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Budgeting for Outcomes
Why use BFO? What is Budgeting for Outcomes? How is BFO different from traditional
budgeting? How does the BFO process work? Eight Steps to BFO Keys to Success Questions??
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Traditional Budgeting Hasn’t Worked Well Enough in Our
New Fiscal Reality
“We are all out of less”
We will identify all revenue sources and utilize citizen input to prioritize not only services but levels of service. We will continue to provide quality services in a fiscally responsible manner necessary to maintain a comfortable, safe and healthy community.
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Align the City budget with Citizen priorities Focus our limited resources on the services
that provide the best outcomes for Citizens Prioritize our services and spend within our
means
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A completely different approach to public budgeting
Most important goal: spending in the best way to maximize results within the money we have to spend
Focusing on what to “buy” not what to “cut” No base budget/doesn’t start with last year’s
budget Citizens and their priorities first Discuss, decide how best to achieve the Priorities Purchase activities based on contributions to
Priorities Budgets are about buying Results for Citizens,
not just paying for programs
Start with last year’s costs/“current service levels”
Add in inflation for those costs, plus, maybe, enhancements, or make arbitrary “cuts”
Argue about cuts
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Traditional budgeting is about justifying needs and costs, not about producing Outcomes
Start with available revenue Agree on results (priorities) that matter
most to Stoughton’s citizens Discuss, debate, disagree, decide how best
to achieve results with the money available Purchase programs/services/activities
based on their contribution to results
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Budgets are about buying results, not just paying for programs or services.
BFO compared to Traditional Budgeting Traditional BFO
Focus Add to or cut departmental “base budgets”
Fund programs and activities that support priorities and strategies
Budget requests Departments ask for amount that can be justified based on ongoing activities (plus a little extra)
Results for a price (value): Departments propose programs likely to produce desired results, efficiently
Budget office job Find places to cut, balance the budget
Test the logic of proposed solutions, provide efficiency tools, Balance the budget
BFO compared to Traditional Budgeting Traditional BFO
Budget debate and discussion
What can we cut to balance the budget?
How to we spend revenues we have to get the best results? Are there better ways?
Decision drivers
Avoiding pain, being fair (to internal stakeholders) and getting it done
Getting better results for the community, based on evidence of effectiveness
Began in February 2011 with Citizen Summit
Set 4 priority areas: ◦ Safe, healthy Community ◦ Stable Self-sufficient
Economy ◦ Well Run Government ◦ Welcoming Community/
Arts /Culture/Recreation Results teams prepared
RFR’s Departments prepared
offers
Results teams ranked offers
Funds were allocated Final ranking
worksheets Leadership Team
revised offers Mayor prepared
proposed budget
Mayor and Council – same as in past, except with better information on relationship between desired results and spending decisions ◦ Mayor propose unified budget based on Priorities ◦ Council review and adopt budget
Project Manager – Laurie Sullivan ◦ Day-to-day coordination and management ◦ Resource support for process
Leadership Team – Mayor and Department Directors ◦ Develop Priorities for review by Mayor, Council ◦ Review recommendations of Results Teams
Results Teams ◦ Identify, recommend indicators for respective Priority outcome ◦ Create Request for Results Indicators Cause and Effect Maps Purchasing Strategies Rank offers
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1. Identify available revenue – all of it 2. Set high level priorities 3. Allocate all revenues to the priorities 4. Create “Request for Results” 5. Invite/prepare offers 6. Rank Offers 7. Decide what offers to “buy” 8. Present the budget
What is the overall amount of money that we have to allocate in the budget?
Define how much is available to fund programs and services
What is your revenue outlook? Make the revenue decision up front and
communicate it
Build on existing work, ◦ Vision or priority statements ◦ Strategic plans ◦ Many governments already have high level priorities
Elected leaders make the final decisions Citizen input is most valuable up front State priorities from a citizen perspective
Understand the public’s needs, likes and dislikes ◦ Use citizen input mechanisms ◦ Analyze objective data ◦ Identify issues and opportunities through an environmental
scan Use group processes for creating tentative priorities ◦ Discuss the reasons these are priorities ◦ Group priorities at higher level of generality until you get to
a manageable number Make final decisions on priorities ◦ Test these priorities with various stakeholders ◦ Consider feedback ◦ Extract the meaning of feedback ◦ Use judgment ◦ Explain logic
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A Stable, Self-Sufficient Economy
An Attractive, Welcoming Community that Values
Arts and Culture
A Citizen-Focused, Well-Run
Government
A Safe, Healthy & Secure Community
Results for Stoughton’s Citizens
How much is each priority worth? ◦ Not: How much do they cost?
What is their relative value? ◦ What have we traditionally spent? ◦ Is that consistent with public expectations?
Historical data can be used as a starting point Keep it flexible
*Remember, priorities are different than
departments.
CAPITAL/TRANSFERS
10%
ECONOMY 2%
Health & SAFETY
40%
GOVERNMENT Services
38%
COMMUNITY 10%
2012 Priority Funding Allocation
General Governmen
t 13%
Public Safety 27%
Public Works 18%
Health Services
5%
Culture 6%
Planning 2%
Transfers Out 29%
2011 EXPENSES BY CATEGORY
There will be resistance to doing this upfront and not all governments do this
However, assigning dollars makes the process “real”
Allocations can be adjusted later in the process, just as in traditional budgeting
1. Statement of desired Priority outcome 2. Three indicators and supporting data 3. Cause and effect map 4. Narrative description of the request 5. Purchasing strategies 6. Evaluation criteria (Priority purchasing
strategies plus Citywide purchasing strategies)
BFO Results Teams Present:
Business Attraction & Retention
Strong Residential Workforce
Strong & Effective Partnerships
Accessibility for Business
Stoughton, Wisconsin I want to live in a community that has a stable, self-sufficient, local economy
Business Ready Sites Business Support, Resources and Information Accessibility – City as Guide vs. City as Regulator Incentives for Business Growth & Attraction Diversity of Business Marketing Stoughton’s Assets
A Variety of Single Family Housing Opportunities Strong Support for Lifelong Education
Existing Partnerships & New Partnerships Connections with & Support for Local Businesses Stoughton’s Role within the Regional Economy
Responsible Planning & Growth Reliable Infrastructure
INDICATORS:
• Improved business attraction and retention
• Improved and strengthened residential workforce
• Increase in effective partnerships that address economic needs
• “User friendly” business environment
• Citizen Involvement/Interaction
• Public-Private Partnerships
• Effective Communication
• Arts & Culture
• Park & Open Space Amenities
• Events & Celebrations
• Public Property Appearance
• Private Property Appearance
• Accessibility
• Unique Community Identity
• Attractive Gateways
• Defined Neighborhoods
- Image/First Impression - Community Engagement
- Participation Levels - Citizen Satisfaction
Major Indicators
• Indicator 1: Improved Financial Stability
• Indicator 2: Improved Citizen Satisfaction
• Indicator 3: Improved Employee Satisfaction
• Indicator 4: Increased Citizen Participation
We are seeking proposals that will maximize
effective leadership at all levels.
We are seeking offers that will promote initiatives to secure financial stability.
We are seeking offers that will promote or maximize effective communication between elected officials, city employees and citizens.
Offers need to show the link between what we spend money on (our activities) and priority results
Value for citizens means getting results at a good price, so efficiency matters too
Offers (programs) must include measures of performance so later performance can be compared to the upfront commitment
We are seeking offers that will maximize efficiencies through the utilization of internal and external partnerships.
We are seeking offers that will promote strong, successful city management.
We are seeking offers that will promote initiatives that allow for and maintain a knowledgeable and
experienced staff.
PURCHASING STATEGIES
1. Beautify and maintain the physical aspects of the community with emphasis on the goals, objectives and policies of the Stoughton Comprehensive Plan;
2. Enrich the lives of residents and visitors especially through Arts, Culture, Parks, Events and Celebrations;
3. Increase accessibility-connectivity and way-finding throughout the community;
4. Emphasize partnerships and promote volunteerism to help reduce costs and duplication of services;
5. Strengthen existing and encourage new cultural and artistic offerings.
Departments create offers as responses to the Requests for Results
Offers explain how proposed program or activities will achieve desired results - a performance commitment at a price
Offers assume no guarantee of funding based on historic funding levels
Offers are opportunities for change ◦ New, innovative practices encouraged
Offers are programmatic, each is aimed at one Priority outcome
Departments may develop alternatives to current programs or services or service levels
Departments must support offers with evidence of the offer’s likelihood of affecting the Priority outcome
Nothing in the budget is funded unless it’s in an offer, including “mandates”
Buyers (Results Teams) seek the most for the money – what is most likely to achieve the desired result?
Buyers:
Taxpayers and citizens
Elected representatives
Results Teams that “wear the citizen hat”
Sellers:
Departments Others Partnerships
(between departments and others)
Different conversation: “How do we spend money in the best way?” not “What to cut?”
Identify duplication and possible inefficiencies Identify proposals that are most effective, based on
measurable contribution/ evidence Prioritize proposals for purchase
1. First round 1. Review and understand proposals developed by sellers 2. Rank proposals into ‘order of purchase’ based on
EVIDENCE of contribution to the Priority outcomes, regardless of mandate or funding source
3. Buy down the list until funding is exhausted 4. Obtain feedback from Leadership Team, others 5. Prepare a summary memo explaining rankings 6. Give individual feedback to sellers (departments)
2. Second round 1. Review revised proposals, complete second rankings,
and recommend ‘order of purchase,’ considering mandates and legal liabilities
2. Finalize recommendations as a package 3. Prepare a summary memo explaining rankings
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1st Ranking is a “Forced Ranking”
Results Teams do final ranking of offers based on what contributes most to achieving the priority
Team recommended rankings given to CEO CEO looks at entire budget across priorities
and may move money and programs We’ve learned that there are always changes
but not usually large changes.
Christina Dollhausen Kelly Janda John McLain Dan Glynn Michael Stacey
TEAM 5 MEMBERS
• Citizen Involvement/Interaction
• Public-Private Partnerships
• Effective Communication
• Arts & Culture
• Park & Open Space Amenities
• Events & Celebrations
• Recreational Opportunities
• Public Property Appearance
• Private Property Appearance
• Accessibility
• Unique Community Identity
• Attractive Gateways
• Defined Neighborhoods
- Image/First Impression - Community Engagement - Participation Levels - Citizen Satisfaction
PURCHASING STATEGIES WE ARE SEEKING OFFERS THAT: 1. Beautify and maintain the physical aspects of the community with
emphasis on the goals, objectives and policies of the Stoughton Comprehensive Plan;
2. Enrich the lives of residents and visitors especially through Arts, Culture, Celebrations and Recreational Opportunities;
3. Increase accessibility-connectivity and way-finding throughout the community;
4. Emphasize partnerships and promote volunteerism to help reduce costs and duplication of services;
5. Strengthen existing and encourage new cultural and artistic offerings.
Parks Management, Senior Center, Opera House, Urban Forestry, Recreation Dept., Planning Dept., and Library.
Top Offers
Library Adult Services, Brush Collection and Broadleaf Control in Parks.
Bottom 3 Offers
Library Budget We struggled with the total cost of offers from the Library We recommend a reduction in Adult Services funding Partially fund Brush Collection and Broadleaf Control
Evaluation of Brush Collection. Trucking vs Chipping On-Site Can it be phased out? By appointment on a fee basis?
Brush Collection funding. Partial funding from Stormwater Utility?
Separate committee to review offers for next year. Combining of offers (Parks Mowing and Broadleaf Control) Offers in correct priority?
◦ Decision makers get involved at this point to decide what to buy ◦ An entire “shopping cart” of programs must make
sense for the community Typically some rankings change and funding moves
among priorities at this stage ◦ The final package becomes the proposed budget.
◦ Present the Budget as “keeps” not “cuts” ◦ Budget is organized around priorities, not
departments ◦ Council has information on offers and rankings ◦ In deliberations, focus is on what works to achieve the
priorities ◦ Debate what works best (do you agree with the
rankings?) ◦ Single-issue advocates must say what “above the line”
services is less important than what didn’t get funded
It’s more strategic – it begins by asking what the community needs; not with last year’s budget
It’s more evidence-based – BFO discussions focus more on evidence of the link between programs and priorities, less on the cost of continuing services
Departments prepare program requests and explain links to achieving high level priorities.
BFO’s methodology addresses key limitations of incremental budgeting
Pushes lower-value spending out of the budget, moves high value to top of list
Focuses on results, not budget inputs or programs in isolation from government-wide context
Enables managers to better make the case, explain how spending is linked to results, the logic of their offers (activities and programs)
Produces information that better enables citizens to see the value they get for their fees and taxes
Wear your citizen hat Act as the purchasing agent for results Challenge assumptions Be open to new ideas Don’t be constrained by status quo There is no absolutely “right” answer (but there are
good and not so good answers) Share relevant information
BFO has been done in 10 weeks and as long as 9 months ◦ It took us about 9 months the first year ◦ And about 5 months the second year.
By starting early you have more time to get the tasks done and less stress
You may need to re-think your traditional budget calendar
Remember that this is a learning process, you will modify this to fit your own needs.
Questions?