Recommended Budget Practices:Recommended Budget Practices:A Framework for Improved A Framework for Improved State and Local BudgetingState and Local Budgeting

Government Finance Officers Association of Government Finance Officers Association of ArizonaArizona

Thursday, October 25, 2012Thursday, October 25, 2012

Eric R. JohnsonHillsborough County, (Tampa) FL

Issues with the Distinguished Budget Presentation Awards Program

Focus on a document, not a process Form over content? How to move forward?

GFOA Strategy Bring together interested participants Develop a “white paper”

What are the principles of good budgeting? What are the barriers to good budgeting? How to encourage best practices?

1994 National Symposium

White Paper

Establish a national council on budgeting Systematically identify best practices Provide a mechanism to share the best

practices

National Advisory Council on State and Local Budgeting

Invite all major players to participate 3 Year sunset to the Council

National Advisory Council on State and Local Budgeting

Association of School Business Officials International

Council of State Governments GFOA ICMA National Association of Counties National Conference of State Legislators National League of Cities U.S. Conference of Mayors Industry, Labor & Academia

Results of the NACSLB

Publish framework, practice statements and examples

Develop research and sharing tools Encourage member institutions to further roll

out the results through training, tools, and techniques.

Focus on Best Practices

Intended to educate Intended as “benchmarks” Intended to improve capacity Intended to promote further

enhancements

Final Report issued

December 15, 1997

Council work completed Plan for dissemination Tremendous resource Baton passed to the major organizations GFOA has used the results most

extensively

What are the Recommended Budget Practices?

A comprehensive set of processes & procedures that define an accepted budget process

A goal-driven approach that spans the planning, development, adoption and execution phases of budgeting

Benefits of Recommended Practices

Helpful tool for governments seeking to improve budget process Educate on potential of budget process Help assess existing budgetary processes Guidance on improving budget practices Promote education, training, and research on

effective techniques

Recommended, not Required

Blueprint for governments wanting to improve budget practices

Implementation likely take place over number of years

Apply to variety of management and political styles

Account for governmental differences: State/local laws, political aspects, management needs

Definition of the Budget Process

Activities that encompass the development, implementation and

evaluation of a plan for the provision of services and capital assets.

Essential Features of a Good Budget Process

Incorporates long-term perspective Establishes linkages to broad organizational

goals Focuses budget decisions on results &

outcomes Involves and promotes effective

communication with stakeholders Provides incentives to government

management & employees

Mission of the Budget Process

Help decision makers make informed choices about the provision of services and capital assets, and

Promote stakeholder participation in the process

Stakeholder Involvement Vital

Involve all stakeholders: Elected officials, administrators, employees, citizen groups, business leaders

Identify stakeholder issues & concerns Obtain stakeholder support for overall

process Achieve stakeholder acceptance of decisions

regarding goals, services and resource utilization

Report to stakeholders on services and resource utilization

Four Principles of the Budget Process

1. Establish broad goals to guide government decision making

2. Develop approaches to achieve goals3. Develop a budget consistent with

goals, policies, plans, etc.4. Evaluate performance and make

adjustments

Twelve Elements of the Budget Process

Principle 1: Establish Broad Goals to Guide Government Decision Making

1. Assess community needs, priorities, challenges and opportunities

2. Identify opportunities and challenges for government services, capital assets & management

3. Develop and disseminate broad goals

Twelve Elements, cont’d

Principle 2: Develop Approaches to Achieve Goals

4. Adopt financial policies5. Develop programmatic, operating and capital

policies and plans6. Develop programs and services that are

consistent with policies and plans7. Develop management strategies

Twelve Elements, cont’d

Principle 3: Develop a Budget Consistent with Approaches to Achieve Goals

8. Develop a process for preparing and adopting a budget

9. Develop and evaluate financial options10. Make choices necessary to adopt a budget

Twelve Elements, cont’d

Principle 4:Evaluate Performance and Make Adjustments

11. Monitor, measure and evaluate performance12. Make adjustments as needed

59 Recommended Budget Practices

Procedures that assist in accomplishing principles and elements of budget process

Multiple practices usually associated

with each budget element Appropriate for all governments, all

circumstances and situations

The next slide provides a sample practice.The next slide provides a sample practice.

Develop Policy on Use of One-time Revenues Practice: A government should adopt a policy limiting the use of one-time revenues for ongoing expenditures.

Rationale: By definition, one-time revenues cannot be relied on in future budget periods. A policy on the use of one-time revenues provides guidance to minimize disruptive effects on services due to non-recurrence of these sources.

Outputs: One-time revenues and allowable uses for those revenues should be explicitly defined. The policy should be publicly discussed before adoption and should be readily available to stakeholders during the budget process. The policy, and compliance with it, should be reviewed periodically.

For detail on the 59 practices, go to

www.gfoa.org

and select the link for “Budget Practices”