Garner mulls new ‘priority’ look at budget

kjahner@newsobserver.comMarch 4, 2014 

— Town leaders are looking into purchasing an innovative new budgeting tool that will give them a new perspective on how town programs fit with town goals and how short decisions affect long-term finances.

Priority Based Budgeting has not been adopted by any North Carolina governments. But more than 60 counties, cities and towns across the country (as well as Canada) have integrated the process designed to provide an alternative and more relevant perspective on the budgeting process.

“It’s about financial transparency,” said Chris Fabian, one of the system’s designers. “There’s such a push to doing more with less...It measures whether we are putting the dollars to our highest priorities or not.”

Prices vary, but Fabian said the program costs a one-time fee of between $35,000 to $50,000. The train-the-trainer-style implementation process means the fee would be one-time, and in Garner’s case could be spread over a couple of fiscal years.

Town Manager Hardin Watkins equated it to the difference between looking under the hood and looking at the dashboard of the car. Elected officials, he said, are more interested in check engine lights and speedometers than the various arcane inner workings under the hood.

“You end up with a policy discussion instead of an accounting exercise,” said Watkins, who first learned about the process at a International City/County Management Association conference in 2011.

The mechanisms and theory of the process were presented to the council at a Feb. 25 work session by creators Jon Johnson, an accountant, and Chris Fabian, an engineer. No decision was made; the council will study the towns options further.

Building a new approach

Johnson and Fabian had worked together in Jefferson County, Colo., when they came up with the idea, and professional organizations and eventually local governments began to take interest. When presenting to members of the business community in Boulder, Colo., Fabian said they captured the essence of the program.

“They said it was the closest thing to ‘return on investment’ they’d seen in the public sector,” Fabian said.

There are two aspects to the tool. One is a financial modeling software that can visually show how adding a one-time or a recurring cost can affect long-term budget projections.

The other breaks down each program by priority. The budget, typically hundreds of pages of line items, doesn’t necessarily calculate each program used, it just counts the things bought: salaries, supplies, vehicles, etc. The software looks at programs – police investigations, preschool activities, business outreach programs, street sweeping – and calculates the share of salaries and other town resources spent on them.

The process also includes quantitatively prioritizing based on a series of factors. How directly does the program align with town goals? Do many citizens use it or just a few? Can others provide this service or is government the only service provider? From there town leaders can easily identify low-impact programs and pick them out by cost, which is much more policy minded by looking through line items.

The process would not replace any existing accounting tools or budgeting methods.

Another layer of analysis

“This doesn’t replace what we’re doing, it’s adding another tool. This adds another layer to validate that we’re doing the right things,” Watkins said. “This can take council’s criteria and marry them to the projects we have.”

Watkins also pointed out that part of the town’s statement included a desire to become “a regional presence,” and said being first to adopt this program would constitute a step that reinforces that effort to be cutting edge.

Governments that have adopted the process include large and small municipalities and counties. Communities range from cities like San Jose, Chesapeake, Va. and Cincinnati to towns like Blue Ash, Ohio, and Grand Island, Nebraska, or counties like Monterey, Ca.

The pair of presenters cited examples of savings identified through the process. For example, Boulder had programs like a bomb squad and a yoga class that scored low on priority measures; one because it was rarely used, the latter because a private business could provide the same service.

While programs can be cut, Johnson noted that often identifying the low-impact items can lead to other solutions as well. The popular yoga class simply began charging a fee to reduce costs, while citizens still got an option that was cheaper. With seven bomb squads in a 30-mile radius, Boulder partnered with other communities so that one bomb squad could cover the area.

Garner budget and special projects manager Jamie Ludovic happened to attend the same presentation Watkins did in Milwaukee in 2011, when she was working in Illinois.

“It was an intriguing idea that leads you to wonder why we aren’t asking these questions, why aren’t we looking at it from this perspective,” Ludovic said.

Jahner: 919-829-4822; Twitter: @garnercleveland

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