This document discusses tools and strategies for local governments to achieve fiscal health and long-term fiscal wellness in the coming decade. It outlines two strategic initiatives - fiscal health and long-term fiscal wellness. To achieve fiscal health, the document recommends analyzing revenues and expenditures, establishing reserves, conducting variance analyses, and creating long-range financial forecasts. To achieve fiscal wellness, it suggests identifying community priorities or "results", evaluating programs based on their influence on priorities, and allocating resources accordingly through a "resource alignment diagnostic tool". The tools and frameworks presented aim to help local governments make sound financial decisions and align their budgets with community needs.

1. Embracing the Decade
of
Local Government
Jon Johnson & Chris Fabian
November 21, 2013
1

2. Alliance for Innovation
A Community Shaping the Future of Local Government

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5. A Brief Introduction
JON JOHNSON
CHRIS FABIAN
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6. 6

7. “…the next decade (for local government)
will be a time in which the fiscal woes of
federal and state governments will leave
local and regional governments on their
own, struggling to balance the need for
innovation against the necessity of making
touch choices.”
Robert O’Neill, Executive Director of ICMA
June 27, 2013
7

8. “Washington paralysis is already
leading to a power inversion. As
the federal government becomes
less energetic, city governments
become more so.”
Columnist David Brooks
June 6, 2013
8

9. Preparing for a Better Future…
The Tools of Fiscal Health &
Priority Based Budgeting
9

10. Achieving Fiscal Health & Wellness
2 Strategic Initiatives
Fiscal Health
Long-term Fiscal Wellness
10

11. 11

12. 12

13. ACHIEVING FISCAL HEALTH
13

14. Strategic Questions
• How much do we have available to spend? (not “How much do you need”?)
“Spend Within Our Means”
• Why do we need to keep “money in the bank”?
Establish & Maintain Reserves
• What’s the “difference”?
Understand Variances (Budget to Actual)
14

15. Strategic Questions
 “It costs how much”????????
Transparent About
“True Cost of Doing Business”
 “What’s the plan and what could cause it to
change?
Economic Analysis & Long-Term Planning
 What does the future look like?
 What if………..???
“Fiscal Health Diagnostic Tool”
15

16. Tools of Fiscal Heath
• “ONGOING vs. ONE-TIME” Sources and Uses Analysis
• Published “Revenue Manual”
• Inventory of Fund Balance Reserves
o Supported by written Fund Balance Reserve Policies
• “Budget to Actual” Variance Analysis
• “Cost Allocation Plan” or “Program Cost Analysis”
• Long-range, Multi-year Financial Forecasts
o Supplemented by multi-year Five-Year One-Time Spending Plan (CIP)
• Graphic Depiction of “Picture of Fiscal Health”
16

17. Differentiate Ongoing and One-time
17

18. Tools of Fiscal Heath
• “ONGOING vs. ONE-TIME” Sources and Uses Analysis
• Published “Revenue Manual”
• Inventory of Fund Balance Reserves
o Supported by written Fund Balance Reserve Policies
• “Budget to Actual” Variance Analysis
• “Cost Allocation Plan” or “Program Cost Analysis”
• Long-range, Multi-year Financial Forecasts
o Supplemented by multi-year Five-Year One-Time Spending Plan (CIP)
• Graphic Depiction of “Picture of Fiscal Health”
18

19. Published “Revenue Manual”
19

20. Tools of Fiscal Heath
• “ONGOING vs. ONE-TIME” Sources and Uses Analysis
• Published “Revenue Manual”
• Inventory of Fund Balance Reserves
o Supported by written Fund Balance Reserve Policies
• “Budget to Actual” Variance Analysis
• “Cost Allocation Plan” or “Program Cost Analysis”
• Long-range, Multi-year Financial Forecasts
o Supplemented by multi-year Five-Year One-Time Spending Plan (CIP)
• Graphic Depiction of “Picture of Fiscal Health”
20

21. Fund Balance Reserve – the “Right” Level
 Baseline recommendation (General Fund)–
o 5% to 15% of operating revenue
o 1 to 2 months operating expenditures
 Adjust for:
o Historic Events and Past Experience
o Government Size
o Revenue Stability
o Future Capital Needs
21

22. Tools of Fiscal Heath
• “ONGOING vs. ONE-TIME” Sources and Uses Analysis
• Published “Revenue Manual”
• Inventory of Fund Balance Reserves
o Supported by written Fund Balance Reserve Policies
• “Budget to Actual” Variance Analysis
• “Cost Allocation Plan” or “Program Cost Analysis”
• Long-range, Multi-year Financial Forecasts
o Supplemented by multi-year Five-Year One-Time Spending Plan (CIP)
• Graphic Depiction of “Picture of Fiscal Health”
22

23. Types of Variance Analysis
• Revenues & Expenditures
o Budget to Actual
o Historical year to year actuals
o Cyclical trends
o Ongoing vs. one-time occurrence
• Multi-year Capital Projects
o Eliminate Carry-forwards
o Avoid excessive “change orders”
23

24. Tools of Fiscal Heath
• “ONGOING vs. ONE-TIME” Sources and Uses Analysis
• Published “Revenue Manual”
• Inventory of Fund Balance Reserves
o Supported by written Fund Balance Reserve Policies
• “Budget to Actual” Variance Analysis
• “Cost Allocation Plan” or “Program Cost Analysis”
• Long-range, Multi-year Financial Forecasts
o Supplemented by multi-year Five-Year One-Time Spending Plan (CIP)
• Graphic Depiction of “Picture of Fiscal Health”
24

25. How to
Identify Program Costs
1) Associate Salary & Benefit Costs with your
Personnel
2) Assign Personnel to the Programs they Provide
3) Associate Non-Personnel Costs with Programs
4) Line item Budget is now expressed as a
Program Budget!
25

26. 1) Associate Salary & Benefit Costs
with your Personnel
•
Key is understanding how personnel line items are distributed (per FTE, on a
percentage of salary basis, etc.)
26

27. 2) Assign Personnel to the
Programs they Provide
•
•
•
Estimate for a given year (this is not a time study!)
Accuracy, not precision, is the goal
Can’t allocate an FTE over 100% (no matter how overworked they think they are)
27

28. 3) Associate Non-Personnel Costs
with Programs
• Choose a reasonable allocation methodology:
• Divide costs by FTE (i.e. supplies line item)
• Assign costs directly to program (i.e. annual audit)
28

29. Tools of Fiscal Heath
• “ONGOING vs. ONE-TIME” Sources and Uses Analysis
• Published “Revenue Manual”
• Inventory of Fund Balance Reserves
o Supported by written Fund Balance Reserve Policies
• “Budget to Actual” Variance Analysis
• “Cost Allocation Plan” or “Program Cost Analysis”
• Long-range, Multi-year Financial Forecasts
o Supplemented by multi-year Five-Year One-Time Spending Plan (CIP)
• Graphic Depiction of “Picture of Fiscal Health”
29

30. Let’s Look through a Different Lens!
30

31. “FISCAL HEALTH DIAGNOSTIC TOOL” –
Tell the Story with a “Picture”
31

32. 32

33. Achieving Long-Term Fiscal Wellness
33

34. Strategic Questions
• What are we in business to do?
Determine Results
Clarify Results Definitions
• What exactly to we do?
Identify Programs and Services
• What do we do that is of highest importance?
Value Programs Against Results
• How do we allocate resources to Community
Priorities?
Look Through a “New Lens” that Leads to Better
Conversations
34

35. Tools of Fiscal Wellness
• Identify Community “ RESULTS”
o Supplemented by Internal Organization’s “Governance” Results
• Communicate meaning of Results using “RESULTS
MAPS”
• Inventory of Programs and Services
o Supported by associated Program Costs; Program Revenues and FTE
• Evaluate “what we do” against “what we are in
business to do”
• Allocate resources based on Community Priorities
o Looking through the “NEW LENS” of the “Resource Alignment
Diagnostic Tool”
35

36. What are “Results”
• High-level and over-arching reasons the organization
exists in the eyes of the community
• Remain consistent and unchanged over time
• Comprehensive
• Distinguished from (i.e. “Results” are not…)
o Vision or Mission Statements
o Organizational Values
• How we want to achieve our results
o “Marketing” statements
• Look and feel of the community
o Specific short-term, projects, goals or initiatives
36

37. Tools of Fiscal Wellness
• Identify Community “ RESULTS”
o Supplemented by Internal Organization’s “Governance” Results
• Communicate meaning of Results using “RESULTS
MAPS”
• Inventory of Programs and Services
o Supported by associated Program Costs; Program Revenues and FTE
• Evaluate “what we do” against “what we are in
business to do”
• Allocate resources based on Community Priorities
o Looking through the “NEW LENS” of the “Resource Alignment
Diagnostic Tool”
37

38. Clarify Result Definitions
(Result Maps)
City of Boulder, CO
Results
•
Accessible &
Connected
Community
•
Economically Vital
Community
•
Healthy Environment
& Community
•
Inclusive & Socially
Thriving Community
•
Safe Community
38

39. The City of Wheat Ridge, Colorado
Offers and supports a variety of
safe activities and facilities that
provide for the physical health
and social well-being of the
community
Provides for the protection and
sustainability of the
environment through
regulatory compliance,
planning and effective
stormwater management
SAFE
COMMUNITY
Provides for a safe
transportation network that is
well-maintained, accessible,
enhances traffic flow and
offers safe mobility to motorists,
cyclists and pedestrians alike
Fosters a feeling of personal
safety throughout the
community by establishing a
visible, accessible presence
that proactively provides for
prevention, intervention, safety
education, and community
involvement
Offers protection, enforces the
law and is well-prepared to
promptly and effectively
respond to emergencies and
calls for service
Creates a secure, wellregulated, well-maintained
community that is healthy,
clean, well-lit and visually
attractive
39

40. The Town of Christiansburg, Virginia
Provides assurance of
regulatory and policy
compliance to
minimize and mitigate
risk
Attracts, motivates and
develops a high-quality
workforce, dedicated
to public service
Protects and prudently
manages its financial,
human, physical and
technology resources
GOOD
GOVERNANCE
(Sound Financial Entity)
Enables and enhances
transparency,
accountability,
integrity, efficiency and
innovation in all
operations
Supports decisionmaking with timely and
accurate short-term
and long-range
analysis
Responsive, accessible
and courteous to its
customers
40

41. Tools of Fiscal Wellness
• Identify Community “ RESULTS”
o Supplemented by Internal Organization’s “Governance” Results
• Communicate meaning of Results using “RESULTS
MAPS”
• Inventory of Programs and Services
o Supported by associated Program Costs; Program Revenues and FTE
• Evaluate “what we do” against “what we are in
business to do”
• Allocate resources based on Community Priorities
o Looking through the “NEW LENS” of the “Resource Alignment
Diagnostic Tool”
41

42. Identify “Programs” within Departments/
Divisions
 Departments develop their own
“program” inventories
 Comprehensive list of “what we
do”
 Comparing relative value of
programs, not relative value of
departments
 Goldilocks & the Three Bears: Not
too big, not too small, just right!
 TOO BIG =
Departments/Divisions
 TOO SMALL = Tasks
 JUST RIGHT = Measure relative
size based on costs/people
associated with program to
more discretely demonstrate
how resources are used
CITY OF BOULDER, COLORADO
Department Program Inventory
Monday, July 26, 2010
Directions: For all of the programs and services
in your department, identify the program
name. When completed, please e-mail the
Program Inventory back to Jim Reasor
Fund
No.
Department Providing Program
Program Name
010
Community Planning & Sustainability
General Business Assistance
010
Community Planning & Sustainability
Business Retention and Expansion
010
Community Planning & Sustainability
010
Community Planning & Sustainability
Business Incentive Programs
Business Partnerships and
Sponsorships
140
Community Planning & Sustainability
Energy Decarbonization
140
Community Planning & Sustainability
Green Job Creation
140
Community Planning & Sustainability
Climate Adaptation Planning
112
Community Planning & Sustainability
Comprehensive Planning
112
Community Planning & Sustainability
Intergovernmental Relations
112
Community Planning & Sustainability
Historic Preservation
112
Community Planning & Sustainability
Ecological Planning
City of Boulder, Colorado
42

43. Tools of Fiscal Wellness
• Identify Community “ RESULTS”
o Supplemented by Internal Organization’s “Governance” Results
• Communicate meaning of Results using “RESULTS
MAPS”
• Inventory of Programs and Services
o Supported by associated Program Costs; Program Revenues and FTE
• Evaluate “what we do” against “what we are in
business to do”
• Allocate resources based on Community Priorities
o Looking through the “NEW LENS” of the “Resource Alignment
Diagnostic Tool”
43

44. Score Programs Against
Results & Attributes
City of Boulder’s Results
Basic Program Attributes
• Accessible & Connected
 Mandated to Provide the
•

•
•
•
Community
Economically Vital
Community
Healthy Environment &
Community
Inclusive & Socially
Thriving Community
Safe Community




Program
Reliance on the City to
Provide the Program
Cost Recovery of the
Program
Change in Demand for
the Program
Size of Population Served
And/or any other criteria
that is relevant to your
community
44

45. Identify “Value” of Program Based on
their Influence on Results
Individual Department Program Scorecard
Evaluation Criteria
Thursday, January 28, 2010
Directions: For all the programs in your department,
please rate how these programs score in the four
Basic Attributes and they influence the City’s ability
to achieve its Priority Results. When completed,
please email the Program Scorecard back to
mariah.dabel@sanjoseca.gov
Basic Program Attributes
Mandated to
Cost Recovery
Provide
of Program
Program
Change in
Demand for
Service
-4 to 4 Scale
('4=demand
0-4 Scale
0-4 Scale
significantly
(4=State/Federal
based on Percentage
decreasing;
Mandate; 2=Charter; (4=75-100%; 3=504=demand
1=Ordinance/Resolut 74%; 2=25-49%; 1=1significantly
ion; 0=No Mandate)
24%)
increasing)'
Department
Office of Economic
Development
Office of Economic
Development
Office of Economic
Development
Office of Economic
Development
Office of Economic
Development
Office of Economic
Development
Office of Economic
Development
Office of Economic
Development
Office of Economic
Development
Program
Business Attraction/
Expansion Assistance
International Business
Relations/Sister City
Economic Strategy, Policy
and Analysis
Priority Results
Reliance on
City to Provide
Service
0 to 4 Scale
(4=Only City can
provide service;
2=Only public
entities can provide
service; '0=other
entities can provide
service)'
Safe City
Prosperous
Economy
Green,
Sustainable
City
Attractive,
Vibrant
Community
Reliable,
WellMaintained
Infrastructur
e
On a scale of 0 to 4 points , 0 = program has no influence on achieving the
Result; 1 = program has some influence, though minimal; 2 = program
influences the Result; 3 = program has a strong influence on the Result; 4 =
program is essential to achieving the Results
Enter Score Below Enter Score Below Enter Score Below Enter Score Below Enter Score Below Enter Score Below Enter Score Below Enter Score Below Enter Score Below
4
2
4
4
2
4
3
2
0
0
1
2
2
0
2
1
1
0
1
2
4
2
0
3
3
2
0
Downtown Management
1
2
4
4
3
2
0
3
4
Arts / Festival Grants and
Assistance
1
1
3
0
1
3
1
4
1
K-12 Arts Education
0
0
2
0
1
2
0
4
0
1
0
2
4
1
3
1
4
1
1
1
2
0
1
2
2
4
3
1
1
3
0
1
2
1
4
2
Cultural Planning, Policy
and Initiatives / Arts
Commission
Public Art Project
Management
Public Art Master Plan
Implementation and
Interagency Coordination
45

46. Tools of Fiscal Wellness
• Identify Community “ RESULTS”
o Supplemented by Internal Organization’s “Governance” Results
• Communicate meaning of Results using “RESULTS
MAPS”
• Inventory of Programs and Services
o Supported by associated Program Costs; Program Revenues and FTE
• Evaluate “what we do” against “what we are in
business to do”
• Allocate resources based on Community Priorities
o Looking through the “NEW LENS” of the “Resource Alignment
Diagnostic Tool”
46

47. “Looking Through the
“New Lens”
• Which programs are of the highest priority in terms of
achieving what is expected by the community?
o And which are of lesser importance?
• Which programs are truly mandated for us to provide
o And how much does it cost to provide them?
• Which programs are offered because they are “selfimposed” ?
• Which programs are offered for which there are no
other service providers?
• Are there programs might lend themselves to
public/private partnerships?
47

48. “Looking Through the
“New Lens”
• Who in the private sector is offering programs that
are similar in nature?
o And should we consider” getting out of that business”?
• Which programs are experiencing an increasing
level of demand from the community?
o And which are experiencing a decreasing need?
• Are there programs offered that are not helping
us achieve our intended “Results”?
• What are we spending to achieve our “Results”?
48

49. “Resource Alignment Diagnostic Tool”
City of Boulder, CO
Program Type:
Funding Source:
Prioritization Perspective:
(City-wide, Fund, Funds)
(All Departments, Specific)
(Est. Budget, Gen Gov Revenue,
Program Revenues)
City-wide
(All Programs, Governance,
Community-oriented)
Choose Department:
All Departments
Total Estimated Budget
Community-Oriented
Programs
October 30, 2012
Quartile Ranking
(Qua rti l e 1: Hi ghest Rated Progra ms;
Qua rti l e 4: Lowes t Rated Progra ms)
Priority Based Budgeting: Spending Array Perspectives
1
$85,915,772
2
$51,726,155
3
$21,505,297
4
$7,498,842
$-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
$90,000,000
$100,000,000
Quartile Ranking
2011 Budget
2012-13 Proposed Budget
Increase (Reduce) %
Impact
2012-13 Target Budget
Programs in Array
Qrt 1
$0
$85,915,772
0.00%
$0
$85,915,772
88
Qrt 2
$0
$51,726,155
0.00%
$0
$51,726,155
116
Qrt 3
$0
$21,505,297
$21,505,297
110
Qrt 4
$7,498,842
0.00%
2-10%
0.00%
$0
$0
$0
$7,498,842
54
$0
$166,646,067
0.00%
$0
$166,646,067
368
TOTALS
49

50. 50

51. Thank You !
Jon Johnson, Co-Founder
303-909-9052 (cell)
jjohnson@pbbcenter.org
Chris Fabian, Co-Founder
303-520-1356 (cell)
cfabian@pbbcenter.org
www.pbbcenter.org
Copyright ©2009 by Chris Fabian and Jon Johnson d/b/a the Center for Priority Based Budgeting,
Denver, Colorado.
51

52. Webinar Resources
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53. Save the Date – April 23rd – 25th
2014 Transforming Local Government
Conference
Denver, Colorado
20 Years of Transformation – Inside

54. Calendar
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12/12 Partnering with Your Community on Code Enforcement
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55. Thank You for Joining Us!
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