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Government Finance Officers Association

2nd Annual Better Budgeting

Web Stream Event

#GFOA

Speakers

Mike Mucha, GFOA (Facilitator)

Lisa Bracken, Atlanta Public Schools

Ann M. Carbone, City of Boston

John Fishbein, GFOA

David Schmiedicke, City of Madison

Ebony Shelton, County of San Diego

Overall Budget Process

Develop ApproachesTo Achieve Goals

Develop a BudgetConsistent with ApproachesTo Achieve Goals

Evaluate Performance And Make Adjustments

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Establish Broad Goalsto Guide Decision Making

POLLING QUESTION 1

o What phase of the budget process do you

feel your organization has the most room

for improvement?

1. Establishing goals / defining community

priorities

2. Developing approaches / operational

planning

3. Allocating resources / creating the budget

4. Monitoring the budget and evaluating results

Training Focus

Develop ApproachesTo Achieve Goals

Develop a BudgetConsistent with ApproachesTo Achieve Goals

Evaluate Performance And Make Adjustments

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Establish Broad Goalsto Guide Decision Making

Budget Process / Budget Roles

Identify Goals

Long-Term Planning

Internal Collaboration

Capital

Budget Understanding

Training Agenda

o The budget process / budget roles

o Identifying goals and community priorities

City of Madison Case Study

o Long-term planning / dealing with uncertainty

Capital planning

City of Boston Case Study

o Internal collaboration

County of San Diego Case Study

o Transparency and budget understanding

o Discussion – better budgeting

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Structure of Training

Discussion, Tips, and Lessons Learned Key Takeaways

Additional Resources Questions and Follow Up

www.gfoa.org/betterbudget2018

Budget Roles

Budget Process

Policy within the Budget Process

Strategic planning (GFOA Best Practice) Environmental scan - what’s happening around you that

you should take into account?

Goals – what broad goals are driving your organization?

Fiscal policies (GFOA Best Practice) What changes need to be made?

What did you learn from the past that should influence a change in policy?

Communicate (GFOA Best Practice) How do you communicate externally around priorities?

How do you communicate internally about connecting goals to resource requests?

http://www.gfoa.org/best-practices

Strategic Planning - Environmental Scan

Strengths and Weaknesses

Rochester Genesee Regional Transportation Authority, New York

Strategic Planning - Environmental Scan

Opportunities and Threats

Rochester Genesee Regional Transportation Authority, New York

Strategic Planning Influence on Budget

City of New Orleans, Louisiana

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POLLING QUESTION 2

o Does your organization have a strategic plan that is well understood and used for the basis for the budget process?

1. No. We don’t have a strategic plan

2. We have a strategic plan, but it is not well communicated

3. We have a good strategic plan, but it is not linked to the budget

4. We have a good strategic plan that is used in the budget process, but it is not made to guide budget decisions

5. Our strategic plan is in complete alignment with our budget

Financial Policies Summary

Napa Sanitation District, California

Financial Policies Compliance

Napa Sanitation District, California

Financial Policy Revisions

New Kent County, Virginia

Important Steps in Communicating the Process

1. Identify the public’s perspective – broader

range collected through a variety of ways and

sources

2. Collect information before a decision has been

made

3. Encourage all citizens to participate

4. Communicate how public involvement has

specifically made a difference

Citizen Involvement as a Policy

Citizen involvement shall be encouraged in the

annual budget decision-making process through

public hearings and community meetings. Such

involvement shall include assistance in

establishing program and budget priorities for

the city.

Involvement shall also be facilitated through city

boards, task forces and commissions, which

shall serve in advisory capacities to the city

council and the mayor.

City and County of Honolulu, Hawaii

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First Step – Getting Community Feedback

City of Tacoma, Washington

Reaching Out to Stakeholders

City of San Antonio, Texas

Community Surveys

City of San Antonio, Texas

Letter for Funding Proposals

City of Lawrence, Kansas

Know the Policy – Key Dates

Town of Avon, Connecticut

Budget Calendar

Gloucester County, Virginia

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Know the Law

City of Bridgeport, Texas

BALANCED BUDGET

As per State Law, current operating revenues, including Property Tax Reduction Sales Tax (which can be used for operations), will be sufficient to support current operating expenditures. Annually recurring revenue will not be less than annually recurring operating budget expenditures (operating budget minus capital outlay). Debt or bond financing will not be used to finance current expenditures.

Help Frame Issues for Decision Makers

• Identify the key policy options, including

points to consider (pros, cons, long-range

implications, etc.)

• Place the options into context – Why has

this issue arisen? What will be the impact

if nothing is done? What are other

priorities?

• Create a narrative – How do all the pieces

fit together into a cohesive budget? How

is the budget balanced and priorities met?

Decision Process

• Identify decision items

• Use various data visualization tools

• PowerPoint, maps, etc.

• Place options before the decision makers

– balance the need to stay on task with

time for consideration and consultation

with others

• Keep the process going – your role is

often to facilitate and maintain focus

• Develop a tolerance for ambiguity

Watch the Steps

County of Chester, Pennsylvania

Budget Process/Budget Roles Takeaway

• Set up long-term goals

• Develop financial policies

• Encourage stakeholder involvement in the

budget process

• Assign responsibilities, tasks, and key dates

• Communicate the process concisely

Key Takeaways:1. Identify appropriate stakeholders and get them involved, especially

up-front2. Communicate key dates and expectations. Communicate results

and decisions.

POLLING QUESTION 3

Which scenario best describes how department stakeholders are involved in the budget process?

1. They are not at all. The budget is prepared by the budget office.

2. Departments are given a target budget by finance and identify how to allocate discretionary or non-salary spending

3. Departments work with the budget office to identify new programs or strategies for achieving results

4. Departments are involved throughout the budget process to help create efficiencies, develop more effective programs, and work collaboratively to create the budget

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Identifying Goals and Community Priorities

Building relationships and trust with the public

oCommunicate

oHonestly

oEarly

oOften

Balancing special interest / politics

oFirst, educate

oThen, follow-up

oDepth vs. breadth

o“You can’t always get what you want…”

Building Relationships and

Trust with the Public

Commit Communicate

To persuade?

Make the case. Ensure

understanding. Outline next

steps.

To create buy-in?

How has input changed the

outcome? Demonstrate you listened…

To inform?

What’s the media? Can it be accessed? Easily understandable?

To build trust?

How will you close the loop?

Honestly,

Know where the gaps are and address them openly

and honestly

Come out of the cube…

But tell the GOOD NEWS TOO!!!

Prepare stakeholders for what’s ahead

(Money on Non-Fun Stuff)

Speak to the perceptions and address it head on(Bloated Central Office)

Be transparent about where you were

(acknowledge the past), where you are

(transformation takes time), and where you are

going (won’t please everyone)

Early,

Budget and Finance Advisory Committee (BFAC): provides guidance and counsel on matters of budget and finance; meets regularly with the Chief Financial Officer, working alongside staff and others to develop tools and methodologies on how to best improve the district’s budgeting process. The administration has been responsive to BFAC’s recommendations for greater cohesion and clarity.

Every meeting includes an update

from our office, feedback protocol,

and BFAC led discussion

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and Often.

New Student First Funding InitiativeMulti-Year Planning

(And Again!)

Balancing Special Interest

and Politics

First, educate

Superintendent’s Employee

Meeting

FY2018 Budget Development

October 12, 2016 4:00-7:00

o Welcome and Introductions

o Budgeting 101

o FY18 Budget: Closing the Gap

o FY18 Budget: Unfunded

Components of Transformation

o Wrap–Up and Next Steps

Then, follow-up

Superintendent’s Employee Meeting

FY2018 Budget Development

December 14, 2016 4:00-6:00

o Recap - Last Superintendent’s Employee

Meeting

o Introduction - Budget Development Exercise

o Table Work Session

o Share-out

Depth vs. Breadth

1. The district will allocate resources pursuant to the district’s definition of equity.

2. The district will continue investing in the Turnaround Strategy, providing additional support and interventions for schools that have been chronically struggling on the state accountability metric.

3. The district will recruit, develop, retain, and promote high-quality staff by developing and implementing a multi-year compensation model.

4. The district will continue implementing its charter system operating model and core components of signature programming, cluster funds, school flexibility dollars, and community engagement strategy.

5. The district will fund pension obligations in accordance with State statute and actuarial standards.

6. Per resource parameter #2, with additional public funding and/or partnership resources, the district will make investments in Pre-K through 3rd grade to ensure all students are reading by the end of 3rd grade.

7. Per resource parameter #2, with additional public funding and/or partnership resources, the district will focus on whole-child development, including positive behavior supports, arts and athletics.

8. Per resource parameter #2, with additional public funding and/or partnership resources, the district will create a comprehensive leadership development program.

9. Per resource parameter #2, with additional public funding and/or partnership resources, the district and its partners will significantly expand access to quality Early Childhood Education.

FY2018 Expenditures ParametersFY2017 Expenditures Parameters

1. Allocation decisions will be made to prioritize achieving a more equitable distribution of resources pursuant the district’s equity audit.

2. The district will allocate resources to implement effectively the system’s move to a “charter system” operating model.

3. The district will fund pension obligations in accordance with State statute and

actuarial standards.

4. The district will invest in a multi-year school turn-around strategy that provides additional support and interventions for schools at risk of state take-over.

5. The district will make investments in early childhood education based on findings from research study.

6. The district will ensure that the budget is aligned to the Board’s mission and

vision and that resources are allocated against key district strategic priorities in the areas of:

a. Academic Program

Ongoing implementation of district’s CRCT remediation &

enrichment efforts

Improvement in student achievement in math, science, and literacy, including a comprehensive materials of instruction

strategy (inclusive of textbook adoption and online student and teacher resources)

Ongoing implementation of signature programming across clusters

Ongoing implementation of positive behavior supports

programming

b. Talent Management

Strategies to recruit, professionally develop, and retain high quality staff

Continued implementation of multi-year compensation study recommendations to address pay parity

c. Systems & Resources

The safety, security, and well-being of students and staff

(including the implementation of a new safety/security model)

Preventative maintenance of support infrastructure (including

buildings, buses and technology)

d. Culture

Continued implementation cultural transformation strategy, including strengths based programming

Implementation of District’s external communications strategy

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“You can’t always get what you want…” POLLING QUESTION 4

o Do you think that all employees are aware

of and understand your mission and

goals?

1. Yes. All understand

2. Somewhat. Most would understand

3. No. Mission and goals are not communicated

POLLING QUESTION 5

o On a scale of 1 to 5, please indicate how well your budget is aligned with your strategic plan and works to accomplish the plan.

1. Not at all

2. Some alignment

3. Mostly aligned but no communicated link

4. Aligned

5. Perfect alignment. All programs are consistent with stated priorities and strategic goals

NA. We don’t have a strategic plan

Key Takeaway # 3: Remember your purpose and mission and commit to itThe key to building trust is open and honest communication and then follow-through on your commitments. Or in short… put your money where your mouth is!

City of MadisonCase Study

Better Budgeting

Background – City of Madison

• 30 city agencies

• 2,900 FTE positions

• Budget:• $700 million all-funds operating budget

• $283 million general fund

• $17 million library fund

• $219 million levy

• $360 million capital budget ($170 million GO)

• Strong Mayor; 20-member council• one of the largest per capita in the country

(12,500 people per member)

• About 100 city committees

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City General Fund Revenues - $300 million

73%

12%

4%3%

2% 2% 2%2%

2017 Revenues

Property Tax

State Aid

Payments in Lieu of Taxes

Charges

Fines and Forfeitures

Other

Licenses/Permits

Room Tax and Other

Issues Facing City

• Rising poverty rate – 50% of school students eligible for free and reduced price lunch

• Rising violence – gun violence in parts of the City

• State retrenchment – strict levy limits; state aid reductions; 50% pro-ration of payments for police and fire services to state-owned and UW buildings

• Infrastructure pressures – reconstruction of major city streets; renovation of key city facilities; rising debt service share (historically 12.5% of g.f. expenditures; could exceed 19% by 2023)

• Economy is strong – state government, University of Wisconsin, biotech, medical records technology

Mayor and Council

• Council has a neighborhood view

• 12,500 residents per Council district

• Mayor has city-wide view

• Strong political support for labor

• Collective bargaining agreements replaced

with ordinance and handbooks

• Strong non-profit organization sector

Approaches

• City-wide goals and outcomes

• Better connecting budgeting to outcomes

• Data inventory effort

• Cross-functional/agency teams

• Joint executive/council strategic

management oversight group

• Racial equity and social justice initiatives

Data in Action

Ad-hoc Data Collection

Siloed Data Sources

Agency Specific Goals and Initiatives

Proactive Data Collection

Enterprise-Wide Solutions

City-Wide Goals and Cross Functional Teamwork

• Efforts are intended to make systems easier to interact with & manage

• Principles of strategic management intended to

become THE WAY we do business instead of AN ADDITIONAL WAY

OLD WAY NEW WAY

Framework that connects the City’s vision and mission with outcome areas and S.M.A.R.T. indicators. The framework serves as a cornerstone in the decision-making process.

City-wide Goals

Outcomes & Indicators

Agency Service Delivery

StrategiesPerformance

Measures

Strategic Framework

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The Strategic Framework

• Guidance Teams worked together to define what success would look like and how that success would be measured

• Staff currently working to bring concepts together with Comp Plan

The Planning Process

Strategic Framework

Mayor, Council, & residents set

priorities

Agencies submit proposals that will

drive outcomes

Mayor & Council adopt budget that funds strategies to

advance outcomes

City services implement

strategies as outlined in

workplans funded in budget

Data collected by service to monitor progress against goals articulated

in budget

Quarterly meetings provide

forum to track City-wide

outcomes across services

Service delivery adjusted based on

what we know from data

Connecting Service

Delivery & Outcomes

Tools to Guide Us

These tools will help foster innovation among City staff at all levels

helping us to achieve our objective of delivering the outcomes that

matter most to Madison’s residents.

Continuous Improvement

Accountable Government

Data Informed

• Use data to identify where we can be more efficient

• Provide training and support for agencies to pilot innovations to improve service delivery

• Connect our services with the outcomes they are seeking to influence

• Use the budget process as an annual planning opportunity to confirm our priorities

• Convene around City-wide Goals to monitor progress in driving outcomes

• Share data about our progress internally & with the public

Next Steps:Connecting City Services & Outcomes

Step 3: Develop Data Action Plan

Identify the data source and variables necessary to develop dashboards.

Step 2: Define How to Measure Success

Define how much are we doing with each service, how well are we doing it, and is anyone better off.

Step 1: Identify Services

Define services in a way that is consistent with how residents interact with them.

Engagements with City agencies will focus on connecting their work with the outcomes they drive

The 2018 Executive CIP has been mapped allowing you to see where

projects are planned for the next 6 years

Mapping the Plan

Projects have been grouped into four categories to reflect the way our residents

think about the budget. The categories are: Facilities, Parks, Transportation, and Utilities.

The overview map allows you to see all of the projects planned throughout the CIP; keep

scrolling through the map to see more detail about the categories including link to the City’s

projects portal & budget.

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Capital Projects

• Each section of the map

highlights key projects

included in the budget

• Project amounts reflect the

total project budget; this

may cause budget to vary

slightly from what is in the

budget document as prior

year appropriation is not

shown in the budget book

• Each section of the map

includes an introductory

overview that shows the

funding breakdown and

anticipated spending levels

across the CIPUse this map as a tool to talk about the budget with

your constituents learning more about their budgetary priorities

Key Takeaways -

#4 - Engage Council in goals and outcomes development – help them understand the larger picture

#5 - Transparency in data – be a resource (e.g., mapping the capital budget)

#6 Understand that neighborhood issues will usually be adopted by the Council

#7 Need to integrate comprehensive land use plan with budget outcomes

County of San Diego

Policy Analysis and Budget Process

Policy Analysis and the Budget Process

o Importance of policy analysis

o Creating financial policies

o Communicating your financial

policies

o Fiscal impact of new policies

Importance of Policy Analysis

o Every policy has a fiscal impact

This is almost always true

o Two examples

Intergovernmental revenue• How other policies impact “my” cash flow

Economic/Business impact• How “my” policies impact other cash flow

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POLLING QUESTION 6

o Does your organization require that policy

proposals contain a fiscal impact

analysis?

1. Yes

2. Yes, but the process is not always followed

3. No

Creating Financial Policies

o Align with broad government goals

o Implement best practices in the following policy areas:

• Budget • Performance

• Capital • Reserves

• Contingencies • Revenue

• Debt • and more…

• Fees

o Select government organizations in finance

• Government Finance Officers Association (GFOA)

• International City/County Managers Association (ICMA)

• National League of Cities (NLC)

• National Advisory Council on State and Local Budgeting (NACSLB)

Source: National Advisory Council on State and Local Budgeting Practice

Communicating Your Financial Policies

o Publish on public website

o Engage in dialogue with key stakeholders

• Elected officials

• Constituents

• Investors

o Budget

• A living document of short-term priorities

• Reflects policy decisions of elected officials

• Must consistently apply existing financial policies

Fiscal Impact of New Policies

o Short term

• Typically in alignment with the budget

o Long term

• Typically in alignment to maintain a long-term

financial outlook

o Job of elected official

• Goal is to weigh public benefit vs. cost of

program/service in the short and long term

Conclusion

o Do your financial policies reflect your agency’s

goals?

o What are the short- and long-term effects of

new or proposed policies?

Key Takeaway #8: You need to understand the effects of new policiesThis is the only way to provide decision makers with accurate information, allowing them to make the right decisions about your organization’s future.

Creating Long-Range

Capital Plans

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Long-Range Capital Planning GFOA Recommends

o Comprehensive

o Fiscally sustainable

o Identifies and prioritizes expected needs

based on a’ strategic plan

o Establishes project scope and cost

o Details estimated amounts of funding

from various sources

o Estimate future operating and

maintenance costs

At least three years, preferably five or more

Step 1: Identify Needs

o Governments should:

Develop a capital asset life cycle for major capital assets.

o Include costs to:

Operate

Maintain

Administer

Renew or replace the capital asset

o Identify present and future service needs that require capital infrastructure or equipment

Step 1: Identify Needs (cont)

o Attention should be given to:

Infrastructure improvements that support

private development and the good of the

public

Changes in policy or community entity needs

Incorporating input and participation from

major stakeholders and the general public

Projects with revenue-generating potential

Analyze the non-financial impacts of the

project (e.g., environmental) on the

community

Determine Financial Impacts

o GFOA recommends governments

determine the full extent of the capital

project/asset and the associated life cycle

costs

Determine Financial Impacts (cont)

o Scope and timing

o Identify and use the most appropriate approaches when estimating project costs and potential revenues

o Adjust cost projections based on anticipated inflation

o All major components Land acquisition needs

Design, construction

Contingency

Post-construction costs

o Quantify ongoing life-cycle costs Sources of funding for those costs should be identified

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Prioritize Capital Requests

o Health and safety

o Asset preservation

o Service/asset expansion/addition

Prioritize Capital Requests

o Attention should be given to:

Coordination with related entities

Allowing submitting agencies to provide an initial prioritization

Incorporating input and participation from major stakeholders and the general public

The impact on operating budget impacts resulting from capital projects

Appling analytical techniques, as appropriate, for evaluating potential projects (e.g., net present value, payback period, cost-benefit analysis, life-cycle costing, cash-flow modeling)

Using a rating system to facilitate decision-making

Develop a Comprehensive Financial Plan

o GFOA recommends

Develop a viable overall multi-year financing

plan

Covering the multi-year period of the capital

plan

Ensuring that the proposed capital plan is

achievable within expected available

resources

Develop a Comprehensive Financial Plan

o Financing strategies

Should align with expected project

requirements while sustaining the financial

health of the government.

Develop a Comprehensive Financial Plan

o Revenue and expenditure trends

o Cash flow projections

o Compliance with all established financial policies

o Recognize appropriate legal constraints

o All appropriate funding alternatives

o Sources and uses for debt service

o Affordability of the financing strategy

Capital Project Monitoring and Reporting

o The financial management of capital

projects requires a substantial

commitment of organizational time and

resources

o Given their scale and cost, capital

projects can represent a significant risk

for local governments

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Data Systems

Appropriate technological solutions

Positional roles

Process for controlling and managing project

changes

Accountability and data integrity

Data accuracy

System controls and security

Consistency and standardized language

Ease of accessing data ***

Monitoring Projects

o Plan identifies all required resources and milestones

o Scope has been clearly identified

o Project stays within scope

o Review project-related financial transactions

o Review expenditures

o Confirm continued availability / appropriateness of revenue sources

o Confirmation adequacy of cash

o Review timing of investment maturities

o Review of sources and project

o Results compared to established measures of performance

Project Status Reports

Percent of project completed

Percent of project budget expended

Progress on key project milestones

Contract status information

Revenue and expenditure activity

Cash flow and investment maturities

Funding commitments

Available appropriation

Comparison of results in relation to

established performance measures

GFOA Best Practices

Multi-Year Capital Planning

Capital Project Monitoring and Reporting

http://www.gfoa.org/best-practices

POLLING QUESTION 7

o Who is primarily responsible for tracking

capital project needs and capital

budgeting in your organization?

1. Finance / Budget Office

2. Public Works

3. City Manager / County Manager / CEO

4. Engineering

5. Other

6. Everyone works collaboratively on capital

budgeting

County of San Diego

Revenue and Expense Forecasting

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Revenue and Expense Forecasting

o Why local governments forecast

o Types of forecasting

o Goals of forecasting

o Structure of forecasting

Why Local Governments Forecast

o What problem does forecasting solve?

Identifies potential problems and issues in

future

• It’s better to look at the problem now than to look

for the problem later

Allows leaders to make early decisions

• Prompt choices enable performance in a non-

emotional environment

Examples of Major Challenges Facing Local

Governments

o Fluctuations in the economy

o Pension costs

o State budget challenges and uncertainties

o Tax base continuity

o Federal government budget deficit

o Delivering services in a new technological age

o Changing demographics of the population

o Tax and expenditure limitations

o Aging infrastructure

o Healthcare costs

o Educational attainment

o Visionary, thinking process about the

future

Solve problems, meet challenges, capture

opportunities, sustain essential services

o Link between strategic planning and

budgeting

Strategic planning sets broad goals

Budgeting is short term and tactical, and is

used to operationalize long-term strategies

Helps direct resources to highest priority

items

o Multi-year horizon

o Government-wide (all funds)

o Comprehensive content

o Institutionalized and integrated with

strategic planning and budgeting

Our Planning and Budgeting Environment

Strategic Plan5-Yr Forecast2-Yr Op Plan

BoardPrioritiesPolitical

Influences

DepartmentInitiatives

LaborAgreements

State & FederalMandates, Regulations

& Budgets

FundingOpportunities

Public Requests

Documented orPerceived Needs

ResourcesAvailable

PopulationGrowth

LocalRegulations

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Financial Planning Process Phases

o Mobilization Purpose, who leads, who participates, preliminary

financial analysis, service-level and outcome-preferences, financial policy review, and scope

o Analysis Data gathering (aka “environmental scan”), revenue

and expenditure trends, and financial balance (gap) analysis

o Decision making The organization’s response to the analysis

o Execution Budgeting, monitoring, and reporting

Source: GFOA

Types of Forecasting

o Qualitative

• Use when data is scarce or unavailable.

• EX techniques: visionary forecasts, market research, panel

consensus.

• Accuracy = poor

o Time-series analysis

• Use if data is available for several years and relationships/trends

are relatively clear.

• EX techniques: moving avg., exponential smoothing, trend

projections.

• Accuracy = poor to good

o Causal models

• Use when historical data is available & clear relationships among

variables exist.

• EX techniques: regression, econometric models, input-output,

economic-input-output.

• Accuracy = good to excellentSource: Harvard Business Review

Picking a Forecast Type and Technique

o Picking a forecast type & technique

Many factors to consider

• Size & context of government

• Accuracy & availability of historical data

• Desired accuracy of the forecast

• Time available to develop the forecast

• The value government places on the forecast

• The number of projection periods

• Cost to conduct the forecast

Remember: forecasting is an art!• But goals and structure are still valuable in forecasting.

Source: Harvard Business Review

Goals of Forecasting

o Revenue forecasting

• Project revenues for 3+ years

• Analyze government’s major revenue sources

• Seek consensus among leadership team/decision makers with final

forecast

• Get better – use forecast variances from prior years to make better

projections and/or assumptions

Source: National Advisory Council on State and Local Budgeting Practice

POLLING QUESTION 8

o How far in advance does your

organization forecast revenue?

1. 1 year

2. 2-5 years

3. 5-10 years

4. 10-20 years

5. 20 + years

Goals of Forecasting

o Expenditure forecasting

• Project expenditures for 3+ years

• Identify and explain service-level assumptions

• Develop capital improvement plan (CIP) for 5+ years

o Comparison of forecasts

• Compare revenue and expenditure forecasts

• Use the results as a tool to identify future issues or problems where

expenditures exceed future revenues

Source: National Advisory Council on State and Local Budgeting Practice

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Structure of Forecasting

o Aspects of structure

• Timeline

• Available data

• Consistent forecasting across organization

o GFOA forecasting resources

• Online Resources (www.gfoa.org)

• Printed Resources like Informed Decision Making through

Forecasting (a step-by-step guide for in-house revenue forecasting)

Case Study

BOSTON – CAPITAL PLAN

o Mayor Martin J. Walsh today presented

his $2.08 billion proposed Fiscal Year

2018 - Fiscal Year 2022 (FY18-FY22)

Capital Plan

Makes critical investments in the City's

infrastructure in every Boston neighborhood

Guided by Boston's citywide plan, Imagine

Boston 2030

• Apr 13, 2017

CITYWIDE PLANNING

IMAGINE BOSTON 2030

o Ambitious initiatives

o An ambitious set of initiatives form the

foundation of the Imagine Boston 2030

plan. Taken together, these initiatives will

support Boston's dynamic economy and

improve quality of life for residents by:

o encouraging affordability;

o increasing access to opportunity;

o promoting a healthy environment; and

o guiding investment in the public realm.

OPPORTUNITY OF GROWTH

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OPPORTUNITY OF GROWTH INCREASING POPULATION

INCREASING POPULATION AFFORDABILITY

CLIMATE CHANGE CLIMATE CHANGE

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EQUITY AND ECONOMIC OPPORTUNITY EQUITY AND ECONOMIC OPPORTUNITY

o Moving into the 21st century

o Mayor Walsh committed $1 billion over ten

years to bring Boston's school buildings into

the 21st century, and this Capital Plan

launches that investment with funding for:

o 21st century classrooms;

o MSBA Accelerated Repair Program

partnerships;

o Completion of projects in the pipeline; and

o Reserves for future projects identified by

BuildBPS community engagement.

o Core initiatives

o Boston, in collaboration with State and Federal sources, will invest $709 million over the next five years in implementing the core initiatives outlined in Go Boston 2030:

o streets that are safer for all users of our roads and sidewalks, particularly pedestrians and cyclists;

o travel that is more reliable and predictable; and

o quality transportation choices that improve access to interconnect our neighborhoods for all modes of travel.

FY2018 CAPITAL PROJECTS

Key Takeaway # 1: Name of TakeawayOne sentence explanation

FY2018 CAPITAL BUDGET

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FY2018 CAPITAL BUDGET FY2018 CAPITAL BUDGET

124

CAPITAL PROJECTS CAPITAL PROJECT FINANCING

Fiscal Years 2018 - 2022

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DEBT SERVICE DEBT SERVICE REQUIREMENTS

Fiscal Years 2015 - 2022

OUTSTANDING PRINCIPAL BY STATUTE

(a/o 4/30/17)

OPEN BUDGET FY 17 SNAPSHOT

IMAGINE BOSTON

County of San Diego

Communication and Collaboration

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Communication and Collaboration

o Need for communication & collaboration

o Types of communication & collaboration

o Purposes of communication & collaboration

Need for Communication and Collaboration

o Tone set at the top

It filters down based on leader’s priorities

o Reasons to communicate & collaborate

Accuracy and control

• To understand and determine variances

Ethical behavior

• To safeguard public resources

Excellence and performance

• To meet audit requirements and exceed operational

expectations

Source: Financial Management for Public, Health, and Not-for-Profit Organizations

Types of Communication

o Verbal

• Sounds, language & tone of voice

o Auditory

• Listening & hearing

o Non-Verbal

• Facial expressions, body language & posture

o Written

• E-mails, memos & other recorded text

o Visual

• Pictures, symbols & other representations

Source: Department of Labor

Types of Collaboration

o Collaboration combinations

Open or closed network?

Flat or hierarchical governance?

o Elite circle

• Closed and hierarchical collaboration

o Innovation mall

• Open and hierarchical collaboration

o Innovation community

• Open and flat collaboration

o Consortium

• Closed and flat collaboration

Source: Harvard Business Review

Purpose of Communication and Collaboration

o For making decisions

o To maintain and understand operational

impacts

o For public consumption

• Long-term forecasts

• Budget

• Quarterly reports

SD Example: Making Decisions

o Group finance director model

o Facilities planning board

• Capital Improvement Needs Assessment (CINA)

• Major Maintenance Improvement Plan (MMIP)

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SD Example: Operations

o Quarterly Meetings with CAO

o Cost Commission

• Internal Service Fund (ISF) rates

SD Example: Public Consumption

o Tips for creating a public document

Hire and train the right people

• Give employees a baseline of knowledge according to

agency standards

Document expectations

• Develop clear processes and procedures

Discuss changes for upcoming fiscal year

Encourage budget office to work with departments on

a draft

Invite stakeholders to edit draft until it is finalized and

published

Communication and Collaboration

o Do you know your communication and

collaboration style?

o With what purpose do you communicate and

collaborate?

Working with Other

(Non Budget) Departments

Collaborative Budgeting Successful Budget Process

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Successful Budget Process Collaboration Essentials

Budget Collaborators Questions for Collaborators

From the Beginning To Budget Completion

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Budgets reflect an organization’s priorities

o The relationship between budgets and

priorities is critical for good planning

o Division heads give preferential treatment

to proposals that directly support the

priorities

o There’s a finite amount of funds, and

priorities help us determine how best to

use them

o Departments submit plans to their division

head, explaining why their projects are

important and how they support priorities

o The division heads, in turn, review the

proposals and develop their division-wide

budgets

Budget Cycle

o

Unlocking Boston’s budget

o Until this year, three books, 860 pages, and almost three inches of data-rich Boston budget and performance information was buried in a PDF format.

o This year, the Budget Office worked closely with the City’s Digital Team to unlock this budget information with the public in three new ways: an in-depth budget website, a quick 100-second video on how the budget works, and live streams of budget presentations on Facebook and YouTube.

POLLING QUESTION 9

o What is the biggest challenge in getting

departments to work more

collaboratively?

1. Trust issues

2. Not enough time (collaboration is time

consuming)

3. Departments don’t understand budget

process

4. No executive commitment

5. Lack of process

Case Study: County of San Diego

GFOA Better Budgeting WebinarSeptember 2017 Internal Communication

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INTRODUCTION

157

• Most southwestern countyin the United States

• 4,526 square miles with 70 miles of coastline

• 3.8 million residents (2016)

o 2nd most populous countyin California

o 5th most populous countyin the U.S.

• Fiscal Year 2017-18

o Total budget = $5.79 billion

o Workforce = 17,413 staff years

COUNTY OVERVIEW

Public Safety$1,836.1M

31.7%

Health & Human Services

$1,914.4M33.1%

Land Use & Environment

$511.8M8.8%

Community Services $328.6M

5.7%

Finance & General Gov’t

$409.1M7.1%

Capital Program $154.1M

2.7%

Finance Other$632.3M

10.9%

Total Adopted Budget: $5.79 billion

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• Five-member elected Board of Supervisors

• Five business groups headed by a Deputy Chief Administrative Officer (DCAO)

• DCAO of Finance and General Government is also the Auditor & Controller

o Office of Financial Planning

GOVERNANCE

Mission: To provide comprehensive financial planning, policy oversight, advisory services,

and administration of community grant programs to ensure stability, integrity and

promote accountability and transparency in government to foster public confidence.

159

• Business model that guides all County operations

• Annual cycle drives financial planning and budgeting

• Begins with strategic planning

GENERAL MANAGEMENT SYSTEM

160

LONG-TERM FINANCIAL PLANNING

161

WHERE DO WE WANT TO BE IN FIVE YEARS?• Goals for the County and community

• Defines internal County culture

STRATEGIC PLANNING

162

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FIVE-YEAR FINANCIAL FORECAST

INTERNAL PROCESS FOR ALL FUNDS• Comprehensively anticipates expenditures, revenues, and any gaps

• Not a five-year budget, but first two years become basis for budget

• Subject matter experts

• Identify operational needs and forecast expenditures/revenue

County Departments

• Coordinate input from departments

• Identify Group needs and constraints

DCAOs and Group Finance Directors

• Provides framework/tools and compiles results

• Establishes County-wide assumptions for salaries and benefits, ISF rates

• Communicates County priorities

Office of Financial Planning

163

STRATEGIC FACILITIES PLANNING• Identifies future business needs and physical environments

o Capital Improvements Needs Assessment (CINA)

o Major Maintenance Improvements Plan (MMIP)

o Essential Infrastructure program: 50+ year-old buildings

CAPITAL PLANNING

164

MEETING OF CAO and DCAOs• Share results of Five-Year Financial Forecast

• Discuss enterprise-level issues including capital needs

• Integrate any revisions to Strategic Plan

EXECUTIVE OFFSITE WORKSHOP

165

COORDINATED BY CAO WITH DCAOs• General Purpose Revenue

• One-time use of fund balance(s)

RESOURCE ALLOCATION

166

BUILDING THE BUDGET

167

FROM THE TOP DOWN…

• Operational Plan Kickoff meeting

o Shares assumptions and rates

o Identifies enterprise-level issues and changes

o Provides “standard language” for consistency

• County-wide training for budget and operational staff

• Operational Plan User Guide

COUNTY-WIDE COMMUNICATION

168

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FROM THE BOTTOM UP…

• Departments develop their budget(s)

o Expenditures and revenues

o Accomplishments and objectives

o Performance measures

• Office of Financial Planning reviews and edits

• Departments, groups, and executive stakeholdersfinalize drafts

BUDGET DEVELOPMENT

169

ONGOING BUDGET MONITORING

170

FROM LEADERSHIP

• Quarterly all Fiscal Staff meetings

• Monthly meetings with DCAO and departments

• Internal department meetings

FINANCIAL COMMUNICATION

171

TO LEADERSHIP

• Quarterly Executive Management Exchange

o Reports to CAO and other key executives

o Focus changes each quarter

o Generates discussion

FINANCIAL COMMUNICATION

172

QUARTERLY ACTION BY THE BOARD OF SUPERVISORS

• Public hearing

o Projects year-end results

o Updates on County financesand economy

o Identifies key issues/risks

• Incorporated into next Five-Year Financial Forecast

BUDGET ADJUSTMENTS

173

Understanding the Budget

Document

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Budget Transparency

Budget transparency, while not a goal in itself, is a

prerequisite for public participation and

accountability. A budget that is not transparent,

accessible, and accurate cannot be properly

analyzed. Its implementation cannot be

thoroughly monitored nor its outcomes evaluated.

POLLING QUESTION 10

o Describe the level of online budget

transparency in your organization.

1. We do not post anything online

2. We post a PDF of the budget document

3. We post a PDF of the budget document

along with other important reports, plans,

and documents

4. We have a financial transparency website

that is updated frequently

5. We have interactive dashboards/queries that

allow citizens to view financial information

GFOA Budget Award Winners Using PDF Files

Town of Queen Creek, Arizona

Quick Reference Guide

County of Chester, Pennsylvania

Document Mapping

Arlington Heights Park District, Illinois

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Budget in Brief

City of Oceanside, California

Issue Discussion

Smith County, Texas

From the transmittal letter...........

City of Lawrence, Kansas

This year, the method by which funds are budgeted changed rather dramatically. This was done in an effort to reduce some of the transfers occurring between funds, which complicated the ability to fully understand the budget. Another purpose for the restructuring was to include funds that were previously not budgeted, such as grant funds, in order to increase transparency to the public.

Purpose of Debt Obligations

Gallatin County, Montana

Prioritization

Town of Windsor, Colorado

Priority I: IMPERATIVE (Must-Do) – Projects that cannot reasonably be postponed in order to avoid harmful or otherwise undesirable consequences.

A. Corrects a condition dangerous to public health or safety B. Satisfies a legal obligation C. Alleviates an emergency service disruption or deficiency D. Prevents irreparable damage to a valuable public facility.

Priority II: ESSENTIAL (Should-Do) – Projects that address clearly demonstrated needs or objectives.

A. Rehabilitates or replaces an obsolete public facility or attachment thereto B. Stimulates economic growth and private capital investment C. Reduces future operating and maintenance costs D. Leverages available state or federal funding.

Priority III: IMPORTANT (Could-Do) – Projects that benefit the community but may be delayed without detrimental effects to basic services.

A. Provides a new or expanded level of service B. Promotes intergovernmental cooperation C. Reduces energy consumption D. Enhances cultural or natural resources.

Priority IV: DESIRABLE (Other Year) – Desirable projects that are not included within five-year program because of funding limitations.

Departmental Financials

Town of Avon,

Connecticut

City of Olympia, Washington

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Explain Charts and Tables

Palm Beach County

Clerk of the Circuit

Court, Florida

Still the Best Deal Around

, Texas

Coachella Valley Water District, California

Transparency Grades Mobile Apps

City of El

Paso, Texas

Transparency Takeaway

o Modern governmental budgeting includes

more than a financial plan

Build on the budget document with

Community focused content

Illustrations of the information focused on your

audience

Use of visualization technologies, and

Relevant non-financial information as wellKey Takeaways:9. Make the budget document easy to navigate10. Budgets should focus on the entire community11. Budget transparency goes beyond just financial data

POLLING QUESTION 11

o What do you feel is the biggest challenge

to overcome in building a better budget?

1. Uncooperative elected officials

2. Lack of attention on budget process

3. Lack of time

4. Lack of technology resources

5. Poor communication internally

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Key Takeaways:1. Identify appropriate stakeholders and get them involved, especially

up-front2. Communicate key dates and expectations. Communicate results

and decisions.3. Remember your purpose and mission and commit to it4. Engage Council in goals and outcomes development – help them

understand the larger picture5. Transparency in data – be a resource (e.g., mapping the capital

budget)6. Understand that neighborhood issues will usually be adopted by the

Council7. Integrate comprehensive land use plan with budget outcomes8. Understand the effects of new policies9. Make the budget document easy to navigate10.Budgets should focus on the entire community11. Budget transparency goes beyond just financial data