Transcript www.gfoaz.org

Elected Expectations
Administrative Realities
Brent Stockwell
Strategic Initiatives Director
Scottsdale City Manager’s Office
(480) 312-7288
[email protected]
Sylvia Dlott
Sr. Budget Analyst
Scottsdale Finance & Accounting Division
(480) 312-2419
[email protected]
www.ScottsdaleAZ.gov/finance
Different perspectives;
Different goals
Consider the role of the translator
“A translator is a person who helps
people who speak different
languages to communicate or who
takes something (such as a speech
or a book) in one language and
who puts it into a different
language for people to
understand.”
http://www.yourdictionary.com/translator
Presentation Framework
 The budget is a policy document
 Use the budget to communicate
effectively
 Encourage public involvement and
transparent decision-making
 Pay careful attention to revenues
 Monitor the budget. Require timely
updates and adjustments.
 Establish a fund balance policy. Maintain
and deploy fund balances wisely
 Encourage performance targets and
measures as management tools
Source: Elected Officials Guide to
Government Finance, Second Edition, 2008,
Girard Miller
Environment
and Context
Matters
Things to consider:
Leadership
Organization structure
Community concerns
Fiscal indicators and
trends
Difference between Proposed and
Adopted Budget (General Fund)
$4.0
2012/2013
$2.0
2011/2012
2010/2011
-$9.0
$0.0
Several variations
2009/2010
$2.0
2008/2009
2007/2008
2006/2007
2005/2006
$0.0
$1.0
$0.0
$3.0
2004/2005
2003/2004
Full Council
Budget Commission
Council Subcommittee
Structuring the
review process
$1.0
Advantages and
disadvantages to each
The budget is a policy document
“Elected officials should focus on policies…”
“Excessive review of details, however may preclude
thoughtful study of broader policy issues that rightfully
should dominate the public policy dialogue. Many
budget deliberation sessions have suffered from
debates over relatively inconsequential operational
details and special interests of individual elected
officials, while long-term fiscal problems loomed
ahead.” (p.12)
Examples?
Make everything available, but focus on key issues
Use the budget to communicate
effectively
“with a deliberate focus on decision-relevant information,
government can improve the communications quality of their
budget documents.” (p. 13)
Refer back to the provided documents, build trust and confidence
Keep in mind that crisis can impact decisions for a long time…
Use the budget process to help them understand what’s important
to understand from a management perspective.
 What information do use to make decisions?
 What are you trying to accomplish?
 How will you know when you’ve done it?
 How do you know what you need? $$$, staff, etc.
“It’s got to be math,
got to be simple math”
~ David N. Smith
Tips for Council communications
What’s the goal? clear, unbiased and politically sensitive
Get to the point.
Include information necessary to adequately understand the issue and
make a decision
Place it in context.
Don’t forget to remind Council of past discussions, actions and direction
Explain the effect on the citizen.
What we do impacts others, and we need to clearly explain the impacts,
and what input we have received
Remember that the City Council “is the boss.”
Your writing and interactions should acknowledge their role in the
policy process
Tips for Council communications (cont’d)
Don’t “waffle” on difficult subjects.
Limit the times you “frame” or soften an issue. Be up front, clear and
honest.
Support your statements.
Avoid terms that make value judgments about the topic, i.e. good/bad,
right/wrong, etc.
Anticipate questions.
Don’t assume that anything is simple or minor. Be prepared for anything;
or better yet – anticipate the questions and include responses
Use graphics appropriately.
Some readers prefer visual information, others prefer written or oral
explanations. Provide both.
Ask others to review. Clarify and simplify any information that may be
difficult to understand.
Encourage public involvement and
transparent decision-making
“Unfortunately, public
attendance at
preliminary hearings
tends to reflect special
interest and general
apathy regarding broader
fiscal issues…” (p. 14)
Want to increase
attendance at budget
meetings?
1. Raise taxes
2. Cut services
Discussion
What have you learned in your community about:
 focusing discussions at the policy level?
 using the budget to communicate effectively?
 Involving citizens and transparent
decision-making?
Pay careful attention to revenues
“Overly optimistic revenue projections often precede a financial crisis.
Inflating revenue estimates to avoid cutting expenditures only defers and
aggravates any fiscal imbalance.” (p. 15)
Monitor the budget. Require timely updates and
adjustments.
“…interim reports should highlight variances from the original budget and
provide sufficient narrative explanations for elected officials to make
informed judgments.” (p. 16)
Establish a fund balance policy.
Maintain and deploy fund balances wisely
When is the budget, truly “balanced?”
Discussion
What have you learned in your community
about:
 paying careful attention to revenues?
 timely budget monitoring?
 maintaining and deploying fund balances
wisely?
Encourage performance targets and
measures as management tools
“…elected officials should encourage public managers to develop realistic
performance targets and reliable, relevant measures for assessing and
reporting performance…” (p. 20)
“… legislators have two roles:
1) to allocate resources among various agencies (and their only available
guidance is their own political or personal values), and
2) to provide an incentive scheme that appropriately rewards and
punishes managers for behaviors consistent with the goals of the
government.”
“Performance measures are not useful for the legislative problem of
allocating resources among disparate goals, but they are useful for
improving the quality and reducing the cost of providing services.”
“when the legislature is hesitant or unwilling to state its desires, the value of
performance measures is limited.”
“Evidence suggests that improved performance occurs at a much greater
rate when performance measures are compared.”
Smith, Ken A. and Cheng, Rita Hartung, Assessing Reforms of Government Accounting and Budgeting (November 5, 2004). , . Available
at SSRN: http://ssrn.com/abstract=616921
Some things to think about, from some practical academics
The existing process is costly and time consuming.
“…no government in the world devotes as much time, energy and talent to budget
decision making as ours does.” ~ Alice Rivlin (1984)
“…there is always one army formulating budgets, another adopting them, and a third
executing them. Where flexibility is needed to adapt to changed circumstances…
transferring spending authority from one place to another is often almost as time
consuming as enacting it in the first place.”
It doesn’t work (do what it was/is supposed to do).
Budget reform (1921) was intended to “moderate spending growth, produce better
estimates of revenues and expenditures, and reduce government waste and fraud.”
It doesn’t actually do much of anything useful.
“what and how government spends, taxes, and borrows matters a great deal.
However, there is very little evidence that all the time and effort devoted to budgeting
has much, if any, influence on the actual pattern of spending, taxing and borrowing.”
Budgets focus attention on the wrong things.
“Under current norms, once budgets have been adopted, they must be executed as
enacted, spending is supposed to follow the numbers in the budget. This has the effect
of constraining responsiveness and retarding experimentation and learning.”
Source: Smith, Ken A. and Thompson, Fred, Budgets? We Don’t Need No Stinkin Budgets: Ten Things We Think We Think We Know
about Budgets and Performance (August 24, 2010). Available at SSRN: http://ssrn.com/abstract=1664771
Some things to think about, from some practical academics
Transparency is good…
“When government processes are transparent, officials have greater incentives to put
public benefit ahead of narrower interests, and citizens’ confidence in government
expands…”
What to do?
“In Beyond Budgeting, Hope and Fraser describe the experiences of many of the
businesses around the world that have discarded annual performance
targets/contracts because their leaders believed they tended to produced
dysfunctional behaviors, promoted centralized command and control instead of
localized learning, performance or growth, and got in the way of achieving the
purposes of enterprises. To replace them they designed a slew of alternative financial
planning systems: rolling forecasts, scenario planning and relative performance
evaluation.”
“The time and resources previously wasted on traditional annual budgeting could be
productively reallocated to figuring out how to reasonably evaluate relative
performance and to difficult but useful discussions about how to prepare for events
(scenario planning).
Source: Smith, Ken A. and Thompson, Fred, Budgets? We Don’t Need No Stinkin Budgets: Ten Things We Think We Think We Know
about Budgets and Performance (August 24, 2010). Available at SSRN: http://ssrn.com/abstract=1664771
Discussion
What, if anything, stands out to you about the
academic critiques of the budget process?
Describe budget “fantasyland” – if you could do
anything, what might you do?
From the perspective of an elected official…
what improvements to the budget process
would you recommend?