Depth vs. Breadth FY2017 Expenditures Parameters FY2018 Expenditures Parameters 1. The district will allocate resources pursuant to the 1. Allocation decisions will be made to prioritize achieving a more equitable district’s definition of equity. distribution of resources pursuant the district’s equity audit. 2. The district will allocate resources to implement effectively the system’s move 2. The district will continue investing in the Turnaround to a “charter system” operating model. Strategy, providing additional support and interventions 3. The district will fund pension obligations in accordance with State statute and for schools that have been chronically struggling on actuarial standards. the state accountability metric. 4. The district will invest in a multi-year school turn-around strategy that provides 3. The district will recruit, develop, retain, and promote additional support and interventions for schools at risk of state take-over. high-quality staff by developing and implementing a 5. The district will make investments in early childhood education based on findings from research study. multi-year compensation model. 6. The district will ensure that the budget is aligned to the Board’s mission and 4. The district will continue implementing its charter vision and that resources are allocated against key district strategic priorities in system operating model and core components of the areas of: signature programming, cluster funds, school flexibility a. Academic Program dollars, and community engagement strategy. Ongoing implementation of district’s CRCT remediation & 5. The district will fund pension obligations in enrichment efforts accordance with State statute and actuarial standards. Improvement in student achievement in math, science, and literacy, including a comprehensive materials of instruction 6. Per resource parameter #2, with additional public strategy (inclusive of textbook adoption and online student and funding and/or partnership resources, the district will teacher resources) make investments in Pre-K through 3rd grade to Ongoing implementation of signature programming across ensure all students are reading by the end of 3rd clusters grade. Ongoing implementation of positive behavior supports programming 7. Per resource parameter #2, with additional public b. Talent Management funding and/or partnership resources, the district will Strategies to recruit, professionally develop, and retain high focus on whole-child development, including positive quality staff behavior supports, arts and athletics. Continued implementation of multi-year compensation study 8. Per resource parameter #2, with additional public recommendations to address pay parity funding and/or partnership resources, the district will c. Systems & Resources create a comprehensive leadership development The safety, security, and well-being of students and staff (including the implementation of a new safety/security model) program. Preventative maintenance of support infrastructure (including 9. Per resource parameter #2, with additional public buildings, buses and technology) funding and/or partnership resources, the district and d. Culture its partners will significantly expand access to quality Continued implementation cultural transformation strategy, Early Childhood Education. including strengths based programming Implementation of District’s external communications strategy
“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 it The 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 Madison Case 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
City General Fund Revenues - $300 million 2017 Revenues 2% 2% 2% 2% 3% 4% Property Tax State Aid Payments in Lieu of Taxes 12% Charges Fines and Forfeitures Other Licenses/Permits 73% 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 • 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 NEW WAY OLD WAY Ad-hoc Data Proactive Data Collection Collection Enterprise-Wide Siloed Data Sources Solutions Agency Specific Goals City-Wide Goals and Cross and Initiatives Functional Teamwork
Strategic Framework 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 Performance Strategies Measures
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 Mayor, Council, & residents set priorities Service delivery Agencies submit adjusted based on proposals that will what we know drive outcomes from data Strategic Framework Quarterly Mayor & Council meetings provide adopt budget that forum to track funds strategies to City-wide advance outcomes across outcomes services City services Data collected by implement service to monitor Connecting Service strategies as progress against outlined in goals articulated workplans funded in budget Delivery & Outcomes in budget
Tools to Guide Us Continuous Accountable Data Informed Improvement Government • • • Use data to identify Connect our services Convene around City- where we can be with the outcomes wide Goals to monitor more efficient they are seeking to progress in driving • Provide training influence outcomes • • and support for Use the budget Share data about our agencies to pilot process as an annual progress internally & innovations to planning opportunity with the public improve service to confirm our delivery priorities 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.
Engagements with City agencies will focus on Next Steps: connecting their work with the outcomes they drive Connecting City Services & Outcomes Step 1: Identify Services Define services in a way that is consistent with how residents interact with them. 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 3: Develop Data Action Plan Identify the data source and variables necessary to develop dashboards.
The 2018 Executive CIP has been mapped allowing you to see where projects are planned for the next 6 years
Mapping the Plan 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. 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.
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 CIP
Use 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
Policy Analysis and Budget Process County of San Diego
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
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 policies This 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
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
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
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
Revenue and Expense Forecasting County of San Diego
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 Resources Board Available Priorities Political Funding Influences Opportunities Department Strategic Plan Initiatives Public 5-Yr Forecast Requests Labor 2-Yr Op Plan Agreements State & Federal Documented or Mandates, Regulations Perceived Needs & Budgets Local Population Regulations Growth
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 excellent Source: 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
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