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Why Budget Doesn’t Matter North Carolina Local Government Budget Association Summer Conference July 19, 2007 Wilmington, NC.

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Presentation on theme: "Why Budget Doesn’t Matter North Carolina Local Government Budget Association Summer Conference July 19, 2007 Wilmington, NC."— Presentation transcript:

1 Why Budget Doesn’t Matter North Carolina Local Government Budget Association Summer Conference July 19, 2007 Wilmington, NC

2 2 Introduction Hyong Yi Management and Budget Director Office of Strategic Organizational Improvement (SOI) Mecklenburg County Government www.MecklenburgCountyNC.gov

3 3 Presentation Overview Question 1 - Why doesn’t budget matter? Question 2 – If budget doesn’t matter, what does?

4 4 A Show of Hands How many of you… 1.Have departments that have new ideas (i.e., services, programs, strategies, etc.) that they propose in the annual budget process 2.Have City/County executives that have ideas and look to budget to “fill in the details” on how it will work 3.Use the budget process as THE process for strategic planning, determining priorities, and assessing the consequences of performance (good or bad) 4.Ask for performance data? Use it to make budget decisions?

5 5 The Mother of All Processes The Budget Process has become the “de facto” process for: Strategic Activities –Planning –Priority Identification –Goal Definition and Setting Program Evaluation –Performance Management –Program Assessment –Return on Investment But Budget was not intended for this.

6 6 Defining Budgeting “On what basis shall it be decided to allocate X dollars to Activity A instead of Activity B?” 1 1 V.O. Key, Jr., “The Lack of a Budgetary Theory,” American Political Science Review, 34 (December 1940), 1137. This isn’t budgeting, this is planning.

7 7 Examples GPRA Performance Based Budgeting Managing for Results Budgeting for Outcomes Activity Based Costing/Budgeting

8 8 Redefining Budgeting Budgeting is a process of resource allocation based on planned priorities. It –Follows a strategic planning process which has identified goals and outcomes –Precedes an evaluation process which assesses progress against the plan In it’s simplest form, a budget is a list with dollar signs associated with the items In it’s more complex forms, budget is about things other than money (i.e., priorities, performance, etc.)

9 9 Budget Doesn’t Matter In it’s 21 st Century incarnation, budget and budgeting is a member of the cast, and not the governmental diva that it once was. An example to illustrate this point

10 10 Managing for Results Outcome Goals Strategies Program Alignment Performance Measurement Goals Performance Management Budget for Results Program Alignment Corporate Strategies Five Stage Process

11 11 Why Goals Matter Outcome Goals Strategies Program Alignment Performance Measurement Goals Vision for the Future

12 12 Why Vision Matters In 2015, Mecklenburg County will be a community of pride and choice for people to LIVE, WORK and RECREATE. Vision sets the target.

13 13 Vision for the Future In 2015, Our County will be a community of pride and choice for people to LIVE, WORK and RECREATE. Affordable Housing Celebrate Diversity Preserve History/Landmarks Community Health Community Safety Protecting Natural Resources Senior Citizens Economic Development Education and Literacy Arts & Cultural Activity Government Stewardship Transportation/Transit Partnerships Parks/Open Space

14 14 Increase Customer & Stakeholder Satisfaction Increase Citizen Awareness of County Responsibilities, Services & Results Increase Citizen Awareness of County Responsibilities, Services & Results Increase Safety & Security of Residents Increase Safety & Security of Residents Reduce Health Risks & Diseases Reduce Health Risks & Diseases Increase Efficiency & Effectiveness of Criminal Justice Services Increase Literacy & Workforce Development Increase Respect/ Appreciation of Ethnic & Cultural Diversity Increase Respect/ Appreciation of Ethnic & Cultural Diversity Increase Citizen Self-Sufficiency Increase Citizen Self-Sufficiency Improve Access to Public Facilities Improve Access to Public Facilities Increase Economic Development & Job Opportunities Increase Economic Development & Job Opportunities Improve/ Expand Parks, Open Space, Greenways & Recreational Opportunities Improve Air, Water, & Land Improve Air, Water, & Land Preserve Historic Sites & Landmarks Preserve Historic Sites & Landmarks Increase Employee Access to Information Improve Employee Efficiency Reduce/Avoid Costs Improve Financial Management Maintain Triple- A Bond Rating Maintain Triple- A Bond Rating Maintain Affordable & Competitive Tax Rate Increase Employee Motivation & Satisfaction Enhance Workforce Retention & Recruitment Enhance Workforce Retention & Recruitment Increase Employee Knowledge, Skills & Abilities Improve Technology- Related Capacities Enhance Citizen Involvement Employee & Organizational Capacity Financial Internal Business Process Customer/ Stakeholder Focus Areas Social, Education, & Economic Opportunity Effective & Efficient Government Community Health &Safety Growth Management & Environment Improve Management of Mental Illness, Developmental Disabilities & Substance Abuse Improve Management of Mental Illness, Developmental Disabilities & Substance Abuse Community & Corporate Scorecard County Has Primary Service Provider Responsibility

15 15 Why Strategy Matters Outcome Goals Strategies Program Alignment Performance Measurement Goals Corporate Strategies The Means To Achieving The Goals

16 16 What is Strategy A strategy is a long term plan of action designed to achieve a particular goal.

17 17 Example – Community Health & Safety Focus Area Focus Area Goal: Make our community healthier and safer Desired Result:Increase safety and security of residents Strategy: S1: Provide a safe community to all citizens through prevention and intervention programs, with a focus on children and the elderly S2: Mitigate the effects of abuse Measures: M1: Child Abuse Rate M2: Elder Abuse Rate M3: Domestic Violence Abuse Rate M4: Violent Crime Rate

18 18 Why Services Matter Outcome Goals Strategies Program Alignment Performance Measurement Goals Program Alignment Corporate Strategies The Means to Achieving Our Strategies

19 19 Aligning Services to Vision Community 2015 Vision Community & Corporate Scorecard Program Category Services Program Category Services Program Category Services Program Category Services

20 20 Program Category Alignment Services the County delivers must be tied to achieving a desired result Alignment process evaluates link between 2015 goals, core responsibilities, and service offerings Determine service directive (desired result) for each program category Evaluate results of each program category relative to scorecard goals

21 21 Strategic Alignment Community/ Corporate Focus Area Program Category Services 2015 Vision for Community Community & Corporate Scorecard Focus Area Goals Corporate Strategies Corporate Measures Desired Result Business Strategy Priority Level Ranking Service Strategies Service Performance Measures Funding and FTE Levels Program Review

22 22 The Role of Budget Outcome Goals Strategies Program Alignment Performance Measurement Goals Budget for Results Program Alignment Corporate Strategies Determining the Price Tag of the Plan

23 23 The Strategic Supply Chain 2015 Vision Desired Results Perf. Measures Strategy Program Category Service Linkage $ Business Strategies Strategic Impact Issues Level of budgeting Lowest level of alignment

24 24 Budgeting for Results Desired ResultIncrease Efficiency of Criminal Justice Services Performance Measures M1: Pretrial Inmate Rate M2: Alternative Sentencing Rate Strategic Impact Issue Jail Overcrowding Strategies for Improvement 1.Develop rehabilitation and jail diversion programs 2.Fund Mental Health Courts 3.Fund mental health services for citizens without Medicaid or health ins. 4.Expand jail programs addressing mental illness and substance abuse Program Category Linkage Strategy 1  Jail and Detention Facilities Strategy 2  Court Services Coordination Strategy 3  Economic/Financial Assistance

25 25 Why Evaluation Matters Outcome Goals Strategies Program Alignment Performance Measurement Goals Performance Management Budget for Results Program Alignment Corporate Strategies The Means to Gauging Success

26 26 Defining Evaluation Measurement on a regular basis of the results (outcomes) and efficiency of services or programs. From Hatry, Harry. Performance Measurement: Getting Results. Washington, DC: Urban Institute Press (1999). Many ways/tools to measure, but fundamental principles are the same: –Validity of measure and data –Correlation with desired results

27 27 Mecklenburg’s Scorecard Strategy Employees & Organizational Capacity Customers & Stakeholders Internal Business Process Financial Vision

28 28 Increase Customer & Stakeholder Satisfaction Increase Citizen Awareness of County Responsibilities, Services & Results Increase Citizen Awareness of County Responsibilities, Services & Results Increase Safety & Security of Residents Increase Safety & Security of Residents Reduce Health Risks & Diseases Reduce Health Risks & Diseases Increase Efficiency & Effectiveness of Criminal Justice Services Increase Literacy & Workforce Development Increase Respect/ Appreciation of Ethnic & Cultural Diversity Increase Respect/ Appreciation of Ethnic & Cultural Diversity Increase Citizen Self-Sufficiency Increase Citizen Self-Sufficiency Improve Access to Public Facilities Improve Access to Public Facilities Increase Economic Development & Job Opportunities Increase Economic Development & Job Opportunities Improve/ Expand Parks, Open Space, Greenways & Recreational Opportunities Improve Air, Water, & Land Improve Air, Water, & Land Preserve Historic Sites & Landmarks Preserve Historic Sites & Landmarks Increase Employee Access to Information Improve Employee Efficiency Reduce/Avoid Costs Improve Financial Management Maintain Triple- A Bond Rating Maintain Triple- A Bond Rating Maintain Affordable & Competitive Tax Rate Increase Employee Motivation & Satisfaction Enhance Workforce Retention & Recruitment Enhance Workforce Retention & Recruitment Increase Employee Knowledge, Skills & Abilities Improve Technology- Related Capacities Enhance Citizen Involvement Employee & Organizational Capacity Financial Internal Business Process Customer/ Stakeholder Focus Areas Social, Education, & Economic Opportunity Effective & Efficient Government Community Health &Safety Growth Management & Environment Improve Management of Mental Illness, Developmental Disabilities & Substance Abuse Improve Management of Mental Illness, Developmental Disabilities & Substance Abuse Community & Corporate Scorecard County Has Primary Service Provider Responsibility

29 29 Service Value M1: Customer & Stakeholder Satisfaction Ratings M2: Customer Disparity Rating Service Value M1: Customer & Stakeholder Satisfaction Ratings M2: Customer Disparity Rating Citizen Awareness M1: Public Awareness Index Citizen Awareness M1: Public Awareness Index Safety & Security of Residents M1: Child Abuse Rate M2: Elder Abuse Rate M3: Domestic Violence Abuse Rate M4: Violent Crime Rate Safety & Security of Residents M1: Child Abuse Rate M2: Elder Abuse Rate M3: Domestic Violence Abuse Rate M4: Violent Crime Rate Health Risks & Diseases M1: Health Index Health Risks & Diseases M1: Health Index Criminal Justice Services M1: Pre-Trial Inmate Rate M2: Trial Court Performance Index Criminal Justice Services M1: Pre-Trial Inmate Rate M2: Trial Court Performance Index Literacy and Preparedness M1: Student Literacy Index M2: Adult Literacy Rate M3: Workforce Development Index Literacy and Preparedness M1: Student Literacy Index M2: Adult Literacy Rate M3: Workforce Development Index Respect Diversity M1: Ethnic & Cultural Diversity Index Respect Diversity M1: Ethnic & Cultural Diversity Index Self-Sufficiency M1: Unemployment Rate M2: Self-Sufficiency Index Self-Sufficiency M1: Unemployment Rate M2: Self-Sufficiency Index Access to Public Facilities M1: Transit Proximity Index Access to Public Facilities M1: Transit Proximity Index Economic Development & Jobs M1: Business Growth Rate M2: Job Growth Rate Economic Development & Jobs M1: Business Growth Rate M2: Job Growth Rate Parks, Open Space, Greenways& Recreation M1: Open Space & Parks Index M2: Customer Satisfaction: Recreational Opportunities Parks, Open Space, Greenways& Recreation M1: Open Space & Parks Index M2: Customer Satisfaction: Recreational Opportunities Clean Air, Water & Land M1: Environmental Quality Index Clean Air, Water & Land M1: Environmental Quality Index Historic Sites & Landmarks M1: Preservation Rate Historic Sites & Landmarks M1: Preservation Rate Communication & Information Management M1: Employee Satisfaction Rating: Efficient Access to Needed Information Communication & Information Management M1: Employee Satisfaction Rating: Efficient Access to Needed Information Citizen Involvement M1: Advisory Committee Diversity M2: Citizen Satisfaction w/Input Opportunities Citizen Involvement M1: Advisory Committee Diversity M2: Citizen Satisfaction w/Input Opportunities Cost Savings M1: Percentage Property Tax Revenue Cost Savings M1: Percentage Property Tax Revenue Financial Management M1: Percentage of Net County Funding M2: Tax Collection Rate Financial Management M1: Percentage of Net County Funding M2: Tax Collection Rate Triple-A Bond Rating M1: Bond Rating Triple-A Bond Rating M1: Bond Rating Affordable & Competitive Tax Rate M1: Property Tax to Household Income M2: Competitiveness of Tax Rate to Businesses Affordable & Competitive Tax Rate M1: Property Tax to Household Income M2: Competitiveness of Tax Rate to Businesses Employee Motivation & Satisfaction M1: Employee Motivation & Satisfaction Index M2: Employee Disparity Rating Employee Motivation & Satisfaction M1: Employee Motivation & Satisfaction Index M2: Employee Disparity Rating Workforce Retention & Recruitment M1: Resignation Rate M2: 2-Year Retention Rate M3: Workforce Representation Workforce Retention & Recruitment M1: Resignation Rate M2: 2-Year Retention Rate M3: Workforce Representation Employee Knowledge, Skills & Abilities M1: Employee Satisfaction Rating: Knowledge, Skills, & Abilities Employee Knowledge, Skills & Abilities M1: Employee Satisfaction Rating: Knowledge, Skills, & Abilities Technology-Related Capacities M1: Employee Satisfaction Rating: Technology-Related Resources to Do Their Jobs Technology-Related Capacities M1: Employee Satisfaction Rating: Technology-Related Resources to Do Their Jobs Employee Efficiency M1: Employees per Capita Employee Efficiency M1: Employees per Capita Employee & Organizational Capacity Financial Internal Business Process Customer/ Stakeholder Focus Areas Social, Education, & Economic Opportunity Effective &Efficient Government Community Health & Safety Growth Management & Environment Performance Measure View County Has Primary Service Provider Responsibility Mental Illness & Substance Abuse M1: Mental Health Index Mental Illness & Substance Abuse M1: Mental Health Index

30 30 Conclusions Budgeting is just a component of 21 st Century management tools. To be successful, requires an understanding of the inter-relationships between strategic planning, programs, budget and performance to achieve organizational improvement. Without these other pieces, budgeting is just a sandwich with too much butter and no jelly.


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