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Building a Financially Resilient Government
• Shayne Kavanagh, Senior Manager of Research, GFOA, IL• Bob Eichem, CFO, City of Boulder, CO• Andrew Scott, Budget Director, City of Portland, Oregon• Andrew Salkin, Chief Operating Officer, 100 Resilient Cities,
Pioneered by The Rockefeller Foundation
May 21, 2014
Logistics Scan the QR code to download the presentation This session is 1 hour, 40 minutes long. There will be time for Q/A at the end. Please use the microphones for Q/A
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Our Speakerso Bob Eichem
• CFO, City of Boulder, CO• New GFOA President
o Andrew Scott• Budget Director, City of Portland, Oregon• Member of GFOA Budget Committee
o Andrew Salkin• Chief Operating Officer, 100 Resilient Cities, Pioneered by The Rockefeller Foundation
Session Roadmapo Bob Eichem
• What is resiliency and how does it relate to the finance office?
• How has resiliency impacted Boulder?• How do you talk about resiliency with others?
o Andrew Scott• What are the practical experiences and tools to support resiliency?
o Andrew Salkin• What is the “100 Resilient Cities” project and how will it push the conversation about resiliency forward?
BUILDING A FINANCIALLY RESILIENT GOVERNMENTBob Eichem, CFOCity of Boulder, Colorado
Resiliencyo The ability of a government:
• to withstand acute shocks and chronic stresses
• while maintaining and improving essential services and,
• recovering quickly and effectively.
The Stage Was Set at the COBo Still reeling from the devastating tech bust
• What can we learn?• What are the best practices?• How can it work in our entity?
o 2005 – Long Range Fiscal Planning‐the genesiso Sustainability ‐ Just getting back to where we were –We Need To Be Better
o Result – the journey toward resiliency
Lessons Learned From Sustainability Implementation
o Economic, Environmental, and Social ‐ at first were separate, not integrated: 2004‐05
o Fiscal sustainability was an afterthought o Added via two community driven BRCso The GAPo How do we gain traction going forward so we are better than before?
o How do we make it stick• Not just fiscal – all areas
Resiliency - from Theory to Implementation
o BRC results became the roadmap for our fiscal and leadership journey• More on this later
o Opportunities on the revenue and expenditure sides
o We wanted to be better than we were before the 2001 ‐ 2004 downturn
o Resiliency – let’s find out about it – so the journey began
Resiliency Is Not Something New o GFOA – Recovering From Financial Stress ‐ The Transform State
o GFR – “Rebuilding an Resilient Nation, “Probability Management in Financial Planning” “Sizing Your Reserves a Risk‐Based Approach”
o White Paper – Shayne Kavanagh – “Building a Financially Resilient Government Through Long‐Term Financial Planning”• Covered in the GFOA Long Range Financial Planning and Financial
Policies classes
o Peter Katz – New Urbanism – Land Use
The Themes Of Resiliencyo Diversity o Redundancy o Decentralizationo Transparencyo Collaborationo Fail Gracefullyo Flexibilityo Foresight
• Shayne’s article – “You cannot predict the future, but you can hear its footsteps approaching.”
We Want To Be Resilient –How Do We Make It Happen?
o How do we help finance officers gain acceptance of new ideas in their organizations?
o How do we hasten the spread of public finance best practices?• A short case study COB• Made to Stick – Why some ideas survive and others die
It Had to Stick - Why Do So Many Ideas and Programs Disappear?
o Flavor of the montho Too many competing programso My boss said to ignore ito We have to much to doo What is in it for me? (WIFM)o It wasn’t my idea so it cannot be a good one
BOUNCING FORWARD
From Recovery, to Sustaining to Embracing Resiliency: We can be better
Game Changer # 1 - The GAPo $135M annually to $55 by 2030 and in the midst of updating
o Major progress on both the revenue and expenditure sides• Priority Driven Budgeting
o A change in attitude: It is not my fund/my money ‐ it is one city and the way we will manage and administer
o The path is bright as we distance ourselves from 2008
Game Changer # 2Fires and Floods
o Facing uncertainty (climate, economy, energy, etc.)
o Managing risk, reducing exposure
o Planning ahead to help ‘bounce back’
o It worked
Made to Stickby Chip and Dan Heath
• Finding SUCCESs: One of the Most Important Lessons Learned
• Simple: Find the core of the idea and communicate it• Unexpected: disrupt the norm but not with gimmicks• Concrete: that can be believed and accepted• Credible: believed and trusted• Emotional: so people will care • Stories: to help people act on the idea
– The challenge plot– The connection plot– The creative plot
Lessons Learned in Bouldero Fit the process to the problem• HBR ‐ Two ways to borrow ideas
• Observe and apply• Extract the central idea
o Don’t let the perfect be the enemy of the good
o Maintain and enhance what is “rock solid”
o Resiliency is not just physical, it’s social, it is economic, it is environmental, it is financial
Where We Are Nowo Moving Forwardo Rockefeller Foundation ‐ 100 Resilient Cities
• To better address the shocks and stresses of the 21st Century
• City of Boulder is one of the cities chosen to participate in the program
• Support from the foundation– The network of cities– Resources to create and implement a resilience plan– Resources to hire a Chief Resilience Officer to oversee the plan
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o Be ready to take a leadership role
o You can make a difference in yourorganization and your profession
o As we see the great recession fade in our rear view mirror, is it good enough to get back to where you were?
o As an alternative, consider resiliency and what it can do for your organization
o SUCCESs can help you get there
BUILDING A FINANCIALLY RESILIENT GOVERNMENTAndrew ScottBudget DirectorCity of Portland, Oregon
Portland Experienceo If I told you:
• Voter‐imposed property tax measures limit growth to only 3%
• For over 15 years, projected costs have grown faster than projected revenues
• Worst recession since WWII• In 2012:
• DOJ investigation ($6m/1.5%)• New library district ($10m/2.5%)• Structural Deficit ($8/2.0%)
Portland Experienceo Survival
• Cut costs early and often• Did not tap General Fund reserves
o Recovery• Paid down General Fund debt• $9.3m surplus (2.3%) in FY 14‐15
o Improvement• Taking advantage of bad situation• Not simply adding back services
Financial Resiliency:8 Characteristics
o Diversity o Redundancy o Decentralizationo Transparency
o Collaborationo Failing Gracefullyo Flexibilityo Foresight
Put a Bird on It?
Resiliency is not window‐dressing
Survivalo Economic freefall of 2008
• No direct evidence/impact until 2009
o Immediate action• Informed City Council• Mid‐year cuts after budget adoption• Spending slow‐down and hiring “chill”• Additional budget cuts in FYs 09‐10, 10‐11, and 11‐12, along with mid‐year cuts as needed
o Protected General Fund Reserves
Survivalo Resilient governments fail gracefully through:
• Transparency• Don’t be afraid to inform your elected officials and/or public about crises
• Foresight• Always look to see what is around the corner• Over‐dependence on model results can miss the big picture
• Flexibility• Be willing to change your models as the situation around you changes
Recoveryo Fall 2013: $14 million (3.5%) excess balance
• Used $11m aside to pay down debt• $1.5m for capital projects• $1.5m held over for FY 14‐15 budget
o FY 14‐15: $9.3 million (2.3%) surplus• Invested in Mayor’s priorities and critical needs• Larger General Fund contingency
Recoveryo Resilient governments recover through:
• Redundancy• Program cuts• Revenue enhancements• Service efficiencies• Reserves?
• Transparency• Be clear with the public about the course of action
• Collaboration• Between elected officials and staff
Improvemento Resilient governments maintain and improveservices
“Never let a fiscal crisis go to waste”
Portland Fire & Rescueo Cut 26 firefighter positions (2 companies)
• Federal SAFER grant saved positions• Funded through January 2016
o About 65k – 70k calls per year• Over 65% are emergency medical calls• Under 3% are fires
Portland Fire & Rescueo Council had opportunity to restore funding for 26 positions
o Instead:• Require PF&R to review interaction between EMS calls and ambulance calls
• Review opportunities for additional revenue for EMS calls
Innovation Fundo $1 million
o Allocated by citizen committee to the most innovative ideas submitted by City bureaus• CPR app• Data matching for tax compliance
o Create “culture of innovation”
Improvemento Resilient governments improve through:
• Diversification• Broad‐based tax structure and various revenue streams
• Decentralization• Managers should be engaged in and accountable for long‐term fiscal health
• Innovation• Always look for a better way
Other Best Practices o Strong financial policies
• Will not prevent failure, but will allow graceful failure with quick(er) recovery
o Five‐year forecasting
o Independence of forecasting and financial planning
Conclusiono What stage are you in?
o Finance professionals help move organiza on from survival → recovery → improvement
o Focus on the resiliency characteristics where you are weakest
Introduction to 100 Resilient Cities
GFOA Annual Conference
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100 Resilient Cities …
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Where does resilience come from?
Shock or Stress
• Resilience has its origins in ecology: Capacity of natural systems to maintain or recover functionality
• It has also been used in engineering: “Restoration of business as usual” for engineered systems
• For communities of people – e.g. cities – “evolutionary resilience” is the most relevant concept:– Constant learning– Action at multiple levels and scales– Shocks and stresses as opportunities for positive growth and change
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Resilience is a multi‐faceted concept
Resilience
The capacity of individuals, communities, institutions,
businesses and systems within a cityto survive, adapt, and grow no matter
what kinds of chronic stresses and acute shocks they experience.
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Food supplyWater safety
WasteEnergy supply and demand
UnemploymentCrime
EducationImmigration Emigration
Sea level riseSinking lands
Coastal erosionInequity
Chronic stresses
HurricaneEarthquakeFloodingDisease OutbreakTerrorismViolent protestDroughtTorrential rainLandslideTornadoFireHeat waveBuilding or transit disaster
Acute shocks
A city’s ability to maintain essential functions is threatened by acute shocks and chronic stresses
City
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• Toyota facility in Turkey after 1999 7.6 magnitude Izmit Earthquake• Engineered to withstand strong earthquakes and seismic shocks• Immediate surrounding infrastructure hardened such as roads • Modern systems and plant designed to improve economic opportunity
Case Study: Sakarya Province, Turkey
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• Elsewhere in region 17,118 people killed, nearly 50,000 injured• Estimated 3 - 6.5 billion U.S. dollars in damage, 500,000 people left homeless• Water, electric, transportation and communications systems were disrupted• Severe economic impact across region
Case Study: Sakarya Province, Turkey
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A resilient city demonstrates characteristics that enable it to maintain essential functions in the face of acute shocks and chronic stresses
Qualities
Chronic stressesAcute shocks City
Accepting Organizing Inclusive
Reflective Robust Redundant Flexible Resourceful Inclusive Integrated
Learns from past experiences Well‐conceived,
constructed and managed
physical assets.
Develops efficient
systems that can hand distribution
Can change based on new evidence
Achieving same goals, but through
new processes or methods
Covers wide range of
people and places
Ensurescommon goals and
coordination throughout efforts
Recognizes the ever‐increasing uncertainty and change in today’s world
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Functions and qualities of resilience
Knowledge People
Place Organizations
46Case Study: NYC a Tale of Two Blackouts
47Case Study: NYC a Tale of Two Blackouts
48Case Study: NYC a Tale of Two Blackouts
49Case Study: NYC a Tale of Two Blackouts
50Case Study: NYC a Tale of Two Blackouts
51Case Study: NYC, a Tale of Two Blackouts
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Functions and qualities of resilience
Knowledge People
Place Organizations
Working with Member Cities
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Desired outcomes
The 100RC model aims to catalyze resilience within cities while mobilizing resources and creating a global practice
Catalyze resilience within the city• Coordination across municipal, non‐city, state and national stakeholders
• Integration of existing plans • Application of a resilience lens to ongoing efforts• Identification of opportunities for new initiatives and projects to fill gaps in resilience understanding
• Prioritization and implementation
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Inform the market and activate distribution• Identification of city needs• Creation of a market signal on a city’s resilience priorities
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Establish a resilience practice• Knowledge and best practice sharing between 100RC cities • Expansion/scaling of effort beyond 100RC cities to neighboring and regional cities
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33 cities were selected from over 300 cities around the world to be a part of Wave 1 of this global movement
372 applications 33 selected in 2013
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Wave 1 Members of 100RC
North America
Middle East
Los Angeles (CA)El Paso (TX) San Francisco (CAOakland (CA)Berkley (CA)
Glasgow (UK) Rome (Italy)Rotterdam (Netherlands)
AfricaDakar (SN)Durban (South Africa)
Southeast AsiaBangkok (Thailand) Mandalay (MM)Da Nang (Vietnam)Semarang (ID)
South AsiaSurat (India)
OceaniaMelbourne (Australia)Christchurch (New Zealand)
South AmericaMedellín (Colombia) Rio de Janeiro (Brazil)Porto Alegre (Brazil)Quito (Ecuador)
Europe
Ashkelon (Israel)Ramallah (Palestine)Byblos (Lebanon)
New York City (NY)Norfolk (VA)Boulder (CO)New Orleans (LA) Jacksonville (FL)Mexico City (Mexico)
Bristol (UK)Vejle (DK)
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Each member city will receive four types of support
Funding to hire a Chief Resilience Officer
Support to develop a resilience strategy
A platform of servicesto support strategy implementation
Membership in the 100 Resilient Cities network
The Challengeidentified 33 cities globally to provide four levels of support to better address the shocksand stresses of the 21st century
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100RC Update:
• 100RC has completed 19 workshops worldwide
• 2 CROs are on the job (San Francisco, Medellin)
• Next phase of the Challenge runs July – September; next wave of cities announced in December
• The Rockefeller Foundation recently unveiled a new framework for resilience at the World Urban Forum
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How to get involved
Become a Platform Partner
100 Resilient Cities partners with a wide range of companies and organizations to provide cities with tools and services they need to build resilience. To express interest in partnering with 100 Resilient Cities, please visit 100RESILIENTCITEIS.ORG/PAGE/S/PLATFORM
Join the Conversation
Tell us what your city needs to be resilient using #mycityneeds. Learn more about 100 Resilient Cities and stay up-to-date on resilience innovations via e-mail alerts from100RESILIENTCITIES.ORG
100 Resilient Cities’ second challenge will open in mid-2014. For more information on how to apply and what it means to be a 100 Resilient Cities Member, visit 100RESILIENTCITIES.ORG
Become a Member City
The Endo Questions?
