Tuesday, December 14, 2010

Budgeting from a different perspective

One trend is that of "outcome budgeting" for public sector entities, from Governing Magazine.

We are tasked regularly with working alongside professional financial officials with Indiana Cities, Towns, Townships, Schools, and Counties. We would be pleased to review the options for your next budget cycle.

Another twist in outcome budgeting is that one agency can make a case that it can achieve another agency's results better, faster and cheaper, and propose to take it over. In Baltimore, Housing and Community Development saw a better way to handle burglar alarm registration, then housed in the police department. Housing's proposal integrated redesigns of the property and burglar alarm registration processes, which will improve service, increase revenue and save the 30 percent that had gone to a private contractor to collect false alarm fees. This combined redesign will net an additional $2.6 million. It will also free up police for more important work.

In some cases, the fiscal year 2011 budget cycle was used to put gears in motion for more significant change in the next cycle. For example, special recreation facilities, like ice rinks, driving ranges and others have been put on a path to self-sufficiency. Before, they received appropriations for their costs and their revenues went into the general fund. They had no incentive to ensure that revenues exceeded costs. Now their revenues will go into a special fund from which they can cover their costs. This year, they will still receive some, but less, general fund money and have been put on notice that general fund support is time-limited.

Another benefit of outcome budgeting is more accurately reflecting the true and full cost of activities, which facilitates the value comparisons that support better budget choices. For example, this year, the Balimtore stopped "free" collection of trash at public housing units; public housing will now have to bear that cost.

These results did not come easily. There were rough edges and the process required extraordinary effort. Kleine emphasizes that, "Outcome budgeting is not for the faint-of-heart. You need to have full commitment from the top and be prepared to stick with it for the long term."

Outcome budgeting (or its variants) is a growing trend, and has been used in Los Angeles, New Orleans and Savannah, Ga., as well as California and Colorado, as tough fiscal times are spurring reexamination of priorities.

After the fiscal year 2011 budget was adopted, Kleine and his staff held focus groups, listened carefully, and improved the process for the next cycle. New Mayor Stephanie Rawlings-Blake has endorsed outcome budgeting and personally kicked off Baltimore's fiscal year 2012 cycle. Everyone looks forward to even better results the second time around. Value-based decisions are becoming the norm in Baltimore's budgeting.

To learn more about outcome budgeting in Baltimore, please contact Budget chief Andrew Kleine at Andrew.Kleine@baltimorecity.gov.

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