Another approach to meeting the challenges of fiscal distress in government.

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

2. Time for a New Approach
Budget $
Today
Time

3. 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.

4. 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%.

5. 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

6. 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.

7. 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.

8. 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.”

9. 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.

10. 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

11. 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.

12. Process Mapping
Clerk B Clerk A records
Clerk 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.

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

14. 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.

15. 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.

16. 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.

17. 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.