Michigan Municipal League Center for Priority Based Budgeting Priority Based Budgeting:

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Michigan Municipal LeagueCenter for Priority Based Budgeting

Priority Based Budgeting: Identification of Public Values and Public Priorities

through Citizen Engagement in the Government Budgeting Decisions

Priority Based Budgeting Workshop Ann Arbor, Michigan

Dr. Sheryl MitchellApril 9, 2014

MML/PBB Workshop 04.09.2014 -- S. Mitchell2

Agenda

Overview of the Study

What is PBB?

PBB and Engaging Citizens

Values Based Budgeting Framework

Questions

Saturday, April 22, 2023

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University of Michigan - Center for Local, State, and Urban Policy - Michigan Public Policy Survey 2013, Michigan local government fiscal health continue gradual improvement, but smallest jurisdictions lagging

Overall, 29% of

jurisdictions say they are

better able to meet their

financial needs this year,

while another 29% say

they are less able to do

so.

Declining property tax

revenues are still

reported by 48% of all

local governments in

2013

Demands for public services (e.g.,

infrastructure and public safety)

continue to increase, with half (50%)

of all jurisdictions across the state,

and 71% of the largest jurisdictions,

saying they have increased

infrastructure needs this year.

Government officials express

ongoing concerns about their

jurisdictions’ fiscal health, with

30% feeling it will be worse a

year from now and 28% feeling

they will be better.

Michigan

S. Mitchell4

Why?

Fiscal crisis is not a temporary trend, but the “new normal” (NACo, 2012, p.1)

Persistent fiscal challenges faced by state and local units of government over an extended period due to:

Economic downturn Housing and mortgage foreclosure crisis Long-term unfunded pension obligations

Bureaucratic paralysis – government uncertainty as to how to address current fiscal realities and still meet the expectations of their constituents (Fabien, Collins, & Johnson, 2008).

Crisis in trust - lack of inclusion, access, and transparency, by government leaders fosters citizen distrust

S. Mitchell5

Traditional governmental budgeting methods are generally an accounting exercise that are incremental in nature and do not provide decision-makers with a tool to identify strategic priorities to guide budgeting decisions

Crisis in government - The traditional approaches to government budgeting an organizational culture that is prone to uncertainty of its purpose, strategy, priorities, integrity, and focus

Crisis in Government

UNCERTAINITIES EXISTING WITHIN GOVERNMENT ORGANIZATIONS Purpose Why What is our core purpose? Why do we do want we do? Strategy What What are the desired results/outcomes? What do we do to

achieve them? Priorities Where Where do we focus our resources? Integrity Who Whose values do our priorities reflect? Who is included in

the decision making? Are decisions transparent? Capacity How When can we engage in partnerships for delivery of

services/programs? Focus Which In which direction can we align resources and service

delivery in a budgetary decision-making process that is grounded in the values and priorities of the citizens?


Priority Based Budgeting (PBB) offers a new government budgeting process

PBB provides the alignment of expenditures with the values and priorities of the community

There is limited understanding relative to PBB and the role of citizen engagement

From Problem to Opportunity


Purpose of the Study

The purpose of this study was to understand and explore the Priority Based Budgeting (PBB) process

Learn how PBB can be used by government leaders to effectively engage citizens in identifying public values and priorities

Discover if the PBB process, by reframing dialogues and focusing on values and priorities, can provide guidance for budget expenditures and thereby align resources with public values and priorities


Classic Public Administration

Public administrations are a vehicle for expressing the values and preferences of citizens, communities, and society as a whole. Top-down vertical hierarchy for power and decision-making. A closed environment; allowing for minimal discretion.Citizens feel excluded from the process that gave all of the decision-making power to elected officials, administrators and lobbyists – who serve to promote their own self interest and not that of common good (Bourgon, 2007).

Literature Review


Priority Based Budgeting (PBB)

Figure 2.4. PBB process model. From “Anatomy of a Priority Based Budget Process” by Kavanagh, S.C., Johnson, J., & Fabian, C. (2010). Anatomy of priority-based budget process. Government Finance Review, 26(2), 8-16.

PBB Steps:

1.Identify Available Resources

2.Identify Priorities

3.Define Priority Results

4.Prepare Decision Units for Evaluation

5.Score Decision Units Against Priority Results

6.Compare Scores Between Different Programs/Services

7.Allocate Resources

8.Create Accountability for Results

9.Create Service Efficiencies and Innovation

S. Mitchell10

Existing PBB Studies

The Center for Priority Based Budgeting (CPBB), the primary consultant and subject matter expert for PBB has only been in existence since 2008.

Oettinger (2011) - Study of 12 communities that first implemented the PBB model used a case study analysis with the purpose of understanding the motivating factors to use PBB, the short-term impact, and the long-term budgeting outcomes.

Findings: Increased trust and transparency between the government and citizens. The approaches to planning were more strategic and enabled communities to prioritize expenditures. Limitations of this study: only one budget cycle within each of the participating communities.


Existing PBB Studies

Middleton (2013). Priority based budgeting: A model for the City of Oakland’s long term fiscal sustainability. Study of five cities.Compared with the budgeting models of budgeting for outcomes, performance based budgeting, and participatory budgeting.

Findings:Identified that PBB emphasizes: prioritizing services, doing the important things well, questioning the past patterns of spending, spending within the financial means of the organization, acknowledging and respecting the true cost of doing business, and providing transparency in identifying community priorities and their impact.

Civic engagement was recognized as a major component of the PBB model.


Data Collection In-depth semi-structured telephone interviews (45-60 minutes

each)

Interviews conducted Summer 2013

Interviews were electronically recorded and manually transcribed

Attended national CPBB conference (generated field notes)

Published case stories, articles, field notes, and other archival data

Interviews generated 195 single spaced pages of transcripts

Data collection / coding of data continued until theoretical saturation was achieved


Study Participants

City State Unit of Govt / Organization

Title Gender Education Seniority w/ Org.

Edmonton Alberta, Canada

Province Chief Financial Officer Female Diploma, Accounting-Bus/Mgmt

2 years

Boulder Colorado

City Budget / Finance Manager Female

Masters

8 years

Arvada Colorado City City Manager Male Masters 2 years

Cincinnati Ohio

City Budget/ Finance Manager Female

Masters

15 years

Tualatin

Oregon

City

Budget/ Finance Manager Male

Bachelors

5.5 years

Chandler

Arizona

City Chief Financial Officer Female

Bachelors, CPA

6 years

Douglas County Nevada County County Manager Male Masters 4 years

Douglas County

Nevada

County

Assistant County Manager/ CFO Female

Masters

n/a

Douglas County

Nevada

County

Budget / Finance Manager Female

n/a n/a

Wheat Ridge

Colorado

City

Budget / Finance Manager Male

Masters

2 years

Fort Collins

Colorado

City

Budget / Finance Manager Male

Masters

7 years

Walnut Creek

California

City

Assistant City Manager Female

Masters

12 years

10 PBB Practicing Governments


Study Participants

City State Unit of Govt / Organization Title Gender Education Seniority w/ Org.

Boulder

Colorado

National Research Center

CEO Male

Ph.D.

19 years

Phoenix

Arizona

Alliance for Innovation

Director Female

college, non-degree

10 years

Denver

Colorado

Senior Advisor-CPBB; Former Mayor and Council Member - Northglenn, CO

Former Elected Official; Senior Advisor

Female

Masters

Washington

DC

International City/County Management Association (ICMA)

Director Male

Bachelors, Senior Executive Institute

22 years

Denver

Colorado

Center for Priority Based Budgeting

CEO Male Masters

3 years

Denver

Colorado


CEO Male Bachelors 3 years

Denver

Colorado


Staff(Master’s Thesis)

Female Masters 1 years

Chicago

Illinois

Government Finance Officers Association (GFOA)

Director Male

Masters

12 years

Non-Governmental Unit Participants


Interpretation of Findings

PBB - Citizen Engagement and Transformation

PBB process has been found to be an effective tool in engaging citizens, identifying public values and priorities, and reframing dialogues to provide guidance for prioritized budget decisions.

By engaging a cross-section of citizens in deliberative dialogues, PBB creates a shared sense of community, builds trust, and provides transparency in the sharing of information.

PBB serves as a catalyst for changing the government budget paradigm from one that is based on exclusivity, incremental decision-making processes, and has disconnected lines of communication.

Saturday, April 22, 2023

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Transformation Traditional Budgeting PBB

Organizational

Deficit based Strengths-basedFactional community Sense of shared communityGovernment is Epic Center Government is subset of the community

Entitlement OwnershipFosters disengagement and hostility Improves civility

Lack of strategic vision Focus on shared vision, goals, and purpose of government

Bureaucratic Collective voiceHierarchal governance Shared governanceDetached from ordinary citizens Inclusive of ordinary citizens

Silos, fragmented departmental decisions Whole system engagement: external and external stakeholders

Vision/Values: Government elite (elected officials and top administration)

Vision/Values: all stakeholders, including citizens, employees, and nongovernment organizations

Lack of public trust Public trustStatus quo Civic innovation (collaboration, engagement,

technology)

Narrow, short-term planning Long-term financial planningDysfunctional governance: mutual distrust, lack of cooperation/respect between elected leaders and staff

Healthy governance: collaborative interactions, mutual trust, consensus decision-making, openness

Isolated Public / Private partnerships

Rule driven Mission driven

Interpretation of FindingsPBB – Organizational Transformation



Process and Procedures

Customer service Collaborative, co-creationInstitutionalized spending patterns Examine legal mandates, existing policies,

procedures, and programs

Budget input: Public hearing with nominal citizen participation

Budget input: authentic and expanded opportunities to participate

Problem oriented Aspiration focused

Incremental budgetary decisions; “across the board cuts”

Priority based budgetary decisions; Strategic

Reactive, “cure” Proactive, anticipatory, “prevention”

Linear, sequential Continuous improvement

Inadequate information for rationale decision-making

Data driven, rational decision-making

Deficit spending Incorporate reserve policy as part of budget

Build up costs – make cuts difficult Linked – expenditures to results/priorities; improve links between results and services; facilitate dept. cooperation

Hidden or unnecessary costs Identifies efficiencies - validate offers or find better choices

Cuts or taxes - Choose to cut services or raise taxes, and get blamed (or blame someone else)

Help determine priorities - Choose the best offers in order to get the most results for citizens based on public values

Inputs oriented Results oriented

Interpretation of FindingsPBB – Process / Procedure Transformation


Interpretation of Findings


Communication

Directive Facilitative leadershipMonologue Dialogue

Loudest voice is heard Diversity of viewpoints and backgrounds

Limited participation Open access

Downward communication Interdepartmental; inclusive of elected officials, citizens, and non government organizations in dynamic conversations

Citizens Involvement: Inform, Consult Citizen Engagement: Include, Collaborate

Information guarded Transparent

Debate what to cut Debate how to get better results; capacity building partnerships

Non-responsive; one-way communication

Responsive; government is listening, learning, and working with citizens

PBB – Communication Transformation


Interpretation of FindingsEmergent Themes

Public Values - PBB process reframes dialogues to transforms the values and priorities of citizens and government leaders into budgetary decisions.

Civic Innovation – PBB provides a paradigm shift in the government budgeting with an expanded platform for internal collaboration and external citizen engagement through the use of technology, social media, internet, and web-based platforms.

Multiple entry points / eliminating barriers

Transformation - PBB process is a catalyst for civic engagement, dynamic conversations, and positive approaches to changing the organization culture and community building.


New Development

(1)Created a Values Based Budgeting Framework that extends and leverages the PBB process by incorporating

• Civic Engagement• Civic Innovation • Capacity Building alternatives in program and service delivery and• Citizen-driven Performance Measures

(1)Development of the Civic Engagement Framework, to illustrate that government entities serve numerous constituencies in addition to citizens and elected officials

MML/PBB Workshop 04.09.2014 -- S. Mitchell

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Evolution of Budgeting

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Values Based Budgeting Framework

Civic Engagement

Public Values and Priorities

Identify Available

ResourcesIdentify Priorities

Define Priority Results More

Precisely

Prepare Decision Units for Evaluation

Score Decision Units Against

Priority Results

Compare Scores Between Different

Programs / Services

Allocate Resources

Create Accountability

for Results

Create Service Efficiencies and

Innovation

CapacityBuilding

Civic Innovation



Civic Engagement Framework


Understanding PBB

The meaning of PBB that emerged from the responses defined PBB as a tool that can be utilized to engage the whole system, particularly citizens, in collaboration and meaningful conversations.

Through dialogues that are deliberative, PBB identifies public values and aligns government budgeting with public priorities.

•Strategic Process

•Long-term Financial Planning

•High Performing Organization

•Organization Transformation

•Citizen Engagement


Propositions



Summary• PBB is a tool for engaging citizens in a strategic planning process that identifies a shared vision for a

preferred future within results oriented government budgeting.

• Public values and public priorities are a basis to strategically prioritize government budgeting decisions.

• PBB and citizen engagement build the social value of government entities by increasing access, inclusion, transparency, trust, respect, and accountability, which contributes to promoting a shared sense of community and opportunities for capacity building partnerships.

• The Values Based Budgeting Framework was developed to leverage the implementation of PBB.

• The Values Based Budgeting Framework shows how civic engagement and civic innovation can invoke dynamic dialogues to identify public values for government budgeting.

• The Values Based Budgeting framework leverages the implementation of PBB:

• To align public values with budget priorities,

• Supports capacity building for the delivery of public programs/services,

• Incorporates accountability through the adoption of measurable outcomes, and

• Creates sustainable capacity through continuous improvement.


Recommendations

Create a Culture of Engagement

Identify Public Values and Priorities

Educate and Inform all Stakeholders

Seek Partnerships to Build Capacity for the Delivery of Public Services/Programs

Develop Strategies to Integrate Performance Measures into the Organization


Questions


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Documents

Michigan Municipal League Center for Priority Based Budgeting Priority Based Budgeting: