organizations seem to do this type of budget in the same way. In Redmond we use this type of approach for all elements of the budget. That includes all the funds (yes, even utilities or those who think their money is different or sacrosanct) and, for both operations and capital. We use this approach for internal services (though we bundle in fleet while we don’t bundle in any other support costs). The teams get allocations of funding from the mayor’s office to use in making their recommendations. The mayor’s office determines how much of the overall funding will go to each of the priority teams. The mayor’s allocation helps ensure adequate funds for all essential elements of the city. For more information on the mechanical elements, see the city’s Budget web page.
Building the budget around the community’s priorities provides some insight into the connection between the city resources and community needs, but the budget is just a start. Most budgets today have performance measures, but few connect those measures to the funding itself. In BP, each budget offer must include a description of the intended results of the investment as well as a “logic model.” The logic model illustrates the connection between the activities being funded and the output from their work (Ken Miller would call this output their “widgets”). The logic model continues along the logic chain to illustrate how the widgets create (or at least contribute to) the intended results (or outcomes). The model includes a table of data that convert these steps to metrics for tracking and comparison.
In this way each budget offer, within each strategy element, within each priority area, demonstrates the intended value to be contributed to the community through the investment (the result) and how the proposed offer contributes to that result. Continuing with the safety example, the intended result of many of the police offers is to improve community safety (so our citizens can “be safe where they live, work and play”). Even the police communications offer connects the logic between their activities and a safer community.
An added benefit (in addition to illustrating how public investments translate to results) is the clarity of purpose with city staff. It is essential that our communications and police support staff are good at their tasks so that front line staff have good data, so that investigations are accurate and efficient, so that we catch the bad guys and have a safer community as a result. Initially staff objected to being connected with such a vague result (which they had little direct control over). But the models clearly illustrate the importance of each element that contributes to our overall service results.
Having the logic models and the measures in the budget has really helped us have the right conversations about the alignment of resources and city priorities. However, that would not be enough if there were no review of performance - both budget and program performance. We’ve added a program performance step to our budget monitoring to go along with the regular review of financial performance. While we are still experimenting with the timing of such reports (should they be quarterly, twice a year or maybe more often but within council committees?), we have had an initial round of reporting out on this newly revised accountability for the results of funded city programs.
We see the data in the models and the resulting reviews as learning opportunities. Clearly, if something isn’t working as envisioned, this creates an opportunity to discuss the situation and adjust accordingly. At this point, I’d say the connection between hard data and hard budget decisions does not yet exist (if it ever will). What we do have is a real context within which to consider alternatives (more funding, a different approach, etc.)
You can see examples of our work on the city’s Budget webpage.
Our Journey to Better Budgeting and Clearer Accountability
As described, we’ve been on this journey since 2008 and have completed four biennial budgets using BP. We’ve worked hard at learning from each budget cycle. The variation in the economy has contributed to that learning (for example, many were sure that such an open and transparent approach would not work in a sharp downturn). While our very first BP budget (the 2009-2010 budget) was a success, we try and take another significant step in our ten year plan for BP (a recommendation made to us during a debrief GFOA conducted of our first BP) in each subsequent process. The logic models, a separate community committee and community engagement budget game were additions to the latest budget process.
One of the key ways I describe the stark difference between the BP approach and a traditional budget is in its structure. Most budgets are either organized financially (around the accounting fund structure) or organizationally (around the organization chart and departments). Some more progressive budgets are organized around programs. BP is organized around citizen priorities. You won’t find departments, funds or programs (other than offers) in a BP budget. Citizens don’t think in terms of departments or funds (in fact those tend to get in the way though they are important for accountability – and we certainly use them for that purpose).
Redmond isn’t alone in approaching the budget in this way. In Washington there are (or have been) several local government organizations who have experimented with this type of approach. At the risk of leaving someone out – the cities of Renton, Bellevue and Kennewick have pretty mature priorities-based budgets. Snohomish County did at one time, but it has since revised its approach. The State of Washington still works at illustrating its budget around priorities though I would say that the underlying logic used to build the state budget is driven by other factors.
I have one last point to share. In an effort to further enhance transparency we’ve published an open data portal. Here we publish both our “check book” (all the invoices we pay) as well as our purchasing card transactions. We also present our budget in an interactive model which illustrates the funding level for each priority, each strategy, and each offer. In addition, the capital improvement budget is illustrated using a map so you can click on the project by location and learn more about it. We’ve gotten great feedback on both these tools from our council and community (and the amount of use has been quite positive as well).
We entertain questions about our experimentation with this budget approach routinely and would welcome your questions.
Image courtesy of D Coetzee.
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