TOWN MANAGER COLON….
Shrinking the formula….of line item budgeting and transparent municipal government….
Dear Readers…This writer was told that Town Manager Colon had indicated that line item budgeting in LBTS will be a thing of the past…. It is said she explained that many municipalities have moved away from the practice ….I for one was not thrilled to hear the news…and wondered how and when she would carry out such a plan….
This week the Manager is away from the 4th-7th…at a “Budget Analyst Training Academy” in Chicago, Ill. held at GFOA headquarters on N. Lasalle Street …. http://www.gfoa.org/ It struck me as odd …Why would the Town Manager be going to a training academy?…Was the Director of Finance Ms. King in attendance as well?…NOPE!…Director King is still in Town Hall….Hmmmm…I looked at the description of what the academy would be covering for any hint of why it would be the Manager and not the Director sent to the windy city……In looking I was even more taken aback by the “Who will Benefit”portion…”The Budget Analyst Training Academy is a “must attend” for BEGINNING and INTERMEDIATE budget analysts that seek to develop a mastery of the local government budgeting environment.” …HUH?… …This could not be right because all we hear from the Town Manager and the “Gang of 3” is she is our Wonder Woman …able to do what no other Town Manager can do…keep us “in the black.”..winning 11 years of GFOA Budget PRESENTATION Awards… She is irreplaceable unlike a “competent police chief”… so why would she be attending a program aimed toward beginners and intermediate budget analysts?….I read on…”presented by leading practitioners and researchers in the the budgeting field, this offering will empower budget analysts with core and advanced analytical tools and concepts to help them conduct better financial analysis and help their financial managers make improved resource planning decisions.”…Like what?…The program included seminar topics…which included Performance measurement and management…the learning objectives included Differentiate between incremental, zero-based, and performance-based budget types….the recommended reading included An Elected Official’s Guide to Performance Measurement and Organization and Design of an Effective Budget Function…So it seem this would be where the Town Manager would learn to change over from the line item budget we now operate under to a performance type plan….I was curious as to why…and what was behind it…What is behind the change is the GFOA!…(see below)…The excerpt and the the link below will show the formula … the reasons behind such a change and the pitfalls of throwing out the line item budget making a “hybrid” more acceptable ……
Below that is is some interesting information on the “coveted” GFOA Budget Presentation Awards…We have had thrown out at us at every opportunity like it is the “winners circle” or that the Town Manager has elevated LBTS to the 1st place podium in an Olympic win…Not so fast!…Googling for the information turned out again to be quite surprising and amusing…It shows that winning this award is nothing like the way it was presented from the dais……as if we were the championship winners…it is more like ….everybody’s a winner and welcome to the “club”…see the other GFOA Budget PRESENTATION Award winners below…name a fellow community and they too enjoy the GFOA “PRESENTATION” Award…such as Boca Raton 25 yrs/Cape Coral 17 yrs/ Clearwater 22 yrs/ Coral Gables 18 yrs/Deerfield Beach 12 yrs/ Fort Lauderdale 23 yrs/ Fort Meyers 17 yrs/ Hallandale Beach 21 yrs/ Hollywood 12 yrs/ LBTS 11 yrs…90% of all applicants get the award …there are 1265 municipalities……OOPS!…The requirements/ How to submit/Judging Process/and samples of the questions are below…
ONLINE SEARCH….Line Item Budget and Performance Measurement and Management …
Excerpt….
‘PERFORMANCE BUDGETING IN MUNICIPALITIES
Next, we examined when and how performance measures were incorporated into the budget process. The GFOA Distinguished Budget Presentation Awards program encourages, though does not require, service objectives and performance indicators by department and program in the budget document. Table 2 reveals that the incorporation of performance measures into the budget process is significant in all municipal size groups, but especially in larger municipalities.
[Table 2 about here]
The traditional line-item format characterizes most municipal budgets, and for good reason. While alternative presentations may facilitate some kinds of deliberations, revenue and expenditure information must be maintained by object code for the annual audit of financial statements. It may not be efficient to maintain one format for the budget document and another for financial statements, especially when most users of budget and financial information are accustomed to the line-item presentation. This helps explain why most respondent municipalities relied on the traditional line-item format (76 percent), though roughly a fifth (21 percent) indicated they augment that format with a program or performance presentation (a hybrid budget). A small number of municipalities used a program budget format (17 percent), a zero-based format (11 percent) and exclusively a performance format (4 percent).
The respondents that reported using a performance budgeting format reported that program managers were required to submit performance measures with their annual budget request (57 percent), which indicates that performance measures were being used for budget deliberation and not just for presentation. For those respondents using a program budgeting approach, the requirement to submit measures as part of the budget process was lower (24 percent), and even lower for the line-item budget (11 percent). However, for those using a hybrid budget system, the numbers were highest (43 percent), suggesting that most municipal line-item budgets are “hybridized” by performance data for decision-making purposes.
We turn now to survey responses that suggest how performance measures are used in allocation decisions. The next set of questions involved how municipal budget officers used performance measures to evaluate department requests. The questions were framed to permit respondents to choose between varying levels of use. Table 3 presents their responses by size category. We expected responses to the first question⎯the use of performance data to evaluate every request⎯to be low, but did not expect the smaller municipalities to report a higher level of consistent use than larger municipalities. The regular use of performance data for routine and new or expanded requests was relatively constant across size categories. A size difference was evident in the final question about the infrequent use of performance data, though not unexpected based on previous research and what we know about management capacity limitations in very small governments.
[Table 3 about here]
Among all 346 respondent municipalities, five percent indicated that every budget request was evaluated in light of relevant performance information, but 12 percent reported that performance information was usually part of every budget allocation decision. Performance data were more likely to be used during deliberations for new or expanded budget requests (17 percent), but less likely to be used for marginal adjustments to past appropriations. Respondents indicated that budget requests are deliberated primarily on financial and policy issues (40 percent) more than on performance issues. In the open-ended section of the survey, respondents often indicated that performance is more likely to be relevant when resources are available and the request is not inconsistent with current policy initiatives.
The final exploration of performance budgeting in municipalities involved the budget officers’ perceptions of how elected officials use performance measures to inform their deliberations. Some caution is in order here, as the respondents are public finance officers and not elected officials themselves. However, budget officers are typically present in budget hearings, and often questioned by mayors and council members about their budget recommendations. Only five percent of the respondents reported that elected officials request performance data during their budget deliberations, and only seven percent indicated that performance data were “usually” relevant to the allocation decision.
However, 88 percent of the respondents indicated that elected officials referred to performance data during their deliberations if the data were present, suggesting that elected officials may find performance data informative but not determinate for their allocation decisions. Finally, 20 percent of respondents indicated that performance data were more likely to be used for a new or expanded appropriation, indicating that performance is more relevant to non-routine budget decisions by elected officials, just as it is for non-routine budget recommendations by budget officers.
SUMMARY AND CONCLUSIONS
As Caiden pointed out, “even relevant, accurate, and timely data will serve no purpose unless they are actually used.”36 Wang noted that funding decisions are “fundamentally political, not performance based.”37 State studies have not demonstrated a consistent impact of performance budgeting on budget outcomes. Performance results had no demonstrated impact on the budget office’s spending recommendation or on staffing recommendations in fifteen executive departments in Missouri.38 Georgia’s experience, ongoing since 1977, demonstrated that a requirement to use performance data in the budget process did not create its own capacity; appropriate and reliable measures did not “just happen” after they were mandated.39 Florida encountered serious problems with the implementation of its Government Performance and Accountability Act that were not unlike the federal experience. A recent review of the Florida experience identified some challenges for the future of performance budgeting, including how to incorporate performance information in legislative appropriations decisions and how to approach administrative sanctions for agencies that fail to meet performance standards.40 (Grizzle and Pettijohn, 2002).
Moreover, state budget officers reported that the mandate for performance budgeting often came without adequate time, financial resources, executive and legislative leadership and interest in performance information at all levels of state government.41 Twenty-five percent of state budget officers said that performance funding was a success in their states; sixty-four percent said it was not. Yet, eighty-six percent of responding state budget officers predicted that performance funding would be expanded in their states.42
To the observer looking for evidence of performance budgeting’s success in municipalities by changes in budget outcomes, the results may be similarly disappointing. However, if one accepts that performance budgeting does not require outcome changes to be fully successful, the prospects are brighter. When relevant performance data are produced along with the program’s budget request, budget officers typically consider the data during the recommendation phase. When performance data are presented to elected officials during their budget deliberations, a full 88 percent of respondents indicated that those elected officials were likely to refer to the data in the course of their deliberations. The critical factor, then, is the availability of relevant performance data for decision-making and its use in deliberations, not whether budget outcomes changed in some discernable way. The greater barrier to performance budgeting is not reluctance to use performance information when it is available (especially for new or major changes in appropriation); the barrier is having the appropriate measures available for use.
There is yet another reason for advocates of performance budgeting to cheer, though we add a caution to the good news. Smaller municipalities are making strides in implementation of performance management and budgeting rivaling that of larger municipalities. We credit the GFOA’s decision to include performance measures in the criteria for its Distinguished Budget Presentation Award as a powerful incentive. But we stop short of asserting that performance data are used because they are presented. The least productive use of performance measures in the budget process is to enhance presentation without consideration of the performance information during deliberation. Jreisat noted in his review of the use of performance measures by finance officers in Florida that there seem to be few incentives for meaningful integration of information into the budget process.43 Collecting and reporting data without analyzing it may be a pure time and effort cost. That is, if managers are asked to submit performance data for budget presentation but make no other use of it, no benefit accrues.
If the information collected for budgetary purposes is not used outside the budget process, then the information collection effort has not contributed to the overall productivity of the government. In fact, it may actually have constituted a drain on productivity.44
We concur that there is no benefit to public budgeting from the addition of performance information for presentation purposes, but we are suggesting that, according to our survey, performance information often informs deliberations when it is available. The key to realizing the benefit from performance data in the budget process lies in the timing of its entry into the process. If performance budgeting is defined as a commitment to produce and regard performance data during budget deliberations, we have evidence of progress toward that goal. This survey suggested that performance budgeting may be a natural conclusion to performance measurement, though the constraints of resource availability, policy priorities and, frankly, political imperative will always appropriately preclude its determinacy in budget outcomes.’
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more to come…………
Tags: GFOA, line item budget, local government, Performance measurement and management, Scoops
