resources, budget and finance michigan state university judicial administration program

Resources, Budget, and FinanceResources, Budget, and Finance

National Association for Court Management 1

Resources, Budget and FinanceMichigan State University

Judicial Administration Program

National Association for Court Management ConferenceJuly 2011

Learning Objectives

• Understand the relationship between judicial independence, inter-branch relations, and funding the courts.

• Learn alternative court budget planning formats, know about their advantages and disadvantages, and engage in skill development in their use.

Learning Objectives

• Learn about the different types of information and analysis used to support budget requests and budget allocation planning and decision making.

• Know about trends in public budgeting in times of resource constraint and impacts on the rules and procedures governing budgeting.

Learning Objectives

• Apply the principles involved in planning and implementing budget reductions, program downsizing or elimination, and budget re-allocations in the interest of reducing costs, improving court effectiveness, and preserving essential components of court mission and roles.

Learning Objectives

• Link sound problem diagnosis and goal setting in order to build a case for resource requests and for accountability in using resources.

Exercise 1

• What does “budgeting” mean to you?

• What is the purpose of the budget process?

• What do you expect to accomplish through the budget process?

Purposes and

Responsibilities of Courts

Leadership

Visioning and Strategic Planning

Essential Components

Court Community Communication

Resources, Budget and

Finance

Human Resources

Management

Education, Training and Development

Information Technology Management

Caseflow Management

• Context of Court Funding

• Basics of Public Sector Budgeting

• The Budget Process

• Trends in Public Sector Budgeting

Agenda

Resources, Budget and Finance Fundamentals

Context of Court Funding

Characteristics of Public Sector Funding

• Public expectations• Era of structural deficits• Trends limiting available resources• Shifts in budgeting philosophies• No “profit margin” yardstick• Level or workload is not related to level of

revenues

How is Judiciary funding different?

• No authority to raise revenues

• Funding level set by legislative branch

• But what to do and how to do it is prerogative of the judiciary

• Separation of powers - budget negotiations between constitutional co-equals

Exercise 2

What examples can you provide of these phenomenon?

• Has your jurisdiction experienced limitations in revenues?

• How have public expectations about performance impacted your court?

• Are there examples of other branches attempting to control or influence how the court operates?

Finance FundamentalsBasics of Public Sector Funding

Methods of BudgetingAlternate budget formats:

• Lump Sum budgeting

• Line Item budgeting

• Program budgeting

• Zero Base budgeting

Methods of BudgetingElements of a Budget Request:

• Base budget

• Adjustments

• Incremental budget request

• Re-allocating base budget resources

Revenue

Sources of Revenue to Fund Courts:

• General Fund Appropriation

• Special Fund Appropriation

• Program Subvention

• Block Grant

• Grant

RevenueGeneral or Special Funds Revenue

Sources• General purpose taxes• Revenues raised through courts:

• Filing Fees and Surcharges• Fines and Penalty Assessments• Cost Reimbursement• User fees

Revenue

Role and Limitation of Courts in Raising Revenues:

• Courts are not self-funded

• “Net county cost” concept

• Court budget not linked to revenues raised by the court

Separation of Powers and Inherent Power

Concepts:• What is all the fuss about?• What is the judiciary protecting?

• Decision Making• Perception of fairness and equality• Equal protection

Separation of Powers and Inherent Power

• Uses and limitations of inherent power for:

• Resource Acquisition

• Resource Allocation

• Accountability

• Discretion – wise use

Exercise 3

Application of Concepts of Separation of Powers and Inherent Powers

• Selection of court employees• Operation of court support programs

•Court record•Drug Court treatment program•Case management system

• Court facilities

Finance FundamentalsBudget Monitoring

Budget Cycle

Budget Budget PreparationPreparation

Expenditures Expenditures and Collectionsand Collections

AccountingAccountingandand

MonitoringMonitoring

Analysis of Analysis of OutcomesOutcomes

Budget Submission and Approval

• Who approves your budget within the court?

• Who do you submit your budget to?

• Who can change your budget submission?

• Who approves your budget?

Budget Discretion During the Fiscal Year

• Moving money between line items

• “Overspend” one line item if funds available in another line item

• Unanticipated expenditures

• Unanticipated revenues

Building a Budget

A court budget should:

• Be responsive and persuasive to court purposes and vision

• Be responsive and persuasive to court goals and objectives

• Demonstrate the identification and diagnosis of court budgetary and performance problems

Building a Budget

A court budget should be responsive and persuasive to:

• Executive branch decision-makers and their budget analysts

• Legislative branch decision-makers and their budget analysts

• Stakeholders and the community served

Good budget success requires skill in:

• preparing,

• presenting, and

• advocating the court’s budget

•in writing and

•in person

Importance of Credibility

Is the Court perceived to be spending the funds allocated to it wisely?

• Spend money on what you say you will• Know the status of both expenditures

and results on a real time basis• Evaluate practice and programs for

efficiency and effectiveness• Stay on top of what is working and what

isn’t• Being willing to change

Is the Court perceived to be spending the funds allocated to it wisely?

• Answer queries honestly and forthrightly

• Be a “Team player” both as to goals and priorities and working with other justice system entities

• Consider regular information briefing sessions for funding authority

Need for good personal relationships

• With budget analysts

• With the funding body

• With support groups of court programs (constituents, service providers, etc.)

• With the community

• With the public and media

Typical Sources of Budget Increases

Factors which may require budget increases year-to-year

• COLA – cost of living adjustments• Employee benefits• Legislative mandates• Judicial mandates• New programs

Typical Sources of Budget Uncertainties

“Uncontrollable” Costs

• Indigent defense

• Interpreters

• Jury Fees

• Competency evaluations

Budget Preparation and Defense

Perceived Weaknesses and Vulnerabilities:• Public criticisms

• Frivolous spending

• Unpopular programs or litigants

• Programs providing little benefit or impact

• Extraneous activities

Perceived Strengths:

• Well run programs or services

• Cost saving or cost reduction activities

• Popular programs or services

• Programs with visible benefit or impact

Cutback Strategies:

• Raise or enhance revenues

• Nick and cut

• Rearranging the Deck Chairs

• Rational Deconstruction

Monitoring Expenditures and Revenues

Why Monitor Expenditures and Revenues?

• To be responsive to and consistent with the court’s role and vision

• To implement budget goals and objectives

• To identify and diagnose budgetary and performance problems

Methods of Monitoring Expenditures and Revenues:

• Claims and invoice processing• Monthly Reports• Cost Accounting • Monitoring against targets and patterns • Monitoring by line item or program area• Monitor of staff behavior

Monitoring Revenues:

• Posting of revenue

• Distribution of revenue

• Enhanced revenue collection

• Enforcement of court orders

Monitoring Expenditures and Revenues relative to:

• Court purposes and goals

• Court budget objectives

• Legislative and executive branch expectations

• Stakeholder and public expectations

Accounting and Auditing Principles:• General financial record keeping and

accounting for the public sector• Financial audits, interpretation, and

significance• Legal requirements and business

practices that protect courts against fraud, theft, or embezzlement of cash and other assets

Accountability for:

• Applicability of performance standards

• Selection and management of fiscal staff

• Management of the Court’s budget process

• Awareness of expectations of other branches, stakeholders, and the public

Resources, Budget and Finance Fundamentals

Trends in Public Sector Budgeting

Budgeting for Performance• Budgeting for outcomes• Distinction of inputs, outputs, and outcomes• Identifying relevant performance measures • Efficiency and effectiveness measures• Articulating both benefits from funding and

consequences of not funding

Expectations from Funding Bodies

Budget preparation and monitoring:• Fixed ceiling and base line budgeting• Priority setting• Partnering in requests for new funds• Core judicial functions funded• Performance Measures• Multi-year perspective• Cost containment

Collaboration and Partnering

• Cost-sharing partnerships

• Shared support services

• Shared information technology applications

• Jointly operated programs

Outsourcing and Contracting Out:

• With another public agency

• With the private sector

• With performance expectations

• With appropriate safeguards

Mechanisms for delegating greater budget discretion:

• Authority to move funds across line items and program elements

• Lump Sum Budgeting• Carry forward across fiscal years• Use of special funds

Concluding Summary

• Third branch – independence and responsibility

• Authority, limitations, and discretion

• Credibility, credibility, and credibility

Discussion and Feedback

Based on what you heard today:

• What is one thing you will do differently when you get to work tomorrow?

• What is one thing you need to learn how to do, or do better?

• What is one relationship you need to build, or repair, to improve your budget success?

resources, budget and finance michigan state university judicial administration program

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