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TRANSCRIPT
10/2/2017
1
Government Finance Officers Association
2nd Annual Better Budgeting
Web Stream Event
#GFOA
Speakers
Mike Mucha, GFOA (Facilitator)
Lisa Bracken, Atlanta Public Schools
Ann M. Carbone, City of Boston
John Fishbein, GFOA
David Schmiedicke, City of Madison
Ebony Shelton, County of San Diego
Overall Budget Process
Develop ApproachesTo Achieve Goals
Develop a BudgetConsistent with ApproachesTo Achieve Goals
Evaluate Performance And Make Adjustments
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23
4
Establish Broad Goalsto Guide Decision Making
POLLING QUESTION 1
o What phase of the budget process do you
feel your organization has the most room
for improvement?
1. Establishing goals / defining community
priorities
2. Developing approaches / operational
planning
3. Allocating resources / creating the budget
4. Monitoring the budget and evaluating results
Training Focus
Develop ApproachesTo Achieve Goals
Develop a BudgetConsistent with ApproachesTo Achieve Goals
Evaluate Performance And Make Adjustments
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23
4
Establish Broad Goalsto Guide Decision Making
Budget Process / Budget Roles
Identify Goals
Long-Term Planning
Internal Collaboration
Capital
Budget Understanding
Training Agenda
o The budget process / budget roles
o Identifying goals and community priorities
City of Madison Case Study
o Long-term planning / dealing with uncertainty
Capital planning
City of Boston Case Study
o Internal collaboration
County of San Diego Case Study
o Transparency and budget understanding
o Discussion – better budgeting
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Structure of Training
Discussion, Tips, and Lessons Learned Key Takeaways
Additional Resources Questions and Follow Up
www.gfoa.org/betterbudget2018
Budget Roles
Budget Process
Policy within the Budget Process
Strategic planning (GFOA Best Practice) Environmental scan - what’s happening around you that
you should take into account?
Goals – what broad goals are driving your organization?
Fiscal policies (GFOA Best Practice) What changes need to be made?
What did you learn from the past that should influence a change in policy?
Communicate (GFOA Best Practice) How do you communicate externally around priorities?
How do you communicate internally about connecting goals to resource requests?
http://www.gfoa.org/best-practices
Strategic Planning - Environmental Scan
Strengths and Weaknesses
Rochester Genesee Regional Transportation Authority, New York
Strategic Planning - Environmental Scan
Opportunities and Threats
Rochester Genesee Regional Transportation Authority, New York
Strategic Planning Influence on Budget
City of New Orleans, Louisiana
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POLLING QUESTION 2
o Does your organization have a strategic plan that is well understood and used for the basis for the budget process?
1. No. We don’t have a strategic plan
2. We have a strategic plan, but it is not well communicated
3. We have a good strategic plan, but it is not linked to the budget
4. We have a good strategic plan that is used in the budget process, but it is not made to guide budget decisions
5. Our strategic plan is in complete alignment with our budget
Financial Policies Summary
Napa Sanitation District, California
Financial Policies Compliance
Napa Sanitation District, California
Financial Policy Revisions
New Kent County, Virginia
Important Steps in Communicating the Process
1. Identify the public’s perspective – broader
range collected through a variety of ways and
sources
2. Collect information before a decision has been
made
3. Encourage all citizens to participate
4. Communicate how public involvement has
specifically made a difference
Citizen Involvement as a Policy
Citizen involvement shall be encouraged in the
annual budget decision-making process through
public hearings and community meetings. Such
involvement shall include assistance in
establishing program and budget priorities for
the city.
Involvement shall also be facilitated through city
boards, task forces and commissions, which
shall serve in advisory capacities to the city
council and the mayor.
City and County of Honolulu, Hawaii
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First Step – Getting Community Feedback
City of Tacoma, Washington
Reaching Out to Stakeholders
City of San Antonio, Texas
Community Surveys
City of San Antonio, Texas
Letter for Funding Proposals
City of Lawrence, Kansas
Know the Policy – Key Dates
Town of Avon, Connecticut
Budget Calendar
Gloucester County, Virginia
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Know the Law
City of Bridgeport, Texas
BALANCED BUDGET
As per State Law, current operating revenues, including Property Tax Reduction Sales Tax (which can be used for operations), will be sufficient to support current operating expenditures. Annually recurring revenue will not be less than annually recurring operating budget expenditures (operating budget minus capital outlay). Debt or bond financing will not be used to finance current expenditures.
Help Frame Issues for Decision Makers
• Identify the key policy options, including
points to consider (pros, cons, long-range
implications, etc.)
• Place the options into context – Why has
this issue arisen? What will be the impact
if nothing is done? What are other
priorities?
• Create a narrative – How do all the pieces
fit together into a cohesive budget? How
is the budget balanced and priorities met?
Decision Process
• Identify decision items
• Use various data visualization tools
• PowerPoint, maps, etc.
• Place options before the decision makers
– balance the need to stay on task with
time for consideration and consultation
with others
• Keep the process going – your role is
often to facilitate and maintain focus
• Develop a tolerance for ambiguity
Watch the Steps
County of Chester, Pennsylvania
Budget Process/Budget Roles Takeaway
• Set up long-term goals
• Develop financial policies
• Encourage stakeholder involvement in the
budget process
• Assign responsibilities, tasks, and key dates
• Communicate the process concisely
Key Takeaways:1. Identify appropriate stakeholders and get them involved, especially
up-front2. Communicate key dates and expectations. Communicate results
and decisions.
POLLING QUESTION 3
Which scenario best describes how department stakeholders are involved in the budget process?
1. They are not at all. The budget is prepared by the budget office.
2. Departments are given a target budget by finance and identify how to allocate discretionary or non-salary spending
3. Departments work with the budget office to identify new programs or strategies for achieving results
4. Departments are involved throughout the budget process to help create efficiencies, develop more effective programs, and work collaboratively to create the budget
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Identifying Goals and Community Priorities
Building relationships and trust with the public
oCommunicate
oHonestly
oEarly
oOften
Balancing special interest / politics
oFirst, educate
oThen, follow-up
oDepth vs. breadth
o“You can’t always get what you want…”
Building Relationships and
Trust with the Public
Commit Communicate
To persuade?
Make the case. Ensure
understanding. Outline next
steps.
To create buy-in?
How has input changed the
outcome? Demonstrate you listened…
To inform?
What’s the media? Can it be accessed? Easily understandable?
To build trust?
How will you close the loop?
Honestly,
Know where the gaps are and address them openly
and honestly
Come out of the cube…
But tell the GOOD NEWS TOO!!!
Prepare stakeholders for what’s ahead
(Money on Non-Fun Stuff)
Speak to the perceptions and address it head on(Bloated Central Office)
Be transparent about where you were
(acknowledge the past), where you are
(transformation takes time), and where you are
going (won’t please everyone)
Early,
Budget and Finance Advisory Committee (BFAC): provides guidance and counsel on matters of budget and finance; meets regularly with the Chief Financial Officer, working alongside staff and others to develop tools and methodologies on how to best improve the district’s budgeting process. The administration has been responsive to BFAC’s recommendations for greater cohesion and clarity.
Every meeting includes an update
from our office, feedback protocol,
and BFAC led discussion
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and Often.
New Student First Funding InitiativeMulti-Year Planning
(And Again!)
Balancing Special Interest
and Politics
First, educate
Superintendent’s Employee
Meeting
FY2018 Budget Development
October 12, 2016 4:00-7:00
o Welcome and Introductions
o Budgeting 101
o FY18 Budget: Closing the Gap
o FY18 Budget: Unfunded
Components of Transformation
o Wrap–Up and Next Steps
Then, follow-up
Superintendent’s Employee Meeting
FY2018 Budget Development
December 14, 2016 4:00-6:00
o Recap - Last Superintendent’s Employee
Meeting
o Introduction - Budget Development Exercise
o Table Work Session
o Share-out
Depth vs. Breadth
1. The district will allocate resources pursuant to the district’s definition of equity.
2. The district will continue investing in the Turnaround Strategy, providing additional support and interventions for schools that have been chronically struggling on the state accountability metric.
3. The district will recruit, develop, retain, and promote high-quality staff by developing and implementing a multi-year compensation model.
4. The district will continue implementing its charter system operating model and core components of signature programming, cluster funds, school flexibility dollars, and community engagement strategy.
5. The district will fund pension obligations in accordance with State statute and actuarial standards.
6. Per resource parameter #2, with additional public funding and/or partnership resources, the district will make investments in Pre-K through 3rd grade to ensure all students are reading by the end of 3rd grade.
7. Per resource parameter #2, with additional public funding and/or partnership resources, the district will focus on whole-child development, including positive behavior supports, arts and athletics.
8. Per resource parameter #2, with additional public funding and/or partnership resources, the district will create a comprehensive leadership development program.
9. Per resource parameter #2, with additional public funding and/or partnership resources, the district and its partners will significantly expand access to quality Early Childhood Education.
FY2018 Expenditures ParametersFY2017 Expenditures Parameters
1. Allocation decisions will be made to prioritize achieving a more equitable distribution of resources pursuant the district’s equity audit.
2. The district will allocate resources to implement effectively the system’s move to a “charter system” operating model.
3. The district will fund pension obligations in accordance with State statute and
actuarial standards.
4. The district will invest in a multi-year school turn-around strategy that provides additional support and interventions for schools at risk of state take-over.
5. The district will make investments in early childhood education based on findings from research study.
6. The district will ensure that the budget is aligned to the Board’s mission and
vision and that resources are allocated against key district strategic priorities in the areas of:
a. Academic Program
Ongoing implementation of district’s CRCT remediation &
enrichment efforts
Improvement in student achievement in math, science, and literacy, including a comprehensive materials of instruction
strategy (inclusive of textbook adoption and online student and teacher resources)
Ongoing implementation of signature programming across clusters
Ongoing implementation of positive behavior supports
programming
b. Talent Management
Strategies to recruit, professionally develop, and retain high quality staff
Continued implementation of multi-year compensation study recommendations to address pay parity
c. Systems & Resources
The safety, security, and well-being of students and staff
(including the implementation of a new safety/security model)
Preventative maintenance of support infrastructure (including
buildings, buses and technology)
d. Culture
Continued implementation cultural transformation strategy, including strengths based programming
Implementation of District’s external communications strategy
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“You can’t always get what you want…” POLLING QUESTION 4
o Do you think that all employees are aware
of and understand your mission and
goals?
1. Yes. All understand
2. Somewhat. Most would understand
3. No. Mission and goals are not communicated
POLLING QUESTION 5
o On a scale of 1 to 5, please indicate how well your budget is aligned with your strategic plan and works to accomplish the plan.
1. Not at all
2. Some alignment
3. Mostly aligned but no communicated link
4. Aligned
5. Perfect alignment. All programs are consistent with stated priorities and strategic goals
NA. We don’t have a strategic plan
Key Takeaway # 3: Remember your purpose and mission and commit to itThe key to building trust is open and honest communication and then follow-through on your commitments. Or in short… put your money where your mouth is!
City of MadisonCase Study
Better Budgeting
Background – City of Madison
• 30 city agencies
• 2,900 FTE positions
• Budget:• $700 million all-funds operating budget
• $283 million general fund
• $17 million library fund
• $219 million levy
• $360 million capital budget ($170 million GO)
• Strong Mayor; 20-member council• one of the largest per capita in the country
(12,500 people per member)
• About 100 city committees
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City General Fund Revenues - $300 million
73%
12%
4%3%
2% 2% 2%2%
2017 Revenues
Property Tax
State Aid
Payments in Lieu of Taxes
Charges
Fines and Forfeitures
Other
Licenses/Permits
Room Tax and Other
Issues Facing City
• Rising poverty rate – 50% of school students eligible for free and reduced price lunch
• Rising violence – gun violence in parts of the City
• State retrenchment – strict levy limits; state aid reductions; 50% pro-ration of payments for police and fire services to state-owned and UW buildings
• Infrastructure pressures – reconstruction of major city streets; renovation of key city facilities; rising debt service share (historically 12.5% of g.f. expenditures; could exceed 19% by 2023)
• Economy is strong – state government, University of Wisconsin, biotech, medical records technology
Mayor and Council
• Council has a neighborhood view
• 12,500 residents per Council district
• Mayor has city-wide view
• Strong political support for labor
• Collective bargaining agreements replaced
with ordinance and handbooks
• Strong non-profit organization sector
Approaches
• City-wide goals and outcomes
• Better connecting budgeting to outcomes
• Data inventory effort
• Cross-functional/agency teams
• Joint executive/council strategic
management oversight group
• Racial equity and social justice initiatives
Data in Action
Ad-hoc Data Collection
Siloed Data Sources
Agency Specific Goals and Initiatives
Proactive Data Collection
Enterprise-Wide Solutions
City-Wide Goals and Cross Functional Teamwork
• Efforts are intended to make systems easier to interact with & manage
• Principles of strategic management intended to
become THE WAY we do business instead of AN ADDITIONAL WAY
OLD WAY NEW WAY
Framework that connects the City’s vision and mission with outcome areas and S.M.A.R.T. indicators. The framework serves as a cornerstone in the decision-making process.
City-wide Goals
Outcomes & Indicators
Agency Service Delivery
StrategiesPerformance
Measures
Strategic Framework
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The Strategic Framework
• Guidance Teams worked together to define what success would look like and how that success would be measured
• Staff currently working to bring concepts together with Comp Plan
The Planning Process
Strategic Framework
Mayor, Council, & residents set
priorities
Agencies submit proposals that will
drive outcomes
Mayor & Council adopt budget that funds strategies to
advance outcomes
City services implement
strategies as outlined in
workplans funded in budget
Data collected by service to monitor progress against goals articulated
in budget
Quarterly meetings provide
forum to track City-wide
outcomes across services
Service delivery adjusted based on
what we know from data
Connecting Service
Delivery & Outcomes
Tools to Guide Us
These tools will help foster innovation among City staff at all levels
helping us to achieve our objective of delivering the outcomes that
matter most to Madison’s residents.
Continuous Improvement
Accountable Government
Data Informed
• Use data to identify where we can be more efficient
• Provide training and support for agencies to pilot innovations to improve service delivery
• Connect our services with the outcomes they are seeking to influence
• Use the budget process as an annual planning opportunity to confirm our priorities
• Convene around City-wide Goals to monitor progress in driving outcomes
• Share data about our progress internally & with the public
Next Steps:Connecting City Services & Outcomes
Step 3: Develop Data Action Plan
Identify the data source and variables necessary to develop dashboards.
Step 2: Define How to Measure Success
Define how much are we doing with each service, how well are we doing it, and is anyone better off.
Step 1: Identify Services
Define services in a way that is consistent with how residents interact with them.
Engagements with City agencies will focus on connecting their work with the outcomes they drive
The 2018 Executive CIP has been mapped allowing you to see where
projects are planned for the next 6 years
Mapping the Plan
Projects have been grouped into four categories to reflect the way our residents
think about the budget. The categories are: Facilities, Parks, Transportation, and Utilities.
The overview map allows you to see all of the projects planned throughout the CIP; keep
scrolling through the map to see more detail about the categories including link to the City’s
projects portal & budget.
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Capital Projects
• Each section of the map
highlights key projects
included in the budget
• Project amounts reflect the
total project budget; this
may cause budget to vary
slightly from what is in the
budget document as prior
year appropriation is not
shown in the budget book
• Each section of the map
includes an introductory
overview that shows the
funding breakdown and
anticipated spending levels
across the CIPUse this map as a tool to talk about the budget with
your constituents learning more about their budgetary priorities
Key Takeaways -
#4 - Engage Council in goals and outcomes development – help them understand the larger picture
#5 - Transparency in data – be a resource (e.g., mapping the capital budget)
#6 Understand that neighborhood issues will usually be adopted by the Council
#7 Need to integrate comprehensive land use plan with budget outcomes
County of San Diego
Policy Analysis and Budget Process
Policy Analysis and the Budget Process
o Importance of policy analysis
o Creating financial policies
o Communicating your financial
policies
o Fiscal impact of new policies
Importance of Policy Analysis
o Every policy has a fiscal impact
This is almost always true
o Two examples
Intergovernmental revenue• How other policies impact “my” cash flow
Economic/Business impact• How “my” policies impact other cash flow
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POLLING QUESTION 6
o Does your organization require that policy
proposals contain a fiscal impact
analysis?
1. Yes
2. Yes, but the process is not always followed
3. No
Creating Financial Policies
o Align with broad government goals
o Implement best practices in the following policy areas:
• Budget • Performance
• Capital • Reserves
• Contingencies • Revenue
• Debt • and more…
• Fees
o Select government organizations in finance
• Government Finance Officers Association (GFOA)
• International City/County Managers Association (ICMA)
• National League of Cities (NLC)
• National Advisory Council on State and Local Budgeting (NACSLB)
Source: National Advisory Council on State and Local Budgeting Practice
Communicating Your Financial Policies
o Publish on public website
o Engage in dialogue with key stakeholders
• Elected officials
• Constituents
• Investors
o Budget
• A living document of short-term priorities
• Reflects policy decisions of elected officials
• Must consistently apply existing financial policies
Fiscal Impact of New Policies
o Short term
• Typically in alignment with the budget
o Long term
• Typically in alignment to maintain a long-term
financial outlook
o Job of elected official
• Goal is to weigh public benefit vs. cost of
program/service in the short and long term
Conclusion
o Do your financial policies reflect your agency’s
goals?
o What are the short- and long-term effects of
new or proposed policies?
Key Takeaway #8: You need to understand the effects of new policiesThis is the only way to provide decision makers with accurate information, allowing them to make the right decisions about your organization’s future.
Creating Long-Range
Capital Plans
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Long-Range Capital Planning GFOA Recommends
o Comprehensive
o Fiscally sustainable
o Identifies and prioritizes expected needs
based on a’ strategic plan
o Establishes project scope and cost
o Details estimated amounts of funding
from various sources
o Estimate future operating and
maintenance costs
At least three years, preferably five or more
Step 1: Identify Needs
o Governments should:
Develop a capital asset life cycle for major capital assets.
o Include costs to:
Operate
Maintain
Administer
Renew or replace the capital asset
o Identify present and future service needs that require capital infrastructure or equipment
Step 1: Identify Needs (cont)
o Attention should be given to:
Infrastructure improvements that support
private development and the good of the
public
Changes in policy or community entity needs
Incorporating input and participation from
major stakeholders and the general public
Projects with revenue-generating potential
Analyze the non-financial impacts of the
project (e.g., environmental) on the
community
Determine Financial Impacts
o GFOA recommends governments
determine the full extent of the capital
project/asset and the associated life cycle
costs
Determine Financial Impacts (cont)
o Scope and timing
o Identify and use the most appropriate approaches when estimating project costs and potential revenues
o Adjust cost projections based on anticipated inflation
o All major components Land acquisition needs
Design, construction
Contingency
Post-construction costs
o Quantify ongoing life-cycle costs Sources of funding for those costs should be identified
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Prioritize Capital Requests
o Health and safety
o Asset preservation
o Service/asset expansion/addition
Prioritize Capital Requests
o Attention should be given to:
Coordination with related entities
Allowing submitting agencies to provide an initial prioritization
Incorporating input and participation from major stakeholders and the general public
The impact on operating budget impacts resulting from capital projects
Appling analytical techniques, as appropriate, for evaluating potential projects (e.g., net present value, payback period, cost-benefit analysis, life-cycle costing, cash-flow modeling)
Using a rating system to facilitate decision-making
Develop a Comprehensive Financial Plan
o GFOA recommends
Develop a viable overall multi-year financing
plan
Covering the multi-year period of the capital
plan
Ensuring that the proposed capital plan is
achievable within expected available
resources
Develop a Comprehensive Financial Plan
o Financing strategies
Should align with expected project
requirements while sustaining the financial
health of the government.
Develop a Comprehensive Financial Plan
o Revenue and expenditure trends
o Cash flow projections
o Compliance with all established financial policies
o Recognize appropriate legal constraints
o All appropriate funding alternatives
o Sources and uses for debt service
o Affordability of the financing strategy
Capital Project Monitoring and Reporting
o The financial management of capital
projects requires a substantial
commitment of organizational time and
resources
o Given their scale and cost, capital
projects can represent a significant risk
for local governments
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Data Systems
Appropriate technological solutions
Positional roles
Process for controlling and managing project
changes
Accountability and data integrity
Data accuracy
System controls and security
Consistency and standardized language
Ease of accessing data ***
Monitoring Projects
o Plan identifies all required resources and milestones
o Scope has been clearly identified
o Project stays within scope
o Review project-related financial transactions
o Review expenditures
o Confirm continued availability / appropriateness of revenue sources
o Confirmation adequacy of cash
o Review timing of investment maturities
o Review of sources and project
o Results compared to established measures of performance
Project Status Reports
Percent of project completed
Percent of project budget expended
Progress on key project milestones
Contract status information
Revenue and expenditure activity
Cash flow and investment maturities
Funding commitments
Available appropriation
Comparison of results in relation to
established performance measures
GFOA Best Practices
Multi-Year Capital Planning
Capital Project Monitoring and Reporting
http://www.gfoa.org/best-practices
POLLING QUESTION 7
o Who is primarily responsible for tracking
capital project needs and capital
budgeting in your organization?
1. Finance / Budget Office
2. Public Works
3. City Manager / County Manager / CEO
4. Engineering
5. Other
6. Everyone works collaboratively on capital
budgeting
County of San Diego
Revenue and Expense Forecasting
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Revenue and Expense Forecasting
o Why local governments forecast
o Types of forecasting
o Goals of forecasting
o Structure of forecasting
Why Local Governments Forecast
o What problem does forecasting solve?
Identifies potential problems and issues in
future
• It’s better to look at the problem now than to look
for the problem later
Allows leaders to make early decisions
• Prompt choices enable performance in a non-
emotional environment
Examples of Major Challenges Facing Local
Governments
o Fluctuations in the economy
o Pension costs
o State budget challenges and uncertainties
o Tax base continuity
o Federal government budget deficit
o Delivering services in a new technological age
o Changing demographics of the population
o Tax and expenditure limitations
o Aging infrastructure
o Healthcare costs
o Educational attainment
o Visionary, thinking process about the
future
Solve problems, meet challenges, capture
opportunities, sustain essential services
o Link between strategic planning and
budgeting
Strategic planning sets broad goals
Budgeting is short term and tactical, and is
used to operationalize long-term strategies
Helps direct resources to highest priority
items
o Multi-year horizon
o Government-wide (all funds)
o Comprehensive content
o Institutionalized and integrated with
strategic planning and budgeting
Our Planning and Budgeting Environment
Strategic Plan5-Yr Forecast2-Yr Op Plan
BoardPrioritiesPolitical
Influences
DepartmentInitiatives
LaborAgreements
State & FederalMandates, Regulations
& Budgets
FundingOpportunities
Public Requests
Documented orPerceived Needs
ResourcesAvailable
PopulationGrowth
LocalRegulations
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Financial Planning Process Phases
o Mobilization Purpose, who leads, who participates, preliminary
financial analysis, service-level and outcome-preferences, financial policy review, and scope
o Analysis Data gathering (aka “environmental scan”), revenue
and expenditure trends, and financial balance (gap) analysis
o Decision making The organization’s response to the analysis
o Execution Budgeting, monitoring, and reporting
Source: GFOA
Types of Forecasting
o Qualitative
• Use when data is scarce or unavailable.
• EX techniques: visionary forecasts, market research, panel
consensus.
• Accuracy = poor
o Time-series analysis
• Use if data is available for several years and relationships/trends
are relatively clear.
• EX techniques: moving avg., exponential smoothing, trend
projections.
• Accuracy = poor to good
o Causal models
• Use when historical data is available & clear relationships among
variables exist.
• EX techniques: regression, econometric models, input-output,
economic-input-output.
• Accuracy = good to excellentSource: Harvard Business Review
Picking a Forecast Type and Technique
o Picking a forecast type & technique
Many factors to consider
• Size & context of government
• Accuracy & availability of historical data
• Desired accuracy of the forecast
• Time available to develop the forecast
• The value government places on the forecast
• The number of projection periods
• Cost to conduct the forecast
Remember: forecasting is an art!• But goals and structure are still valuable in forecasting.
Source: Harvard Business Review
Goals of Forecasting
o Revenue forecasting
• Project revenues for 3+ years
• Analyze government’s major revenue sources
• Seek consensus among leadership team/decision makers with final
forecast
• Get better – use forecast variances from prior years to make better
projections and/or assumptions
Source: National Advisory Council on State and Local Budgeting Practice
POLLING QUESTION 8
o How far in advance does your
organization forecast revenue?
1. 1 year
2. 2-5 years
3. 5-10 years
4. 10-20 years
5. 20 + years
Goals of Forecasting
o Expenditure forecasting
• Project expenditures for 3+ years
• Identify and explain service-level assumptions
• Develop capital improvement plan (CIP) for 5+ years
o Comparison of forecasts
• Compare revenue and expenditure forecasts
• Use the results as a tool to identify future issues or problems where
expenditures exceed future revenues
Source: National Advisory Council on State and Local Budgeting Practice
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Structure of Forecasting
o Aspects of structure
• Timeline
• Available data
• Consistent forecasting across organization
o GFOA forecasting resources
• Online Resources (www.gfoa.org)
• Printed Resources like Informed Decision Making through
Forecasting (a step-by-step guide for in-house revenue forecasting)
Case Study
BOSTON – CAPITAL PLAN
o Mayor Martin J. Walsh today presented
his $2.08 billion proposed Fiscal Year
2018 - Fiscal Year 2022 (FY18-FY22)
Capital Plan
Makes critical investments in the City's
infrastructure in every Boston neighborhood
Guided by Boston's citywide plan, Imagine
Boston 2030
• Apr 13, 2017
CITYWIDE PLANNING
IMAGINE BOSTON 2030
o Ambitious initiatives
o An ambitious set of initiatives form the
foundation of the Imagine Boston 2030
plan. Taken together, these initiatives will
support Boston's dynamic economy and
improve quality of life for residents by:
o encouraging affordability;
o increasing access to opportunity;
o promoting a healthy environment; and
o guiding investment in the public realm.
OPPORTUNITY OF GROWTH
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OPPORTUNITY OF GROWTH INCREASING POPULATION
INCREASING POPULATION AFFORDABILITY
CLIMATE CHANGE CLIMATE CHANGE
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EQUITY AND ECONOMIC OPPORTUNITY EQUITY AND ECONOMIC OPPORTUNITY
o Moving into the 21st century
o Mayor Walsh committed $1 billion over ten
years to bring Boston's school buildings into
the 21st century, and this Capital Plan
launches that investment with funding for:
o 21st century classrooms;
o MSBA Accelerated Repair Program
partnerships;
o Completion of projects in the pipeline; and
o Reserves for future projects identified by
BuildBPS community engagement.
o Core initiatives
o Boston, in collaboration with State and Federal sources, will invest $709 million over the next five years in implementing the core initiatives outlined in Go Boston 2030:
o streets that are safer for all users of our roads and sidewalks, particularly pedestrians and cyclists;
o travel that is more reliable and predictable; and
o quality transportation choices that improve access to interconnect our neighborhoods for all modes of travel.
FY2018 CAPITAL PROJECTS
Key Takeaway # 1: Name of TakeawayOne sentence explanation
FY2018 CAPITAL BUDGET
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FY2018 CAPITAL BUDGET FY2018 CAPITAL BUDGET
124
CAPITAL PROJECTS CAPITAL PROJECT FINANCING
Fiscal Years 2018 - 2022
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DEBT SERVICE DEBT SERVICE REQUIREMENTS
Fiscal Years 2015 - 2022
OUTSTANDING PRINCIPAL BY STATUTE
(a/o 4/30/17)
OPEN BUDGET FY 17 SNAPSHOT
IMAGINE BOSTON
County of San Diego
Communication and Collaboration
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Communication and Collaboration
o Need for communication & collaboration
o Types of communication & collaboration
o Purposes of communication & collaboration
Need for Communication and Collaboration
o Tone set at the top
It filters down based on leader’s priorities
o Reasons to communicate & collaborate
Accuracy and control
• To understand and determine variances
Ethical behavior
• To safeguard public resources
Excellence and performance
• To meet audit requirements and exceed operational
expectations
Source: Financial Management for Public, Health, and Not-for-Profit Organizations
Types of Communication
o Verbal
• Sounds, language & tone of voice
o Auditory
• Listening & hearing
o Non-Verbal
• Facial expressions, body language & posture
o Written
• E-mails, memos & other recorded text
o Visual
• Pictures, symbols & other representations
Source: Department of Labor
Types of Collaboration
o Collaboration combinations
Open or closed network?
Flat or hierarchical governance?
o Elite circle
• Closed and hierarchical collaboration
o Innovation mall
• Open and hierarchical collaboration
o Innovation community
• Open and flat collaboration
o Consortium
• Closed and flat collaboration
Source: Harvard Business Review
Purpose of Communication and Collaboration
o For making decisions
o To maintain and understand operational
impacts
o For public consumption
• Long-term forecasts
• Budget
• Quarterly reports
SD Example: Making Decisions
o Group finance director model
o Facilities planning board
• Capital Improvement Needs Assessment (CINA)
• Major Maintenance Improvement Plan (MMIP)
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SD Example: Operations
o Quarterly Meetings with CAO
o Cost Commission
• Internal Service Fund (ISF) rates
SD Example: Public Consumption
o Tips for creating a public document
Hire and train the right people
• Give employees a baseline of knowledge according to
agency standards
Document expectations
• Develop clear processes and procedures
Discuss changes for upcoming fiscal year
Encourage budget office to work with departments on
a draft
Invite stakeholders to edit draft until it is finalized and
published
Communication and Collaboration
o Do you know your communication and
collaboration style?
o With what purpose do you communicate and
collaborate?
Working with Other
(Non Budget) Departments
Collaborative Budgeting Successful Budget Process
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Successful Budget Process Collaboration Essentials
Budget Collaborators Questions for Collaborators
From the Beginning To Budget Completion
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Budgets reflect an organization’s priorities
o The relationship between budgets and
priorities is critical for good planning
o Division heads give preferential treatment
to proposals that directly support the
priorities
o There’s a finite amount of funds, and
priorities help us determine how best to
use them
o Departments submit plans to their division
head, explaining why their projects are
important and how they support priorities
o The division heads, in turn, review the
proposals and develop their division-wide
budgets
Budget Cycle
o
Unlocking Boston’s budget
o Until this year, three books, 860 pages, and almost three inches of data-rich Boston budget and performance information was buried in a PDF format.
o This year, the Budget Office worked closely with the City’s Digital Team to unlock this budget information with the public in three new ways: an in-depth budget website, a quick 100-second video on how the budget works, and live streams of budget presentations on Facebook and YouTube.
POLLING QUESTION 9
o What is the biggest challenge in getting
departments to work more
collaboratively?
1. Trust issues
2. Not enough time (collaboration is time
consuming)
3. Departments don’t understand budget
process
4. No executive commitment
5. Lack of process
Case Study: County of San Diego
GFOA Better Budgeting WebinarSeptember 2017 Internal Communication
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INTRODUCTION
157
• Most southwestern countyin the United States
• 4,526 square miles with 70 miles of coastline
• 3.8 million residents (2016)
o 2nd most populous countyin California
o 5th most populous countyin the U.S.
• Fiscal Year 2017-18
o Total budget = $5.79 billion
o Workforce = 17,413 staff years
COUNTY OVERVIEW
Public Safety$1,836.1M
31.7%
Health & Human Services
$1,914.4M33.1%
Land Use & Environment
$511.8M8.8%
Community Services $328.6M
5.7%
Finance & General Gov’t
$409.1M7.1%
Capital Program $154.1M
2.7%
Finance Other$632.3M
10.9%
Total Adopted Budget: $5.79 billion
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• Five-member elected Board of Supervisors
• Five business groups headed by a Deputy Chief Administrative Officer (DCAO)
• DCAO of Finance and General Government is also the Auditor & Controller
o Office of Financial Planning
GOVERNANCE
Mission: To provide comprehensive financial planning, policy oversight, advisory services,
and administration of community grant programs to ensure stability, integrity and
promote accountability and transparency in government to foster public confidence.
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• Business model that guides all County operations
• Annual cycle drives financial planning and budgeting
• Begins with strategic planning
GENERAL MANAGEMENT SYSTEM
160
LONG-TERM FINANCIAL PLANNING
161
WHERE DO WE WANT TO BE IN FIVE YEARS?• Goals for the County and community
• Defines internal County culture
STRATEGIC PLANNING
162
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FIVE-YEAR FINANCIAL FORECAST
INTERNAL PROCESS FOR ALL FUNDS• Comprehensively anticipates expenditures, revenues, and any gaps
• Not a five-year budget, but first two years become basis for budget
• Subject matter experts
• Identify operational needs and forecast expenditures/revenue
County Departments
• Coordinate input from departments
• Identify Group needs and constraints
DCAOs and Group Finance Directors
• Provides framework/tools and compiles results
• Establishes County-wide assumptions for salaries and benefits, ISF rates
• Communicates County priorities
Office of Financial Planning
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STRATEGIC FACILITIES PLANNING• Identifies future business needs and physical environments
o Capital Improvements Needs Assessment (CINA)
o Major Maintenance Improvements Plan (MMIP)
o Essential Infrastructure program: 50+ year-old buildings
CAPITAL PLANNING
164
MEETING OF CAO and DCAOs• Share results of Five-Year Financial Forecast
• Discuss enterprise-level issues including capital needs
• Integrate any revisions to Strategic Plan
EXECUTIVE OFFSITE WORKSHOP
165
COORDINATED BY CAO WITH DCAOs• General Purpose Revenue
• One-time use of fund balance(s)
RESOURCE ALLOCATION
166
BUILDING THE BUDGET
167
FROM THE TOP DOWN…
• Operational Plan Kickoff meeting
o Shares assumptions and rates
o Identifies enterprise-level issues and changes
o Provides “standard language” for consistency
• County-wide training for budget and operational staff
• Operational Plan User Guide
COUNTY-WIDE COMMUNICATION
168
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FROM THE BOTTOM UP…
• Departments develop their budget(s)
o Expenditures and revenues
o Accomplishments and objectives
o Performance measures
• Office of Financial Planning reviews and edits
• Departments, groups, and executive stakeholdersfinalize drafts
BUDGET DEVELOPMENT
169
ONGOING BUDGET MONITORING
170
FROM LEADERSHIP
• Quarterly all Fiscal Staff meetings
• Monthly meetings with DCAO and departments
• Internal department meetings
FINANCIAL COMMUNICATION
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TO LEADERSHIP
• Quarterly Executive Management Exchange
o Reports to CAO and other key executives
o Focus changes each quarter
o Generates discussion
FINANCIAL COMMUNICATION
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QUARTERLY ACTION BY THE BOARD OF SUPERVISORS
• Public hearing
o Projects year-end results
o Updates on County financesand economy
o Identifies key issues/risks
• Incorporated into next Five-Year Financial Forecast
BUDGET ADJUSTMENTS
173
Understanding the Budget
Document
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Budget Transparency
Budget transparency, while not a goal in itself, is a
prerequisite for public participation and
accountability. A budget that is not transparent,
accessible, and accurate cannot be properly
analyzed. Its implementation cannot be
thoroughly monitored nor its outcomes evaluated.
POLLING QUESTION 10
o Describe the level of online budget
transparency in your organization.
1. We do not post anything online
2. We post a PDF of the budget document
3. We post a PDF of the budget document
along with other important reports, plans,
and documents
4. We have a financial transparency website
that is updated frequently
5. We have interactive dashboards/queries that
allow citizens to view financial information
GFOA Budget Award Winners Using PDF Files
Town of Queen Creek, Arizona
Quick Reference Guide
County of Chester, Pennsylvania
Document Mapping
Arlington Heights Park District, Illinois
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Budget in Brief
City of Oceanside, California
Issue Discussion
Smith County, Texas
From the transmittal letter...........
City of Lawrence, Kansas
This year, the method by which funds are budgeted changed rather dramatically. This was done in an effort to reduce some of the transfers occurring between funds, which complicated the ability to fully understand the budget. Another purpose for the restructuring was to include funds that were previously not budgeted, such as grant funds, in order to increase transparency to the public.
Purpose of Debt Obligations
Gallatin County, Montana
Prioritization
Town of Windsor, Colorado
Priority I: IMPERATIVE (Must-Do) – Projects that cannot reasonably be postponed in order to avoid harmful or otherwise undesirable consequences.
A. Corrects a condition dangerous to public health or safety B. Satisfies a legal obligation C. Alleviates an emergency service disruption or deficiency D. Prevents irreparable damage to a valuable public facility.
Priority II: ESSENTIAL (Should-Do) – Projects that address clearly demonstrated needs or objectives.
A. Rehabilitates or replaces an obsolete public facility or attachment thereto B. Stimulates economic growth and private capital investment C. Reduces future operating and maintenance costs D. Leverages available state or federal funding.
Priority III: IMPORTANT (Could-Do) – Projects that benefit the community but may be delayed without detrimental effects to basic services.
A. Provides a new or expanded level of service B. Promotes intergovernmental cooperation C. Reduces energy consumption D. Enhances cultural or natural resources.
Priority IV: DESIRABLE (Other Year) – Desirable projects that are not included within five-year program because of funding limitations.
Departmental Financials
Town of Avon,
Connecticut
City of Olympia, Washington
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Explain Charts and Tables
Palm Beach County
Clerk of the Circuit
Court, Florida
Still the Best Deal Around
, Texas
Coachella Valley Water District, California
Transparency Grades Mobile Apps
City of El
Paso, Texas
Transparency Takeaway
o Modern governmental budgeting includes
more than a financial plan
Build on the budget document with
Community focused content
Illustrations of the information focused on your
audience
Use of visualization technologies, and
Relevant non-financial information as wellKey Takeaways:9. Make the budget document easy to navigate10. Budgets should focus on the entire community11. Budget transparency goes beyond just financial data
POLLING QUESTION 11
o What do you feel is the biggest challenge
to overcome in building a better budget?
1. Uncooperative elected officials
2. Lack of attention on budget process
3. Lack of time
4. Lack of technology resources
5. Poor communication internally
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Key Takeaways:1. Identify appropriate stakeholders and get them involved, especially
up-front2. Communicate key dates and expectations. Communicate results
and decisions.3. Remember your purpose and mission and commit to it4. Engage Council in goals and outcomes development – help them
understand the larger picture5. Transparency in data – be a resource (e.g., mapping the capital
budget)6. Understand that neighborhood issues will usually be adopted by the
Council7. Integrate comprehensive land use plan with budget outcomes8. Understand the effects of new policies9. Make the budget document easy to navigate10.Budgets should focus on the entire community11. Budget transparency goes beyond just financial data