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?