THE AIKIDO BUDGET METHOD<br />PA 583, Advanced Budgeting<br />
Budget Process ProblemsGoverning Board Perspective<br />Process too time-consuming<br />No time for long-range issues<br /...
Budget Process ProblemsGoverning Board Perspective<br />Most budget processes build in inflationary increases, so…<br />…....
Budget Process ProblemsCEO Perspective<br />Built-in rules for bad budget behavior:<br />Spend it or lose it<br />Line ite...
Budget Process ProblemsCEO Perspective<br />Budget-balancing waits for departments’ budget requests<br />Departments look ...
The Aikido Method of Budgeting<br />"Aikido focuses not on punching or kicking opponents, but rather on using their own en...
The Aikido Method of Budgeting Features:<br />Two-Year Budget<br />Spending Targets<br />Bottom-Line Results<br />Carryove...
The Aikido Method of Budgeting Other Budget Policies:<br />Continuing expenses should be covered by continuing revenues.<b...
The Aikido Method of Budgeting CEO Perspective<br />Starting the budget cycle--Net Budget Targets:<br />Same $$ (net) as p...
The Aikido Method of Budgeting CEO Perspective<br />Departments can ADD:<br />Carryover savings from current year<br />Dep...
Net Budget = Expenses - Revenues<br />
TARGET = Current year net budget + Salary/Benefit increase<br />
CARRYOVER SAVINGS = Next year’s beginning balance<br />
The Aikido Method of Budgeting Results<br />“Big Picture” budget balancing while departments work on the details<br />Ince...
The Aikido Method of Budgeting After Budget Adoption<br />Strong incentive for savings<br />Revenue doesn’t get lost in “g...
The Aikido Method of Budgeting Governing Board Perspective<br />Cycle linked to Board elections<br />Board goal-setting se...
The Aikido Method of Budgeting Governing Board Perspective<br />Time free for policy issues during “off year”<br />Forecas...
Diminishing Returns:Oregon Cities’ Struggle to Afford Basic Services<br />Property Tax – Shrinking Share of City Revenues<...
The Aikido Method of Budgeting Governing Board Perspective<br />Departments manage their own budgets—no need to grovel for...
The Aikido Method of Budgeting Governing Board Perspective<br />Two-year budget forces the agency to match ongoing costs w...
The Aikido Method of Budgeting Results for City of Sandy<br />PERS, medical insurance costs dealt with up-front<br />Build...
The Aikido Method of Budgeting Results for Sandy (continued)<br />Strong growth in non-tax revenues: (user fees, permit fe...
The Aikido Method of Budgeting Results for Sandy (continued)<br />No easy solutions for general fund programs that don’t h...
AIKIDO BUDGETING <br />THE END<br />
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Aikido Budget Method

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Aikido Budget Method

  1. 1. THE AIKIDO BUDGET METHOD<br />PA 583, Advanced Budgeting<br />
  2. 2. Budget Process ProblemsGoverning Board Perspective<br />Process too time-consuming<br />No time for long-range issues<br />Number crunching and budget details obscure the “big picture”<br />
  3. 3. Budget Process ProblemsGoverning Board Perspective<br />Most budget processes build in inflationary increases, so…<br />….Process focuses on difficult “cuts” even when overall revenues increase.<br />
  4. 4. Budget Process ProblemsCEO Perspective<br />Built-in rules for bad budget behavior:<br />Spend it or lose it<br />Line item padding<br />Fictional revenue<br />
  5. 5. Budget Process ProblemsCEO Perspective<br />Budget-balancing waits for departments’ budget requests<br />Departments look to general fund contingency for unanticipated needs<br />
  6. 6. The Aikido Method of Budgeting<br />"Aikido focuses not on punching or kicking opponents, but rather on using their own energy to gain control of them or to throw them away from you. It is not a static art, but places great emphasis on motion and the dynamics of movement."<br />Source: What is Aikido? From www.aikidofaq.com<br />
  7. 7. The Aikido Method of Budgeting Features:<br />Two-Year Budget<br />Spending Targets<br />Bottom-Line Results<br />Carryover Savings Program<br />Departmental BWC, Contingency<br />
  8. 8. The Aikido Method of Budgeting Other Budget Policies:<br />Continuing expenses should be covered by continuing revenues.<br />Cash balances in the general fund should be sufficient to cover expenses until property tax is received in November.<br />New development should pay for itself.<br />
  9. 9. The Aikido Method of Budgeting CEO Perspective<br />Starting the budget cycle--Net Budget Targets:<br />Same $$ (net) as past year, except…<br />…allowance for pay & benefit increase<br />Some tweaking (rare)<br />
  10. 10. The Aikido Method of Budgeting CEO Perspective<br />Departments can ADD:<br />Carryover savings from current year<br />Departmental revenues<br />Departments have full flexibility on line items<br />
  11. 11. Net Budget = Expenses - Revenues<br />
  12. 12. TARGET = Current year net budget + Salary/Benefit increase<br />
  13. 13. CARRYOVER SAVINGS = Next year’s beginning balance<br />
  14. 14. The Aikido Method of Budgeting Results<br />“Big Picture” budget balancing while departments work on the details<br />Incentive for finding new or expanded revenues<br />Eliminates almost all budget tricks<br />
  15. 15. The Aikido Method of Budgeting After Budget Adoption<br />Strong incentive for savings<br />Revenue doesn’t get lost in “general fund black hole”<br />Departments watch the bottom line<br />Departmental contingency accounts for emergencies, one-time needs<br />
  16. 16. The Aikido Method of Budgeting Governing Board Perspective<br />Cycle linked to Board elections<br />Board goal-setting session at front-end of process<br />
  17. 17. The Aikido Method of Budgeting Governing Board Perspective<br />Time free for policy issues during “off year”<br />Forecasts<br />Capital Improvement Planning<br />Program Priorities & Effectiveness<br />
  18. 18. Diminishing Returns:Oregon Cities’ Struggle to Afford Basic Services<br />Property Tax – Shrinking Share of City Revenues<br />
  19. 19. The Aikido Method of Budgeting Governing Board Perspective<br />Departments manage their own budgets—no need to grovel for unanticipated needs<br />Typically some discretionary $$ left for allocation by Board (especially one-time revenue)<br />
  20. 20. The Aikido Method of Budgeting Governing Board Perspective<br />Two-year budget forces the agency to match ongoing costs with ongoing revenues: cash carryover is not available to offset the second year costs.<br />
  21. 21. The Aikido Method of Budgeting Results for City of Sandy<br />PERS, medical insurance costs dealt with up-front<br />Building department fully self-supporting…and with a $300,000 contingency account<br />
  22. 22. The Aikido Method of Budgeting Results for Sandy (continued)<br />Strong growth in non-tax revenues: (user fees, permit fees, and grants)<br />No layoffs<br />Healthy general fund cash balance<br />
  23. 23. The Aikido Method of Budgeting Results for Sandy (continued)<br />No easy solutions for general fund programs that don’t have revenue:<br />Park maintenance<br />Finance, administration<br />See www.ci.sandy.or.us for the on-line budget “document”<br />
  24. 24.
  25. 25. AIKIDO BUDGETING <br />THE END<br />

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