Budgeting pioneers – coming together to get results

by Jim Chrisinger

A government budget is one of the most powerful levers of change.  Yet most perceive budget processes as notoriously impervious to change. Not necessarily.

At least 20 jurisdictions, including cities, counties, school and park districts, states, and a Canadian province have adopted new budgets built on prioritized outcomes. At PSG, we call this process Budgeting for Outcomes. We pioneered it in 2002 with Governor Locke in Washington.

With more and more jurisdictions tackling budget reform by creating their own version of a priority or outcome-based process, we thought it would be valuable to get some of them together to talk about what works and what doesn’t. Last month, representatives of six jurisdictions in various stages of implementing their new process participated in a conference call.

The discussion showed that this model can successfully challenge the status quo, breathe life into performance measures, make government more results-oriented, bust silos, and prioritize and align spending with the public’s priorities. For all of these reasons, tackling budget reform can be a high-value, high-leverage strategy for government transformation.

One participant talked about how ranking priorities and utilizing data as evidence set up a different and more constructive budget conversation.  Others have also emphasized that point.  When I led accountability and results for the State of Iowa, we implemented an outcome-based budgeting process and I interviewed leaders after the first cycle for their feedback.  One deputy director reflected, “It made me think about things differently.  We do these things, to get this result, for this price.  I really had to ask myself whether what we were getting was worth that price.  I’d never asked that before.”

Isn’t it amazing – and troubling – how traditional budgeting does not prompt that question?  Many have also noted how well a priority-based budget communicates to the public, elected officials, the media, and stakeholders.  It’s “common sense” communications.

The call participants also discussed challenges they’ve encountered: sustaining the new budget process through changing administrations, figuring out how to handle internal support services, and holding departments accountable for the outcomes they commit to deliver.

On this last question, participants on the call advised relentless follow-up. Outcomes and data need to matter year-round, not just at budget time. One organization is holding a quarterly performance forum with their chief executive and another keeps their teams for outcome prioritization (made up of employees and citizens) in place year-round so the departments can regularly report to them on how well they are achieving their performance goals. The Finance Director noted that “peer-to-peer accountability is very effective.”

At PSG, we’ve found that Budgeting for Outcomes can also launch performance management in organizations that haven’t already gone down that road because it establishes a reasonable number of measures that demand attention. When it works well, departments can attract funding for great new ideas.  Of course they also risk their funding in the subsequent budget cycle if they don’t show results in the current one. We’ve also found that it’s easier to implement Budgeting for Outcomes in jurisdictions that already have good performance management in place.

Has your organization reinvented its budget process to better align it with organizational priorities? What worked? What challenges did you face?

If you’re interested in participating in future calls with others who are reinventing their budget processes, please contact me at jim@psg.us or (651) 227-9774.

4 responses to “Budgeting pioneers – coming together to get results

  1. I have worked on quite a few of the PSG Budgeting for Outcomes projects and consistently there is a side benefit beyond the ones Jim describes. This benefit comes from involving employees on the
    Results Teams. Many who serve on the teams have never had a chance to be involved in strategy for their jurisdiction. For many of them it is an exciting experience which broadens their knowledge of the jurisdiction and introduces them to new networks of people. For current leaders it helps identify the emerging leaders who will help replace the baby-boomers as they retire.

  2. What I find especially powerful about these budget prioritization processes is that they force electeds and managers to figure out what activities and results are most important for their citizens. Then it gives them a rationale to put resources to the most important stuff.

    In Paul Light’s very good new book about the Federal Service, “A Government Ill Executed”, his first concern is that we’ve allowed massive “mission-creep” at the federal level without adequately funding it. This is they problem of most jurisdictions — they can’t say no to a new service, but they don’t want to ask citizens to pay for it.

    These budgeting approaches put the spotlight on the issue and in Light’s words, help decision-makers “sort out the mission.”

  3. I agree with both Beverly and Tom. We are so used to the traditional budget mindset (take last year’s budget, add in inflation, then find ways to chop to balance) that it becomes incomprehensible, counter-productive and the source of zero-sum resentment and turf warfare between departments (and specific constituencies for various programs and policies.)

    Budgeting for outcomes isn’t a panacea. But it forces governments to identify priorities, allocate finite resources amongst those priorities and do so in a way that looks beyond the departmental structures that trap us in past thinking and past decisions.

    Rick Cole
    City Manager
    City of Ventura

  4. Agreed. Budgeting for Outcomes is not a panacea. Nothing is. What I most appreciate in Rick and the other courageous government leaders who are pioneering this approach to budgeting, and governing, is their commitment and energy confronting enormous inertia. It’s hard work finding a better way. Admitting that traditional budgeting isn’t meeting the needs of those we serve doesn’t make life easy, but we’re not going to make much progress restoring confidence in government without that first, big step. The budget is the longest, most powerful lever of change. Kudos to Rick and his peers who are leaning on it.

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