BUDGETING BEYOND THE BASICS

Adding context, driving innovation and making better decisions through a more comprehensive budget process

WHAT MAKES A GOOD BUDGET??

Adheres to a GASB and GAAP Balanced and Sustainable

A link between operations and policy objectives

Funds community priorities Communicates effectively More proactive than reactive

IMPLICATIONS OF LINE ITEM BUDGETING Repetition implies inherent value Doesn’t explain outcomes Doesn’t report performance Doesn’t drive innovation Works best with stability Creates a reactive model Good for accountants

LOOK FAMILIAR?

Account #

2013 Actual

2014 Estimated

2015 Budget

2016 Budget

12100 Salaries 1,010,808 1,010,808 1,085,000 1,090,500

12200 Overtime 19,989 32,000 20,000 21,000

12600 Materials 43,921 42,500 44,000 45,000

13100 Insurance 19,244 17,986 17,986 18,000

14100 Utilities 9,850 10,050 10,000 10,250

15100 Task Force 5,000 5,000 5,000 5,500

22100 Delta County 8,000 8,000 9,000 9,000

22800 SWAT 585 625 750 800

31600 Rental 2,225 2,225 2,225 2,500

35500 Equipment 8,000 7,800 8,500 9,000

Total 1,127,622 1,136,994 1,202,461 1,211,550

SIMPLE TOOLS WITH BIG PAYOFF

Establishing Priorities and Desired Outcomes

Understanding True Cost Measuring Performance Collecting & Reporting Meaningful Data No Silver Bullets; But Context, New

Insight and Better Decisions

PRIORITIES AND OUTCOMES

Consider the willingness of citizens to pay

What does the tax payer get? Does the budget reflect citizen

priorities? Are you achieving desired outcomes? Does your line item budget give you

tunnel vision?

PRIORITY BASED BUDGETING

Goal: Allocate resources to programs and

services that are effective at achieving the

highest priority ends.

TRADITIONAL PRIORITY BASED PROCESS

#1

•Set revenues

#2

•Establish broad community outcomes (ex: Community Safety)

#3

•Define what causes the outcome (ex: control crime, safe transit etc.)

#4

•Establish teams for review and scoring

#5

•Rank/ compare programs based on effectiveness

#6

•Allocate resources accordingly

#7

•Measure results

PRIORITY BASED BUDGET SHORTCUT

Establish a complete inventory of services (within or across departments)

Identify the total true cost of the services

Develop ways to measure the effectiveness of each service

Review and discuss

AN EXAMPLE Service/ Program Cost Result

Recreation $2.1M •Improves Health•Strengthens community

Public Safety $1.7M •Reduces crime•Reduces accidents

Street Maintenance $500K •Reduces deferred maintenance costs •Improves safety

Code Enforcement $110K •Beautifies the town •Reduces disputes

Economic Development $45K •Supports new existing business•Expands job base

Recycling Services $15K •Diverts minimal waste from landfill

WHAT DOES IT REALLY COST?

Account #

2013 Actual

2014 Estimated

2015 Budget

2016 Budget

12100 Salaries 1,010,808 1,010,808 1,085,000 1,090,500

12200 Overtime 19,989 32,000 20,000 21,000

12600 Materials 43,921 42,500 44,000 45,000

13100 Insurance 19,244 17,986 17,986 18,000

14100 Utilities 9,850 10,050 10,000 10,250

15100 Task Force 5,000 5,000 5,000 5,500

22100 Delta County 8,000 8,000 9,000 9,000

22800 SWAT 585 625 750 800

31600 Rental 2,225 2,225 2,225 2,500

35500 Equipment 8,000 7,800 8,500 9,000

Total 1,127,622 1,136,994 1,202,461 1,211,550

WHAT’S NOT CAPTURED IN BUDGET?

Cost to sustain infrastructure Long term maintenance True operating costs

AN EXAMPLE: COST OF STREET REPAIR

Overlay Maintenance

Miles of road

Avg. Life Cost/ mile Miles/ year Cost/ year Cost/ Life

64 25 years $330,887 2.56 $847,070 $21,176,769

Reconstruction Cost

Cost/ Mile Added Cost/ Mile

Added Cost at 10% total

miles

Added Cost/ Year

Cost/ life

$1,784,474 $1,453,587 $9,302,956 $372,118 $30,479,725

AN EXAMPLE: RECREATION CENTER

True Program Cost (2013)

Program Pool Sports Fitness Rentals Child Care

Cost $446,814 $232,116 $246,220

$48,550 $26,554

Other Program Consideration (2013)

Program Pool Sports Fitness Rentals Child Care

Participant Uses 81,080 2,585 25,776 17,604 3,784

Cost/ Use $5.51 $89.79 $9.55 $2.75 $7.02

OTHER ASSETS

Five year plan vs. life cycle cost Any high dollar asset that is intended

to be replaced is worth capturing Model leases, used and new purchases

MEASURING PERFORMANCE

“If you can’t measure something, you can’t understand it. If you can’t understand something, you can’t

control it. If you can’t control something, you can’t improve it.”

~H. James Harrington

3 TYPES OF MEASUREMENTS

Outputs: simple measures of raw counts of activities or services

Efficiency: relates outputs to resources used (inputs)

Outcome: gauges impact, effectiveness and quality

WHY MEASURE PERFORMANCE?

Gain insight and context you wont otherwise know

Test the efficacy of strategy Helps communicate results and value Drives innovation

AN EXAMPLE: POLICE

Delta has 17 sworn officers and a $1.73M budget (outputs)

Delta spends $195.62 per capita on law enforcement (efficiency)

Delta Officers spend approximately 33% of each shift on patrol (efficiency)

69% of Delta citizens are confident in the PD’s ability to maintain public safety (outcome)

BENCHMARKING

External: What do other communities do?

Internal: What do performance metrics look like over time?

AN EXAMPLE

Rec $/1,000 Avg. of 92 Median of 92 Rank of 92

$285,126 $78,431 $55,424 #2

PD $/ 1,000 Avg. of 96 Median of 96 Rank of 96

$195,623 $243,000 $216,000 #49

Code $/ 1,000 Avg. of 72 Median of 72 Rank of 72

$9,020 $6,380 $4,770 #18

AN EXAMPLE

0%

10%

20%

30%

40%

50%

60%

70%

41%

63%65%

NA NA

39%

53%

57%53%

41%

26%

49%

64%

48%

38%

2006

2013

2014

Favorable Rating Public Works

COLLECTING AND REPORTING DATA

Add context Translate/ Interpret information Use the data you have in a better way Collect important data that you don’t

have Use simple models to vet important

decisions

CITIZEN SURVEYS

You don’t know if you don’t ask The people you hear from don’t

represent everybody Measure citizen satisfaction Facility use Gauge interest in new programs/

services Educate your citizens at the same time

AN EXAMPLE

Repair

of City

Stree

ts

Expan

sion of L

aw En

forcemen

t

Impro

ved Code E

nforcemen

t

Impro

ved Recy

cling F

aciliti

es

Constructi

on of New

Sidew

alks

Expan

sion R

ecrea

tion Center

Youth Se

rvices

/ Acti

vities

Impro

ved Anim

al Contro

l

Investm

ent in

Downtown Beautificati

on

Expan

sion of th

e City

Flower

Progra

m

More Ev

ents

(Delt

arado Day

s etc.

)

Expan

sion of C

itizen O

utreach

Develo

pment o

f New

Park La

nd

Impro

ved Play

ground Fa

cilities

Expan

sion of th

e City

's Mural

Progra

m

Impro

ve th

e Horse

Country Aren

a0%

10%

20%

30%

40%

50%

60%

70%

Priorities (Top 5 only)

#5#4#3#2#1

AN EXAMPLE

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

76%

85%84%

66% 68%

82%

90%

83%

74%77%

2013

2014

Customer Service Favorable Rating City Hall

CREATING MEANINGFUL INFORMATION Account

#2013

Actual 2014

Estimated 2015

Budget 2016

Budget

12100 Salaries 1,010,808 1,010,808 1,085,000 1,090,500

12200 Overtime 19,989 32,000 20,000 21,000

12600 Materials 43,921 42,500 44,000 45,000

13100 Insurance 19,244 17,986 17,986 18,000

14100 Utilities 9,850 10,050 10,000 10,250

15100 Task Force 5,000 5,000 5,000 5,500

22100 Delta County 8,000 8,000 9,000 9,000

22800 SWAT 585 625 750 800

31600 Rental 2,225 2,225 2,225 2,500

35500 Equipment 8,000 7,800 8,500 9,000

Total 1,127,622 1,136,994 1,202,461 1,211,550

AN EXAMPLE

Rec Center Budget:Aquatics $456,074

(22%)

Sports $193,859

(9%)

Fitness $240,680

(11%)

Marketing/Rentals $103,570

(5%)Child Care $26,554 (1%)

Customer Service $177,008 (8%)

Building & Grounds$206,198

(10%)

Administra-tion

$495,677 (24%)

Utilities $191,200 (9%)

2013 2014

Total Visits 137,378

Cost/ Vist $12.28

Satisfaction Rating

78%

% Resident Participation 70%

Rate of Subsidy 68%

Key Indicators:

LEARN AND EDUCATE

48.73%51.27%

Are you aware that the Recreation Center is sup-ported by a 3/4 cent sales tax (75 cents for every $100

dollars spent on retail goods)?

YES

NO

30.38%

69.62%

Are you aware that the 3/4 sales tax supporting the Recreation Center is due to sunset (expire)?

YES

NO

70.47%

29.53%

Would you support continuing the existing tax to support the Recreation Center AND other City ser-

vices?

YES

NO

MODELING

Good for the “what if?” Looks at more than one variable at

once Provides “real time” analysis Puts potential outcomes in context

SUMMARY

Moving beyond the line item… Consider priorities Work with true costs Measure and report performance Do more with data