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BUDGETING BEYOND THE BASICS
Adding context, driving innovation and making better decisions through a more comprehensive budget process
WHAT MAKES A GOOD BUDGET??
Adheres to a GASB and GAAP Balanced and Sustainable
A link between operations and policy objectives
Funds community priorities Communicates effectively More proactive than reactive
IMPLICATIONS OF LINE ITEM BUDGETING Repetition implies inherent value Doesn’t explain outcomes Doesn’t report performance Doesn’t drive innovation Works best with stability Creates a reactive model Good for accountants
LOOK FAMILIAR?
Account #
2013 Actual
2014 Estimated
2015 Budget
2016 Budget
12100 Salaries 1,010,808 1,010,808 1,085,000 1,090,500
12200 Overtime 19,989 32,000 20,000 21,000
12600 Materials 43,921 42,500 44,000 45,000
13100 Insurance 19,244 17,986 17,986 18,000
14100 Utilities 9,850 10,050 10,000 10,250
15100 Task Force 5,000 5,000 5,000 5,500
22100 Delta County 8,000 8,000 9,000 9,000
22800 SWAT 585 625 750 800
31600 Rental 2,225 2,225 2,225 2,500
35500 Equipment 8,000 7,800 8,500 9,000
Total 1,127,622 1,136,994 1,202,461 1,211,550
SIMPLE TOOLS WITH BIG PAYOFF
Establishing Priorities and Desired Outcomes
Understanding True Cost Measuring Performance Collecting & Reporting Meaningful Data No Silver Bullets; But Context, New
Insight and Better Decisions
PRIORITIES AND OUTCOMES
Consider the willingness of citizens to pay
What does the tax payer get? Does the budget reflect citizen
priorities? Are you achieving desired outcomes? Does your line item budget give you
tunnel vision?
PRIORITY BASED BUDGETING
Goal: Allocate resources to programs and
services that are effective at achieving the
highest priority ends.
TRADITIONAL PRIORITY BASED PROCESS
#1
•Set revenues
#2
•Establish broad community outcomes (ex: Community Safety)
#3
•Define what causes the outcome (ex: control crime, safe transit etc.)
#4
•Establish teams for review and scoring
#5
•Rank/ compare programs based on effectiveness
#6
•Allocate resources accordingly
#7
•Measure results
PRIORITY BASED BUDGET SHORTCUT
Establish a complete inventory of services (within or across departments)
Identify the total true cost of the services
Develop ways to measure the effectiveness of each service
Review and discuss
AN EXAMPLE Service/ Program Cost Result
Recreation $2.1M •Improves Health•Strengthens community
Public Safety $1.7M •Reduces crime•Reduces accidents
Street Maintenance $500K •Reduces deferred maintenance costs •Improves safety
Code Enforcement $110K •Beautifies the town •Reduces disputes
Economic Development $45K •Supports new existing business•Expands job base
Recycling Services $15K •Diverts minimal waste from landfill
WHAT DOES IT REALLY COST?
Account #
2013 Actual
2014 Estimated
2015 Budget
2016 Budget
12100 Salaries 1,010,808 1,010,808 1,085,000 1,090,500
12200 Overtime 19,989 32,000 20,000 21,000
12600 Materials 43,921 42,500 44,000 45,000
13100 Insurance 19,244 17,986 17,986 18,000
14100 Utilities 9,850 10,050 10,000 10,250
15100 Task Force 5,000 5,000 5,000 5,500
22100 Delta County 8,000 8,000 9,000 9,000
22800 SWAT 585 625 750 800
31600 Rental 2,225 2,225 2,225 2,500
35500 Equipment 8,000 7,800 8,500 9,000
Total 1,127,622 1,136,994 1,202,461 1,211,550
WHAT’S NOT CAPTURED IN BUDGET?
Cost to sustain infrastructure Long term maintenance True operating costs
AN EXAMPLE: COST OF STREET REPAIR
Overlay Maintenance
Miles of road
Avg. Life Cost/ mile Miles/ year Cost/ year Cost/ Life
64 25 years $330,887 2.56 $847,070 $21,176,769
Reconstruction Cost
Cost/ Mile Added Cost/ Mile
Added Cost at 10% total
miles
Added Cost/ Year
Cost/ life
$1,784,474 $1,453,587 $9,302,956 $372,118 $30,479,725
AN EXAMPLE: RECREATION CENTER
True Program Cost (2013)
Program Pool Sports Fitness Rentals Child Care
Cost $446,814 $232,116 $246,220
$48,550 $26,554
Other Program Consideration (2013)
Program Pool Sports Fitness Rentals Child Care
Participant Uses 81,080 2,585 25,776 17,604 3,784
Cost/ Use $5.51 $89.79 $9.55 $2.75 $7.02
OTHER ASSETS
Five year plan vs. life cycle cost Any high dollar asset that is intended
to be replaced is worth capturing Model leases, used and new purchases
MEASURING PERFORMANCE
“If you can’t measure something, you can’t understand it. If you can’t understand something, you can’t
control it. If you can’t control something, you can’t improve it.”
~H. James Harrington
3 TYPES OF MEASUREMENTS
Outputs: simple measures of raw counts of activities or services
Efficiency: relates outputs to resources used (inputs)
Outcome: gauges impact, effectiveness and quality
WHY MEASURE PERFORMANCE?
Gain insight and context you wont otherwise know
Test the efficacy of strategy Helps communicate results and value Drives innovation
AN EXAMPLE: POLICE
Delta has 17 sworn officers and a $1.73M budget (outputs)
Delta spends $195.62 per capita on law enforcement (efficiency)
Delta Officers spend approximately 33% of each shift on patrol (efficiency)
69% of Delta citizens are confident in the PD’s ability to maintain public safety (outcome)
BENCHMARKING
External: What do other communities do?
Internal: What do performance metrics look like over time?
AN EXAMPLE
Rec $/1,000 Avg. of 92 Median of 92 Rank of 92
$285,126 $78,431 $55,424 #2
PD $/ 1,000 Avg. of 96 Median of 96 Rank of 96
$195,623 $243,000 $216,000 #49
Code $/ 1,000 Avg. of 72 Median of 72 Rank of 72
$9,020 $6,380 $4,770 #18
AN EXAMPLE
0%
10%
20%
30%
40%
50%
60%
70%
41%
63%65%
NA NA
39%
53%
57%53%
41%
26%
49%
64%
48%
38%
2006
2013
2014
Favorable Rating Public Works
COLLECTING AND REPORTING DATA
Add context Translate/ Interpret information Use the data you have in a better way Collect important data that you don’t
have Use simple models to vet important
decisions
CITIZEN SURVEYS
You don’t know if you don’t ask The people you hear from don’t
represent everybody Measure citizen satisfaction Facility use Gauge interest in new programs/
services Educate your citizens at the same time
AN EXAMPLE
Repair
of City
Stree
ts
Expan
sion of L
aw En
forcemen
t
Impro
ved Code E
nforcemen
t
Impro
ved Recy
cling F
aciliti
es
Constructi
on of New
Sidew
alks
Expan
sion R
ecrea
tion Center
Youth Se
rvices
/ Acti
vities
Impro
ved Anim
al Contro
l
Investm
ent in
Downtown Beautificati
on
Expan
sion of th
e City
Flower
Progra
m
More Ev
ents
(Delt
arado Day
s etc.
)
Expan
sion of C
itizen O
utreach
Develo
pment o
f New
Park La
nd
Impro
ved Play
ground Fa
cilities
Expan
sion of th
e City
's Mural
Progra
m
Impro
ve th
e Horse
Country Aren
a0%
10%
20%
30%
40%
50%
60%
70%
Priorities (Top 5 only)
#5#4#3#2#1
AN EXAMPLE
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
76%
85%84%
66% 68%
82%
90%
83%
74%77%
2013
2014
Customer Service Favorable Rating City Hall
CREATING MEANINGFUL INFORMATION Account
#2013
Actual 2014
Estimated 2015
Budget 2016
Budget
12100 Salaries 1,010,808 1,010,808 1,085,000 1,090,500
12200 Overtime 19,989 32,000 20,000 21,000
12600 Materials 43,921 42,500 44,000 45,000
13100 Insurance 19,244 17,986 17,986 18,000
14100 Utilities 9,850 10,050 10,000 10,250
15100 Task Force 5,000 5,000 5,000 5,500
22100 Delta County 8,000 8,000 9,000 9,000
22800 SWAT 585 625 750 800
31600 Rental 2,225 2,225 2,225 2,500
35500 Equipment 8,000 7,800 8,500 9,000
Total 1,127,622 1,136,994 1,202,461 1,211,550
AN EXAMPLE
Rec Center Budget:Aquatics $456,074
(22%)
Sports $193,859
(9%)
Fitness $240,680
(11%)
Marketing/Rentals $103,570
(5%)Child Care $26,554 (1%)
Customer Service $177,008 (8%)
Building & Grounds$206,198
(10%)
Administra-tion
$495,677 (24%)
Utilities $191,200 (9%)
2013 2014
Total Visits 137,378
Cost/ Vist $12.28
Satisfaction Rating
78%
% Resident Participation 70%
Rate of Subsidy 68%
Key Indicators:
LEARN AND EDUCATE
48.73%51.27%
Are you aware that the Recreation Center is sup-ported by a 3/4 cent sales tax (75 cents for every $100
dollars spent on retail goods)?
YES
NO
30.38%
69.62%
Are you aware that the 3/4 sales tax supporting the Recreation Center is due to sunset (expire)?
YES
NO
70.47%
29.53%
Would you support continuing the existing tax to support the Recreation Center AND other City ser-
vices?
YES
NO
MODELING
Good for the “what if?” Looks at more than one variable at
once Provides “real time” analysis Puts potential outcomes in context