Priority Setting for Budgeting 11.17.14

Priority Setting for BudgetingFGFOA SCHOOL FOR GOVERNMENT FINANCENOVEMBER 19, 2014MELANIE D. PURCELL, CPFO – OPENGOV, INC.

What is Priority Setting in the Budget?

“Priority setting is a process by which an entity articulates the functions or programs considered most important to the attainment of service goals and objectives to be pursued…” Roland Calia, Priority-Setting Models for Public Budgeting, GFOA

* Limited Resources + Unlimited Demands = something doesn’t get funded or pursued.

* The budget is the most important policy document the organization will adopt, communicating policies, priorities, resources and uses, services, challenges, opportunities, and organizational structure.

* Regardless of legislative, economic, or environmental constraints, we use our resources for what matters most to us.

Priority Setting is always happening

“If you choose not to decide, you still have made a choice.” (Rush, Freewill)

Informal Formal

Internal

External

Priority and Goal Setting Goals/ Priorities

Budget Adoption

Implementation

Evaluation

Effective Priority Setting in the Budget

All Methods

* Carry forward for multiple years

* Apply equally in lean or lush times by guiding reductions and increases

* Output is publicly adopted in the budget

Formal Methods

* Defensible, i.e. consistent and defined

* Transparent; increases understanding and trust

* More and better information

Key components of a priority setting program

* Content and focus◦ Education: Context, Perspective, ◦ Communication: Incoming and Outgoing◦ Framework

* Structure and methods◦ Education and Communication Plans◦ Priority Setting Model Elements◦ Understandability and Usability (internal and external

Education- Definitions and Language

Participants and observers need to understand how priorities are set and for what purpose. Explain issues, challenges, parameters, resources, and demands. Identify what outcome is desired from the process.

TIPS

* Provide clear definitions- ensure everyone has the same glossary for terms. i.e. public safety means…

* 3rd to 5th grade reading level makes it easier for all participants to gain a similar understanding

* Avoid advanced vocabulary and complex sentence structures to minimize misinterpretation

Education- Context and Perspective

* Context and Perspective:◦ “The City spent $12 million on Police services last year”

◦ Compare to prior year◦ Compare to other services and departments◦ Compare to other agencies with similar demands and situation◦ Show how much revenue was received for Police services last year

Communications- Plan before starting

Outgoing- Providing information to priority setting participants for use during process. ◦ Multiple media: print, electronic, audio ◦ Multiple styles: narrative, pictures, charts, & graphs, language styles◦ Frequent and repeated◦ Consistent and comprehensive◦ ACCURATE

Incoming- Receiving information from participants with which to compile priorities◦ Multiple methods◦ Multiple points in the process◦ Ensure equal voice and opportunity to participate◦ Acknowledge input

Framework Provide a structure for priorities and goals

◦ Input or Output driven or both◦ Service categories◦ Recipient categories◦ Geographic categories◦ Stakeholder categories◦ Goals with priorities

Provide a process framework◦ Participants◦ Outcomes desired/ Expectations◦ Timeline for process and for priorities

Participants Internal-

◦ Legislative Body◦ Staff◦ Leadership

◦ Managers◦ Unions◦ Staff

External◦ Legislative Body◦ Staff◦ Leadership◦ Citizens◦ Advocate/ Special Interests

Framework- Indirect Priorities Have to

◦ Legal mandates◦ Charter/ Local ◦ State/ Federal◦ Financial

Need to◦ Community Reality

◦ Financial◦ Socio-economic◦ Health, Safety, and/or Welfare

Want to◦ Value of community and/or leadership

Structure- Define the Process

Identify Issues

Identify Goals to Address Issues

Objectives for Goals

Evaluate Programs &

Projects

Develop Budget

Workplans

Define the Process; Customize it

Identify Issues

Identify Goals to Address Issues

Objectives for Goals

Evaluate Programs &

Projects

Develop Budget

Workplans

What will improve this specific concern or situation?

What does improvement look like?

What steps take us there?

How do we know what progress or success looks like?

How do these steps get taken? What resources are needed and what are we willing to give up?

Between Framework & Structure Priority setting is about choosing between issues and related solutions

* Identify the issues

* Prioritizing the issues

* Identifying possible solutions

* Prioritizing the solutions

Issue is Identified, then…Input/

Implementation

AssignmentOutcome

Goal

Objectives

Action Steps

Action Steps

Objectives Action Steps

Too much crime in our neighborhoods

How much does each

Action Step cost?

How is success

defined and measured?

Action Steps

Fewer incidents

and opportunity

Less crime

Reduce crime

Reduce Opportunity for

Crime

Start and support Neighborhood

Watch

# trained neighborhood

leaders

Increase crime prevention education

# of monthly meetings and

attendees

Increase arrests to reduce activity

Increase patrols in neighborhoods

# of arrests by beat patrol

Targeted Task Force

# of arrests by Task Force

Define the discussionPrioritizing issues & prioritizing solutionsToo much crime

Reduce crime

Increase Patrols

Create Targeted Task Force

Places for kids to playCreate play

opportunities

Add Parks

Add activities

People need jobs

Grow more businesses to hire people

Expand business loans

Waive development fees

Evaluation- Influencing Factors We have a list of Issues, Solutions, and Resources; NOW WHAT?

Identify the various factors that influence each issue and options including:◦ Financial Resources- How much does it cost?◦ Human Resources- How many people are needed to implement it?◦ Other Resources- What other resources need to be dedicated to this?◦ Legislative Impact- Does it require changes in local, state, or federal law, guidelines, or policies?◦ Impact on other operations- Do other services have to be adjusted to make this happen?◦ Educational Needs: what kind of publicity or public education will be needed to implement it◦ Affected Parties: Has everyone to be affected been identified and, if intended, been contacted?◦ Affected Parties: How many people, especially relative to the total possible, will be affected?◦ Affected Parties and Alternatives: How critical is this to the affected parties’ health, safety, and wellbeing?◦ Timeframe: How quickly will this affect stakeholders?

Identify those issues and factors that cross your mind as you evaluate your decision.

Evaluation- Weighting & Ratings Think of how important each of the factors is on making your decision. Do one or two of them make the decision, regardless of the answers to the others? Rank the factors in order of importance to the decision. Then determine how much relative importance each factor has. Consider the total bucket as worth 100 points, then assign each factor a certain number of points that reflects how important it is to the discussion. This represents its weight or the maximum value the answer to that factor can have.

For each issue and option, assign a value to each factor, based on the maximum number of points it can have to influence the decision.

Add up all the assigned points per issue and option, and rank by total value.

The points assignment is one method for establishing weighting and ratings. Others include Grades (A-F) and Yes/No.

Linking the Priorities to the Budget

Community & Organizational Goals

Department Goals

Department Work Plan

Performance Measures

Priorities become the BudgetBudget Work Plan

Organizational Structure; Processes; Procedures

Financial Assignments

Reporting Back

Understandability & Usability Consistent- similar methods are used over time; regular and routine communication updates stakeholders.

Comprehensive- Encompasses all aspects of operations or operations & capital; can be broken down but does not evaluate in isolation.

Accurate- Information is made available to all parties and is based on facts; errors are corrected quickly and clearly.

Timely- Deadlines are anticipated and programmed into the process.

Simplicity- make it easy for stakeholders to understand.

Questions? Melanie Purcell

[email protected]

[email protected]

More than 150 governments in 30 states use OpenGov to access, analyze, and share financial data. OpenGov's web-based platform empowers senior executives to see trends, drill down to transaction-level details, and compare actual spending to the budget. It also enables governments to share the financial data with elected officials and the public to improve communication and build trust.