Innovative Strategies For Financial Recovery

Innovative Strategiesfor Financial Recovery Government Finance Officers Association January 27, 2010 Melanie Purcell, Assistant Director University of Tennessee Municipal Technical Advisory Service

Time for a New ApproachBudget $ Today Time

The New Normal• Looking back in time does not give the answers: – Revenues have changed composition and reduced to levels last seen more than five years ago; – Service demands are at current levels and reflect evolving societal needs; – The legal and technological structures are drastically altered since revenues were last at this level.

Three typical responses to reduced resources• 1) across-the-board cuts based on prior year expenditures, frequently used for 1-2 year downturn of 3-5%;• 2) functional percentage cuts based on prior year expenditures and community priorities, 1-3 year downturn of 4-8%;• 3) Programmatic reductions based on actual or estimated costs and community priorities, indeterminate or long-term decline of greater than 10%.

Across-the-Board Cuts• PROS – Easy to explain to the public and employees upfront; – Perceived as equitable by departments and public• CONS – Does not describe impact on citizens or services; – Punishes lean departments and encourages “hiding” the money; – Reinforces public assumption of “bloated bureaucracy” or that cuts can be made without impact; – Does not reflect community goals or priorities

Functional Percentage Cuts• PROS – Relatively easy to present to public and departments; – Based on community and organizational priorities;• CONS – Does not describe impacts on citizens and services beyond department area; – Does not reflect any precision in community priorities, i.e. all public safety activities are equal; – Does not include analysis of efficiency or effectiveness.

Programmatic Reductions• PROS – Developed from community goals and priorities; – Describes explicit impact on citizens and services prior to implementation; – More likely to be sustainable; – Provides clear link of cost to service- reduces belief in “fat to be cut”• CONS – Requires more analysis and communication in early stages; – Resource intensive process.

Tips and Techniques for Strategic Approach• Organizational Restructuring• Process Mapping• Focus on long-term sustainability and suitability• Transparent, swift and precise actions• Communicate!!!• “Whatever is still done, is done very well.”

Organizational Restructuring• Define goals and priorities of community and organization;• Design “ideal” organizational structure to most efficiently and effectively achieve goals and priorities;• Compare current and “ideal” organizational structures and develop plan to transition to “ideal” structure.

Organizational Restructuring• Refocus job descriptions – Consolidate for greater transferability of personnel between departments; – Push duties to lowest responsible positions; – Share positions between co-located or similar service departments, i.e. Planning and Building• Evaluate manager to service delivery position ratios;• Evaluate support staff to service delivery position ratios

Process Mapping• Identify processes that appear to take a long time to complete with many participants and those that have significant cost or revenue implications.• Map each step made by each person throughout the organization in the process, making special note of transition points between departments.• Define duplicate steps or gaps in the process and design remedies.

Process Mapping Clerk B Clerk A recordsClerk A receives photocopies check payment in and enters and records in registration registration. internal database. database. Clerk C posts to Clerk D verifies and central financial completes deposit. records and prepares deposit.

Process Mapping Clerk B photocopies check, enters in centralClerk A receives and financial records andenters registration. registration databases and prepares deposit. Clerk D verifies and completes deposit

Long-term focus• Sustainability – Analyze reductions and revenue enhancements for the ability of the organization to continue them for the foreseeable future. – Avoid cuts that reduce the overall effectiveness of any program that is intended to continue or revenue changes that will not be reliable or stable in future.• Suitability – Ensure reductions and revenues align with the priorities and goals of the community. – Evaluate reductions and revenue sources for impact on select populations within the community. – Analyze potential secondary and tertiary impacts, especially on unintended recipients.

Transparent, Swift, and Precise• Utilizing a transparent process for evaluating options will help to reduce the degree to which rumors and speculation direct morale and productivity.• Once a path is determined, make the action known so that employees especially have time to prepare themselves, i.e. look for another position, consider retirement, etc.• Be as specific as possible in the actions taken and the impact expected so that those affected, citizens and employees, can adapt. “Reduced services” or “some delay” are subject to the audience’s interpretation and negatively impact perception of the overall value of public services.

What is done, is done well!• Encourage and maintain pride in the quality of services provided.• The organization may be smaller and provide fewer services but provides those at the maximum benefit to the public at the lowest cost.• Emphasizing the commitment to quality, both in service delivery and employee development, encourages a long-term mindset and sense of pride in overcoming challenges.

Resources to Assist• GFOA: Fiscal First Aid website – http://www.gfoa.org/index.php?option=com_con tent&task=view&id=1135&Itemid=563• Professional Peers – Discuss options amongst those who understand the region and culture, form of government and structure, political dynamics, and/or unique attributes of your community and situation.

Innovative Strategies For Financial Recovery

by mdpcell on Jan 10, 2012

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Innovative Strategies For Financial Recovery Presentation Transcript