The document discusses different strategies for addressing budget shortfalls, from initial across-the-board cuts to more strategic approaches that engage stakeholders and prioritize goals and services. It emphasizes the need to focus on organizational priorities and capacity, consider revenue enhancements and expenditure reductions, and manage expectations when implementing long-term financial plans.

1. Melanie Purcell
American Society for Public Administration ASPA
Webinar, December, 2009

2. Budget $
Today
Time

3.  Initial reaction when the shortfall is
recognized and is relatively manageable or
has happened before.
 Typically, across-the-board cuts are the first
step; reflect the timeline and severity of
pressure.
 Single percentage across all departments

4.  PROS:
◦ Perceived as fair;
◦ Relatively easy to explain intended implementation;
◦ Traditional method and more readily accepted.
Typical response to less than 5% total reduction.
 CONS:
◦ Impact is difficult to explain;
◦ Assumes the organization has “fat” to cut;
◦ Does not reflect organization’s or communities’
goals or priorities;
◦ Short-term strategy with limited depth.

5.  Percentage or amount cuts that vary
according to department or service cut, i.e.
public safety reduces by a smaller percentage
than parks and recreation.
 There is recognition that financial conditions
are longer-term in nature and/or more severe
than originally anticipated.

6.  PROS:
◦ Introduces strategic response, giving some
consideration to goals and priorities;
◦ Relatively easy to describe implementation;
◦ Begins bridging toward larger cuts but still typically
less than 10% total reduction. Reasonably readily
accepted by public and organizations.
 CONS:
◦ Difficult to explain impacts;
◦ Typically short-term strategy with limited depth.

7.  Recognition that financial decline is structural
with implications for service levels and
quality.
 Efforts are equally suited to positive financial
trends if used in conjunction with strategic
planning.
 Process may engage public, employees, and
other stakeholders more intensely.

8.  PROS:
◦ Reflects priorities and goals of organization and
potentially, community;
◦ Easier to explain impacts;
◦ Requires active engagement by stakeholders;
◦ Greater sustainability when conditions change.
 CONS:
◦ May be difficult or require greater effort to explain
implementation;
◦ Strategies take time to develop, communicate, and
implement.
◦ May be linked with controversy.

9.  Define goals and priorities;
 Determine long-term impact and position;
 Document long-term logistics and viability of
programs;
 Concentrate on structure especially
organizational design;
 Analyze capacity needs and abilities
especially in changing environment.

10. Define Goals
Design your
Organization
Develop your Plan

11. Build your Budget
Measure Results
Refine your Goals

12.  Focus on goals and priorities of
organization;
 Consider current organizational capacity
and necessary steps to increase capacity;
 Define vision for short- and long-term;
 Concentrate on “how we do business” rather
than “how to change the size of how we
have always done it”;
 Define options in terms of revenues and
expenditures as well as efficiencies and
cuts.

13.  Revenue Enhancements
◦ Current
◦ Future/ Underutilized
◦ Economic Development of underlying revenue bases
 Expenditure Reductions
◦ Organization, Communication and Controls
◦ Purchasing, Capital, Insurance
◦ Systems
 Efficiencies: more and/or better service

14.  Focus on the basics: Services that are not
mandated or not directly related to the
health, safety and welfare of citizens need
to be reevaluated; it may be time to let the
market provide or not provide these
services.
 Ask questions to learn more about every
aspect: scope, basis, process…. WHY!
 It is not just about cuts but about
redesigning how we do things.

15.  Ask questions to learn more about every aspect:
scope, basis, process…. Look at little things as well
as big ticket items. WHY!!!
 Communicate goals, plans, and changes from
status quo.
 MANAGE EXPECTATIONS!
 Think long-term, at least 3 years.
 Take action now!