Embracing the Decade of Local Government Jon Johnson & Chris Fabian November 21, 2013 1
Nov 02, 2014
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Embracing the Decadeof
Local Government
Jon Johnson & Chris Fabian
November 21, 2013
Alliance for Innovation
A Community Shaping the Future of Local Government
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A Brief Introduction
JON JOHNSON
CHRIS FABIAN
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“…the next decade (for local government) will be a time in which the fiscal woes of federal and state governments will leave local and regional governments on their own, struggling to balance the need for innovation against the necessity of making touch choices.”
Robert O’Neill, Executive Director of ICMA
June 27, 2013
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“Washington paralysis is already leading to a power inversion. As the federal government becomes less energetic, city governments become more so.”
Columnist David BrooksJune 6, 2013
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Preparing for a Better Future… The Tools of Fiscal Health & Priority Based Budgeting
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Achieving Fiscal Health & Wellness
2 Strategic Initiatives
Fiscal Health Long-term Fiscal Wellness
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CPBB Publications on Fiscal Health & Wellness
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ACHIEVING FISCAL HEALTH
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Strategic Questions • How much do we have available to spend?
- (not “How much do you need”?)
“Spend Within Our Means”
• Why do we need to keep “money in the bank”?
Establish & Maintain Reserves
• What’s the “difference”?Understand Variances (Budget to Actual)
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Strategic Questions “It costs how much”????????
Transparent About “True Cost of Doing Business”
“What’s the plan and what could cause it to
change?Economic Analysis & Long-Term Planning
What does the future look like? What if………..???
“Fiscal Health Diagnostic Tool”
Tools of Fiscal Heath
• “ONGOING vs. ONE-TIME” Sources and Uses Analysis
• Published “Revenue Manual”
• Inventory of Fund Balance Reserveso Supported by written Fund Balance Reserve Policies
• “Budget to Actual” Variance Analysis
• “Cost Allocation Plan” or “Program Cost Analysis”
• Long-range, Multi-year Financial Forecastso Supplemented by multi-year Five-Year One-Time Spending Plan (CIP)
• Graphic Depiction of “Picture of Fiscal Health”16
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Differentiate Ongoing and One-
time
Tools of Fiscal Heath
• “ONGOING vs. ONE-TIME” Sources and Uses Analysis
• Published “Revenue Manual”
• Inventory of Fund Balance Reserveso Supported by written Fund Balance Reserve Policies
• “Budget to Actual” Variance Analysis
• “Cost Allocation Plan” or “Program Cost Analysis”
• Long-range, Multi-year Financial Forecastso Supplemented by multi-year Five-Year One-Time Spending Plan (CIP)
• Graphic Depiction of “Picture of Fiscal Health”18
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Published “Revenue Manual”
Tools of Fiscal Heath
• “ONGOING vs. ONE-TIME” Sources and Uses Analysis
• Published “Revenue Manual”
• Inventory of Fund Balance Reserveso Supported by written Fund Balance Reserve Policies
• “Budget to Actual” Variance Analysis
• “Cost Allocation Plan” or “Program Cost Analysis”
• Long-range, Multi-year Financial Forecastso Supplemented by multi-year Five-Year One-Time Spending Plan (CIP)
• Graphic Depiction of “Picture of Fiscal Health”20
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Fund Balance Reserve – the “Right”
Level
Baseline recommendation (General Fund)– o 5% to 15% of operating revenueo 1 to 2 months operating expenditures
Adjust for:o Historic Events and Past Experienceo Government Sizeo Revenue Stabilityo Future Capital Needs
Tools of Fiscal Heath
• “ONGOING vs. ONE-TIME” Sources and Uses Analysis
• Published “Revenue Manual”
• Inventory of Fund Balance Reserveso Supported by written Fund Balance Reserve Policies
• “Budget to Actual” Variance Analysis
• “Cost Allocation Plan” or “Program Cost Analysis”
• Long-range, Multi-year Financial Forecastso Supplemented by multi-year Five-Year One-Time Spending Plan (CIP)
• Graphic Depiction of “Picture of Fiscal Health”22
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Types of Variance Analysis
• Revenues & ExpendituresoBudget to Actual oHistorical year to year actualsoCyclical trendsoOngoing vs. one-time occurrence
• Multi-year Capital ProjectsoEliminate Carry-forwardsoAvoid excessive “change orders”
Tools of Fiscal Heath
• “ONGOING vs. ONE-TIME” Sources and Uses Analysis
• Published “Revenue Manual”
• Inventory of Fund Balance Reserveso Supported by written Fund Balance Reserve Policies
• “Budget to Actual” Variance Analysis
• “Cost Allocation Plan” or “Program Cost Analysis”
• Long-range, Multi-year Financial Forecastso Supplemented by multi-year Five-Year One-Time Spending Plan (CIP)
• Graphic Depiction of “Picture of Fiscal Health”24
How to Identify Program Costs
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1) Associate Salary & Benefit Costs with your Personnel
2) Assign Personnel to the Programs they Provide
3) Associate Non-Personnel Costs with Programs
4) Line item Budget is now expressed as a Program Budget!
1) Associate Salary & Benefit Costs
with your Personnel
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• Key is understanding how personnel line items are distributed (per FTE, on a percentage of salary basis, etc.)
2) Assign Personnel to the Programs they Provide
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• Estimate for a given year (this is not a time study!)• Accuracy, not precision, is the goal • Can’t allocate an FTE over 100% (no matter how overworked they think
they are)
3) Associate Non-Personnel Costs
with Programs
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• Choose a reasonable allocation methodology:• Divide costs by FTE (i.e. supplies line item)• Assign costs directly to program (i.e. annual audit)
Tools of Fiscal Heath
• “ONGOING vs. ONE-TIME” Sources and Uses Analysis
• Published “Revenue Manual”
• Inventory of Fund Balance Reserveso Supported by written Fund Balance Reserve Policies
• “Budget to Actual” Variance Analysis
• “Cost Allocation Plan” or “Program Cost Analysis”
• Long-range, Multi-year Financial Forecastso Supplemented by multi-year Five-Year One-Time Spending Plan (CIP)
• Graphic Depiction of “Picture of Fiscal Health”29
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Let’s Look through a Different
Lens!
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“FISCAL HEALTH DIAGNOSTIC TOOL” –
Tell the Story with a “Picture”
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Live Demonstration of
“Fiscal Health Diagnostic Tool”
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Achieving Long-Term Fiscal Wellness
Strategic Questions
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• What are we in business to do?Determine Results
Clarify Results Definitions
• What exactly to we do?Identify Programs and Services
• What do we do that is of highest importance?Value Programs Against Results
• How do we allocate resources to Community Priorities?Look Through a “New Lens” that Leads to Better
Conversations
Tools of Fiscal Wellness • Identify Community “ RESULTS”
o Supplemented by Internal Organization’s “Governance” Results
• Communicate meaning of Results using “RESULTS MAPS”
• Inventory of Programs and Serviceso Supported by associated Program Costs; Program Revenues
and FTE
• Evaluate “what we do” against “what we are in business to do”
• Allocate resources based on Community Prioritieso Looking through the “NEW LENS” of the “Resource
Alignment Diagnostic Tool” 35
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What are “Results”• High-level and over-arching reasons the
organization exists in the eyes of the community
• Remain consistent and unchanged over time
• Comprehensive
• Distinguished from (i.e. “Results” are not…)o Vision or Mission Statementso Organizational Values
• How we want to achieve our resultso “Marketing” statements
• Look and feel of the communityo Specific short-term, projects, goals or initiatives
Tools of Fiscal Wellness • Identify Community “ RESULTS”
o Supplemented by Internal Organization’s “Governance” Results
• Communicate meaning of Results using “RESULTS MAPS”
• Inventory of Programs and Serviceso Supported by associated Program Costs; Program Revenues
and FTE
• Evaluate “what we do” against “what we are in business to do”
• Allocate resources based on Community Prioritieso Looking through the “NEW LENS” of the “Resource
Alignment Diagnostic Tool” 37
Clarify Result Definitions (Result Maps)
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City of Boulder, CO Results
• Accessible & Connected Community
• Economically Vital Community
• Healthy Environment & Community
• Inclusive & Socially Thriving Community
• Safe Community
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The City of Wheat Ridge, Colorado
SAFE COMMUNI
TY
Offers and supports a variety of safe activities
and facilities that provide for the physical health and social well-being of
the community Fosters a feeling of personal safety throughout the community by
establishing a visible, accessible presence that proactively provides for
prevention, intervention, safety education, and
community involvement
Offers protection, enforces the law and is
well-prepared to promptly and effectively respond to emergencies and calls for
serviceCreates a secure, well-
regulated, well-maintained community that is healthy, clean, well-lit and visually
attractive
Provides for a safe transportation network that is well-maintained,
accessible, enhances traffic flow and offers safe
mobility to motorists, cyclists and pedestrians
alike
Provides for the protection and
sustainability of the environment through
regulatory compliance, planning and effective
stormwater management
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The Town of Christiansburg, Virginia
GOOD GOVERNANCE (Sound Financial
Entity)
Provides assurance of regulatory and
policy compliance to minimize and mitigate risk
Protects and prudently manages its financial, human,
physical and technology resources
Enables and enhances
transparency, accountability,
integrity, efficiency and innovation in all
operationsResponsive,
accessible and courteous to its
customers
Supports decision-making with timely and accurate short-
term and long-range analysis
Attracts, motivates and develops a
high-quality workforce,
dedicated to public service
Tools of Fiscal Wellness • Identify Community “ RESULTS”
o Supplemented by Internal Organization’s “Governance” Results
• Communicate meaning of Results using “RESULTS MAPS”
• Inventory of Programs and Serviceso Supported by associated Program Costs; Program Revenues
and FTE
• Evaluate “what we do” against “what we are in business to do”
• Allocate resources based on Community Prioritieso Looking through the “NEW LENS” of the “Resource
Alignment Diagnostic Tool” 41
Identify “Programs” within Departments/ Divisions
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Departments develop their own “program” inventories
Comprehensive list of “what we do”
Comparing relative value of programs, not relative value of departments
Goldilocks & the Three Bears: Not too big, not too small, just right!TOO BIG =
Departments/DivisionsTOO SMALL = Tasks JUST RIGHT = Measure relative
size based on costs/people associated with program to more discretely demonstrate how resources are used
CITY OF BOULDER, COLORADODepartment Program Inventory
Fund No.
Department Providing Program Program Name
010 Community Planning & Sustainability General Business Assistance010 Community Planning & Sustainability Business Retention and Expansion010 Community Planning & Sustainability Business Incentive Programs
010 Community Planning & SustainabilityBusiness Partnerships and Sponsorships
140 Community Planning & Sustainability Energy Decarbonization140 Community Planning & Sustainability Green Job Creation140 Community Planning & Sustainability Climate Adaptation Planning
112 Community Planning & Sustainability Comprehensive Planning112 Community Planning & Sustainability Intergovernmental Relations112 Community Planning & Sustainability Historic Preservation112 Community Planning & Sustainability Ecological Planning
Directions: For all of the programs and services in your department, identify the program name. When completed, please e-mail the Program Inventory back to Jim Reasor
Monday, July 26, 2010
City of Boulder, Colorado
Tools of Fiscal Wellness • Identify Community “ RESULTS”
o Supplemented by Internal Organization’s “Governance” Results
• Communicate meaning of Results using “RESULTS MAPS”
• Inventory of Programs and Serviceso Supported by associated Program Costs; Program Revenues
and FTE
• Evaluate “what we do” against “what we are in business to do”
• Allocate resources based on Community Prioritieso Looking through the “NEW LENS” of the “Resource
Alignment Diagnostic Tool” 43
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Score Programs Against Results & Attributes
City of Boulder’s ResultsBasic Program Attributes
• Accessible & Connected Community
• Economically Vital Community
• Healthy Environment & Community
• Inclusive & Socially Thriving Community
• Safe Community
Mandated to Provide the Program
Reliance on the City to Provide the Program
Cost Recovery of the Program
Change in Demand for the Program
Size of Population ServedAnd/or any other criteria
that is relevant to your community
Identify “Value” of Program Based on their Influence on
Results
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Individual Department Program Scorecard
Mandated to Provide Program
Cost Recovery of Program
Change in Demand for
Service
Reliance on City to Provide
ServiceSafe City
Prosperous Economy
Green, Sustainable
City
Attractive, Vibrant
Community
Reliable, Well-
Maintained Infrastructur
e
0-4 Scale (4=State/Federal
Mandate; 2=Charter; 1=Ordinance/Resolution; 0=No Mandate)
0-4 Scale based on Percentage
(4=75-100%; 3=50-74%; 2=25-49%; 1=1-
24%)
-4 to 4 Scale ('-4=demand
significantly decreasing; 4=demand
significantly increasing)'
0 to 4 Scale (4=Only City can provide service; 2=Only public
entities can provide service; '0=other
entities can provide service)'
Department Program Enter Score Below Enter Score Below Enter Score Below Enter Score Below Enter Score Below Enter Score Below Enter Score Below Enter Score Below Enter Score BelowOffi ce of Economic
DevelopmentBusiness Attraction/ Expansion Assistance
4 2 4 4 2 4 3 2 0
Offi ce of Economic Development
International Business Relations/Sister City
0 1 2 2 0 2 1 1 0
Offi ce of Economic Development
Economic Strategy, Policy and Analysis
1 2 4 2 0 3 3 2 0
Offi ce of Economic Development
Downtown Management 1 2 4 4 3 2 0 3 4
Offi ce of Economic Development
Arts / Festival Grants and Assistance
1 1 3 0 1 3 1 4 1
Offi ce of Economic Development
K-12 Arts Education 0 0 2 0 1 2 0 4 0
Offi ce of Economic Development
Cultural Planning, Policy and Initiatives / Arts
Commission
1 0 2 4 1 3 1 4 1
Offi ce of Economic Development
Public Art Project Management
1 1 2 0 1 2 2 4 3
Offi ce of Economic Development
Public Art Master Plan Implementation and
Interagency Coordination
1 1 3 0 1 2 1 4 2
On a scale of 0 to 4 points, 0 = program has no influence on achieving the Result; 1 = program has some influence, though minimal; 2 = program
influences the Result; 3 = program has a strong influence on the Result; 4 = program is essential to achieving the Results
Directions: For all the programs in your department, please rate how these programs score in the four Basic Attributes and they influence the City’s ability to achieve its Priority Results. When completed, please email the Program Scorecard back to [email protected]
Thursday, January 28, 2010 Evaluation CriteriaBasic Program Attributes Priority Results
Tools of Fiscal Wellness • Identify Community “ RESULTS”
o Supplemented by Internal Organization’s “Governance” Results
• Communicate meaning of Results using “RESULTS MAPS”
• Inventory of Programs and Serviceso Supported by associated Program Costs; Program Revenues
and FTE
• Evaluate “what we do” against “what we are in business to do”
• Allocate resources based on Community Prioritieso Looking through the “NEW LENS” of the “Resource
Alignment Diagnostic Tool” 46
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“Looking Through the “New Lens”
• Which programs are of the highest priority in terms of achieving what is expected by the community? o And which are of lesser importance?
• Which programs are truly mandated for us to provideo And how much does it cost to provide them?
• Which programs are offered because they are “self-imposed” ?
• Which programs are offered for which there are no other service providers?
• Are there programs might lend themselves to public/private partnerships?
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“Looking Through the “New Lens”
• Who in the private sector is offering programs that are similar in nature?o And should we consider” getting out of that business”?
• Which programs are experiencing an increasing level of demand from the community? o And which are experiencing a decreasing need?
• Are there programs offered that are not helping us achieve our intended “Results”?
• What are we spending to achieve our “Results”?
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“Resource Alignment Diagnostic Tool”City of Boulder, CO
Quartile Ranking Programs in ArrayQrt 1 88
Qrt 2 116
Qrt 3 1102-10%Qrt 4 54
TOTALS 368
October 30, 2012
Community-Oriented Programs
All Departments
Funding Source: (Est. Budget, Gen Gov Revenue,
Program Revenues)
Total Estimated BudgetCity-wide
Prioritization Perspective: (City-wide, Fund, Funds)
Choose Department: (All Departments, Specific)
Program Type: (All Programs, Governance,
Community-oriented)
$00.00%
0.00%
$0
$0
$85,915,772
$21,505,297
$51,726,155
0.00%
$0
$0
$0 $85,915,772
$51,726,155 0.00%
$0 $166,646,067 0.00% $0 $166,646,067
2012-13 Proposed Budget Increase (Reduce) % Impact 2012-13 Target Budget
$0
$0
2011 Budget
$7,498,842
$21,505,297
$7,498,842
$85,915,772
$51,726,155
$21,505,297
$7,498,842
$- $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 $90,000,000 $100,000,000
1
2
3
4
Quar
tile R
anki
ng(Q
uarti
le 1:
Hig
hest
Rat
ed Pr
ogra
ms;
Quar
tile 4
: Low
est R
ated
Prog
ram
s)
Priority Based Budgeting: Spending Array Perspectives
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Live Demonstration of
“Resource Alignment
Diagnostic Tool”
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Thank You !
Jon Johnson, Co-Founder Chris Fabian, Co-Founder303-909-9052 (cell) 303-520-1356 (cell)[email protected] [email protected]
www.pbbcenter.org
Copyright ©2009 by Chris Fabian and Jon Johnson d/b/a the Center for Priority Based Budgeting,
Denver, Colorado.
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