PRIORITY BASED BUDGETING Developing Program Inventories TOWN of
PRIORITY BASED BUDGETING Developing Program Inventories TOWN of PARKER, COLORADO Jon Johnson April 11, 2016 1
Achieving Fiscal Health & Wellness 2 Strategic Initiatives Fiscal Health Long-term Fiscal Wellness 2
BRINGING VISION INTO FOCUS WITH A NEW “LENS” 3
Who is Looking through the “New Lens” 4
Who is Looking through the “New Lens” in Colorado Longmont Loveland Fort Collins Mountain View Fire Protection District Mead Thornton Jamestown Westgate Community School Fruita Saint Dominic’s Parish Boulder Parker Wheat Ridge Highlands Ranch HOA Englewood Buena Vista Trinidad Jefferson County Victor Pueblo West 5
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Start with “Why” Fiscal Health and Program Budgeting Assess Financial Reality � “WHAT is our “picture of Fiscal Health”? ” Identify Programs and Services � “WHAT exactly do we do? ” Estimate Costs of Programs and Services � “HOW much does it cost to do what we do”? Results and Result Definitions Identify and Establish Results � “WHY do we exist and what are we in business to do? ” Clarify Results Definitions � “HOW will we achieve our Results? ” Putting it All Together – Resource Allocation Evaluate Programs Based on Results � “WHAT is of the highest importance? ” Allocate Resources Based on Community Priorities � “WHAT, HOW and WHY can we “see” differently? ” 7
Identify & Cost Programs 8
TOWN of PARKER, COLORADO Community Results �Support an Active Community �Foster Community Creativity and Engagement �Enhance Economic Vitality �Promote a Safe and Healthy Community �Develop a Visionary Community through Balanced Growth 9
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 10
Value Programs Based on their Influence on Results 11
Peer Review (Quality Control) Process 12
Defining Quartile Groupings Q 4 Q 3 Q 2 Q 1 Quartile 4: 54 Programs Quartile 1: 88 Programs Quartile 3: 110 Programs Quartile 2: 116 Programs Key: Programs are grouped into Quartiles (not ranked, one versus the other). Quartiles are defined using standard deviation City of Boulder, Colorado 13
Allocate Resources Based on Priorities 88 Programs 116 Programs 110 Programs 54 Programs City of Boulder, Colorado 14
“Resource Alignment Diagnostic Tool” City of Boulder, CO 15
Developing a Program Inventory 16
Identify “Programs” within Departments/ Divisions Ø Departments develop their own “program” inventories Ø Comprehensive list of “what we do” Ø Comparing relative value of programs, not relative value of departments Ø 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 17
OBJECTIVES for Developing Program Inventories �Create a comprehensive listing of all services offered by each operating division (to both “external” and “internal” users) �Provide a better understanding of “what we do” to staff, administration, elected officials and citizens �Provide a framework to better understand how resources are used to support “what we do” �Provide a valuable tool for staff, management and elected officials to use when faced with budgetary “choices” about how funds are distributed. �Allow for the preparation and discussion of a “program budget” rather than a “line-item budget” 18
What is a “Program”? Local Government Organization Departments Divisions Programs Tasks, Activities, Line Items 19
Menu Selections • Entree • Side Dish • Beverage 20
Menu Selections • Entree o Chicken o Beef • Side Dish o Starch o Vegetable • Beverage o Something in a Cup o Something in a Glass 21
Alice’s Restaurant Menu Selections Chicken Marsala Fried Chicken Teriyaki Beef Filet Mignon Pot Roast Ground Sirloin Seafood/Fish Lobster Trout Catfish Side Dish Baked Potato Sweet Potato Rice Pilaf Caesar Salad Green Beans Squash Beverage Coffee Tea Wine Beer
Defining Programs • To determine “just right”, look for “differences” that might help determine if an activity can be defined as a “standalone” program o “Who” are you doing the activity for? • Does it benefit a specific demographic group or population? o “Where” are you offering the service? • Does it impact a specific area, location or environment o “What” are you doing the service to? • Does it affect a specific property or asset (infrastructure, facility, etc. ) o “How” is it funded? – Is there someone paying for it? • Are there revenue sources associated directly with the program (“Program Revenues”) 23
Defining Programs o “What” percentage of your resources are used to provide it? - Do you need “specialized resources”? • Is the estimated annual cost of the program a significant percentage of your total section’s budget? • Are the number of FTE’s associated with the program a significant portion of your total section’s staff? o Has someone told us we “have to do it”? • Are there statutes, ordinances, resolutions, or other legislative documents that require us to provide the service? o What “type” of service are you providing? • Preventative, Replacement; Repair/Maintenance; Instruction; Protection; Informative; etc. 24
Defining Programs o Is there an “End Product” as a result of doing it? • Does the external or internal user get something tangible when the service is delivered? o “Is there someone outside the organization that “does the same thing”? • Does a private business offer a similar service (“Yellow Pages test”) o Do we “advertise” that we do it? • Is there a separate phone directory or website reference to the service? 25
Preliminary Comments GENERAL RULES OF THUMB CAUTION – This is not formulaic – just some general guidance to help you get started Ensure costs for a single program represent no more than 8% to 10% of the department’s total budget. For larger existing programs, maximum percentage might need to be closer to 3% to 5% If the cost is less than $300, 000 and the number of FTE devoted to the program is 5 or less, that is a great starting place Don’t be afraid of breaking down too far – easier to “roll up” from first effort than continue to “break down” 26
Preliminary Comments WHAT TO WATCH OUR FOR A “facility” or “location” is not normally considered to be a program – i. e. Golf Course; Airport, Recreation Center, Fire Station, etc. A “line item” in the budget is not normally considered to be a program – i. e. Equipment Maintenance; Utilities; Travel & Training. etc. Revenue sources are not programs Program names should not be the same as the name of an organizational unit i. e. Branch, Department, Division, Section, etc. 27
Preparing the Program Inventory • Responsibility of each Department o Department Director determines who needs to be involved • Assign names to programs that are concise and easily understood o Avoid acronyms or abbreviations that aren’t familiar to someone outside your department • Provide additional (but brief) description of what the program “is” or “does” • Outside agencies receiving general government revenues should also prepare program inventories, showing how those revenues are used to support individual programs. • May need to identify “Administrative” functions at the department/division level as a stand-alone program 28
“Do’s & Don’t’s” of Program Inventory • DO – o Provide a PROGRAM NAME that is concise and easily understood o Identify programs and services that your department OFFERS to the constituency/group it serves o Provide a brief PROGRAM DESCRIPTION of the program o Include the NAME of the accounting fund where the costs for the program are budgeted (not the account number) • DON’T – o Use ACRONYMS or ABBREVIATIONS that are unfamiliar to others o Identify TASKS, BUDGET LINE ITEMS or ORGANIZATIONAL UNITS as a program o Think of functions that are internal or administrative in nature as offered programs – group into one “Administrative” program o Don’t write a justification of the program – just a description! o CHANGE THE TEMPLATE FORMAT (only add rows as needed) 29
Program Inventory Template Example 30
Program Inventory Development • Initial Development of Program Inventory Listing o Review examples from other organizations from Summary Worksheet provided o Provide CPBB with first draft of program inventory listing using Program Inventory Worksheet • Review of Initial Program Inventory Listing o CPBB will review first draft of program inventory listing and offer feedback, comments and suggestions o Program Inventory Worksheet with comments will be returned to departments • Final Revision of Program Inventory Listing o Departments will make revisions to the Program Inventory Worksheet o Departments will assign ratings to each of the programs identified in their final draft for each of the Basic Program Attributes o Final Program Inventory Worksheets with Basic Program Attribute ratings returned to CPBB 31
Basic Program Attributes or Characteristics �Mandated to Provide Program �Reliance on Town to Provide Program �Change in Demand for Program �Cost Recovery of Program �Portion of Community Served by Program 32
Program Inventory with Attributes Template Example 33
Basic Program Attributes: Mandated to Provide Program • Programs that are mandated by another level of government (i. e. federal, state or county) can be differentiated from programs that are mandated solely by the Town or have no mandate whatsoever. • The rating criterion established for identifying these program attributes is as follows: o 4 = Required by Federal, State or County legislation o 3 = Required by Charter or incorporation documents OR to comply with regulatory agency standards o 2 = Required by Code, ordinance, resolution or policy OR to fulfill executed franchise or contractual agreement o 1 = Recommended by national professional organization to meet published standards, other best practice o 0 = No requirement or mandate exists
Basic Program Attributes: Mandated to Provide Program 35
Basic Program Attributes: Reliance on Town to Provide Program • Programs for which residents, businesses and visitors can look only to the Town to obtain the service can be differentiated from programs that may be similarly obtained from another intergovernmental agency or a private business. • The rating criterion established for identifying these program attributes is as follows: o 4 = Town is the sole provider of the program and there are no other public or private entities that provide this type of service o 3 = Town is currently the sole provider of the program but there are other public or private entities that could be contracted to provide a similar service o 2 = Program is also offered by another governmental, non-profit or civic agency o 1 = Program is offered by other private businesses but none are located within the Town limits o 0 = Program is also offered by other private businesses located within the Town limits
Basic Program Attributes: Reliance on City to Provide Program 37
Basic Program Attributes: Portion of Community Served by Program • Programs that benefit or serve a larger segment of the Town’s residents, businesses and/or visitors will receive a higher score for this attribute compared to programs that benefit or serve only a small segment of these populations. • The grading criterion established to score programs, on a 0 to 4 scale is as follows: 4 = Program benefits/serves the ENTIRE community (100%) 3 = Program benefits/serves a SUBSTANTIAL portion of the community (at least 75%) 2 = Program benefits/serves a SIGNIFICANT portion of the community (at least 50%) 1 = Program benefits/serves SOME portion of the community (at least 10%) 0 = Program benefits/serves only a SMALL portion of the community (less than 10%) 38
Basic Program Attributes: Cost Recovery of Programs that demonstrate the ability to “pay for themselves” through user fees, intergovernmental grants or other user-based charges for services will receive a higher score for this attribute compared to programs that generate limited or no funding to cover their cost. The grading criterion established to score programs, on a 0 to 4 scale is as follows: 4 = Fees generated cover 75% to 100% of the cost to provide the program 3 = Fees generated cover 50% to 74% of the cost to provide the program 2 = Fees generated cover 25% to 49% of the cost to provide the program 1 = Fees generated cover 1% to 24% of the cost to provide the program 0 = No fees are generated that cover the cost to provide the program 39
Basic Program Attributes: Change in Demand for Program • Programs demonstrating an increase in demand or utilization will receive a higher score for this attribute compared to programs that show no growth in demand for the program. Programs demonstrating a decrease in demand or utilization will actually receive a minus score for this attribute. • The grading criterion established to score programs, on a -4 to 4 scale is as follows: 4 = Program experiencing a SUBSTANTIAL increase in demand of 25% or more 3 = Program experiencing a SIGNIFICANT increase in demand of 15% to 24% 2 = Program experiencing a MODEST increase in demand of 5% to 14% 1 = Program experiencing a MINIMAL increase in demand of 1% to 4% 0 = Program experiencing NO change in demand -1 = Program experiencing a MINIMAL decrease in demand of 1% to 4% -2 =Program experiencing a MODEST decrease in demand of 5% to 14% -3 =Program experiencing a SIGNIFICANT decrease in demand of 15% to 24% -4 =Program experiencing a SUBSTANTIAL decrease in demand of 25% or more 40
Thank You ! Jon Johnson, Co-Founder Chris Fabian, Co-Founder jjohnson@pbbcenter. org cfabian@pbbcenter. org www. pbbcenter. org Phone: 720 -361 -3710 Copyright © 2009 by Chris Fabian and Jon Johnson d/b/a the Center for Priority Based Budgeting, Denver, Colorado. 41
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