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In Budgeting for Outcomes

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• Presentation To Council 12/16/10

Budgeting for Outcomes: A new way to look at budgeting.

Budgeting for outcomes is a form of priority based budgeting where spending is linked to overall community results.
Instead of the traditional approach to budgeting that begins with last year's budget and is focused on expenditures, the starting point for the budget process becomes setting priorities and establishing the amount of revenue available for achieving those priorities. Efficiencies and outcomes become the focus. Departments prepare budgets based on programs or services provided. Those services are then ranked
based on priorities set by the council and the community.

1. The process starts with education and strategic planning. Overall big picture priorities are set at the citizen summit.
2. The department heads and staff quantify the services provided. Individual services are defined and the costs of those services are identified. Benchmarks are defined.
3. Services are put into a matrix that identifies the cost inputs, services, and expected outcomes.
4. Services are ranked by priority. A table is prepared that shows the service, ranking, outcome and cost.
5. Decision tables are prepared that show where the 'Line" is drawn. (Where revenue meets expenses). These are prepared for levy options (ie 3%, 2%, 0%, -2%).
6. Department heads see where services fall in the funded or not funded category.
7. Department's are sent back to find efficiencies to fit more programs into the funded category.
8. Council decides the funding/service level of the budget.
9. Program budgets are broken down into line item budgets for budget approval.
10. Performance and benchmark reviews/reports/communication to public

Benefits of Budgeting For Outcomes are:

Financial Resiliency – Meeting budget targets. Strategic approach to cost reductions.
Clarity of Outcomes – Opening up the budget process and financial information to the entire organization in order to focus all employees on assisting with the financial challenges
Internal Engagement – Training employees to identify outcomes, develop performance measures, and prioritize services.
Cross-Departmental Cooperation – Changing the organizational culture to one of service collaboration in order to meet priorities.

Budgeting by Priorities (BP) Process in Review

Budgeting by Priorities (BP) requires governments to work differently from past budgeting practices. Instead of starting with the last year's budget, adding a factor for inflation and perhaps a few new initiatives, this budgeting process is a bottom-up approach. Budgeting by Priorities requires citizen involvement and a new way of thinking for City staff. All the services the City provides are reconsidered through the prism of what services the citizens' value most. The final budget "buys" only those services most valued by the citizens.

Objectives

• Align the budget with citizen priorities
• Measure progress towards priorities
• Get the best value for each tax dollar

Requests for Offers

• Cause and effect map
• Three measurable, specific indicators
• Purchasing strategies most likely to achieve the priority
• Requests for Offers are used as the basis for City departments to develop their Offers detailing
• How they propose to produce the priority
• How much it will cost
• How its success will be measured.

Budget Offers

• Service to produce priority
• Cost of the service
• Indicators to measure success

Departments respond to Requests for Offers with proposals (Offers) detailing their performance
commitment for a stated Priority and assume no guarantee of funding based on historic levels. Only
expenditures part of Offers will be funded in the Final Budget. Offers are opportunities for departments to
propose new or innovative approaches and practices.
Offers are ranked by Results Teams according to their value in producing the Priority. Results Teams give
feedback to departments about Offers so they can be improved. New offers may be proposed at this
time.
Results Teams do final ranking of Offers based on what contributes most to achieving the Priority. Money
allocations are applied and legitimate mandates considered. The team then makes Recommendations to the Mayor regarding what should be purchased.