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.