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better budgets build better decisions

10/3/2022

 
Tis the Budget season and many executive directors, municipal managers and other public administrators in small organizations aspire for better budgets that facilitate policy making, particularly for volunteer boards or part-time elected officials.

Budgeting is an expression of values.  But in a small organization,  how do find time to do more than a basic spreadsheet?  Instead of carrying around that frustration, why not set an intention to improve your budget little by little over a series of years?  This smaller, incremental approach, if done with a clear vision of where you are going, will bring about lasting gains and won't require dropping everything else while you valiantly try to raise the bar . 

To do this, take inspiration from the free criteria of the Government Finance Officers Association (GFOA) Distinguished Budget Awards program. That may seem counter intuitive as the Award is a significant accomplishment.  But with the right "baby steps" approach you will begin to see real gains in the quality of information available for making decisions.

Start by being aware of the mandatory criteria of this program (see table below).  This baby step allows the weaving-in of budgeting activities into the day-to-day management of your organization (instead of waiting until "budget season").  For example, has a strategic, comprehensive or other planning process recently taken place?  Great!  Rely on the mission, goals and objectives in that to kick of the goals of your budget.  Participating in a certification programs such as Sustainable Pennsylvania? Awesome! A good place to start for performance measures.  

Once you know the components of a "good" budget, you can begin to plug much of your existing work into each of the following major categories of the GFOA Criteria.  This table presents the budget questions to be answered by each category (table best viewed in desktop browser).  Make incremental gains over a few years and you are well on your way.   It makes me think of what my dad always said, "Inch by inch, life's a cinch...Yard by yard, life is hard."  

Category

Questions

Goals


Are strategic goals included?

Is the process for creating the strategic goals explained?

Are action plans and/or strategies included to show how these goals will be accomplished?

Budget Message

Are action plans and/or strategies included to show how these goals will be accomplished?

Does the message highlight the principal issues facing the governing body in developing the budget (e.g., policy issues, economic factors, regulatory, and legislative challenges)?

Does the message describe the actions to be taken to address these issues?

Does the message explain how the priorities for the budget year differ from the priorities of the current year?

Significant issues and Overview

Are major changes in service levels, fees, and/or taxes presented?

Is an overview contained in the budget message/transmittal letter, executive summary, or in a separate budget-in-brief?

Is summary information on significant budgetary items conveyed in an easy to consume format?

Is summary information on budgetary trends provided?

Is a summary of changes presented between the proposed to adopted budget?

Entity Wide Policies

Is there a summary of financial policies?

Do the financial policies include the definition of a balanced budget?

Does the budget comply with relevant financial policies?

Consolidated Summaries of Major Revenues & Expenditures

Is an overview of revenues and other financing sources and expenditures and other financing uses of all appropriated funds included?

Are revenues and other financing sources and expenditures and other financing uses presented either (1) together in a single schedule or (2) in separate but adjacent/sequential schedules or (3) in a matrix?

Are revenues presented by major type in this schedule (e.g., property taxes, intergovernmental, sales taxes, fees and charges)?

Are expenditures presented by function, program, or spending component in this schedule?

3 Year Histories - Prior/Current/Proposed

Are revenues and other financing sources and expenditures and other financing uses for the prior year, the current year, and the budget year presented together on the same schedule(s) or on schedules presented on adjacent/sequential pages?

Is this information presented for the appropriated funds in total?

Is this information also presented at a minimum for each major fund and for other (i.e. nonmajor) funds in the aggregate (or for each significant fund and other funds in the aggregate if no appropriated funds are included)?

Are revenues presented by major type in this schedule (e.g., property taxes, intergovernmental, sales taxes, fees and charges)?

Are expenditures presented by function, program, or spending component in this schedule?

Fund Balance Changes

Is the definition of fund balance (net position if no governmental funds) included?

Is the fund balance /net position information presented for the budget year?

Is there a schedule showing (1) beginning fund balances, (2) increases or decreases in total fund balances, and (3) ending fund balances for appropriated governmental funds?

Is this information presented at a minimum for each major fund and for nonmajor governmental funds in the aggregate?

If fund balances of any major fund or the nonmajor funds in the aggregate are anticipated to increase or decline by more than 10%, does the document include a discussion of the causes and/or consequences of these changes in fund balance?

Are individual revenue sources described?

Revenues

Do the revenue sources that are described represent at least 75 percent of the total revenues of all appropriated funds?

Are the methods used to estimate revenues for the budget year described (e.g., trend analysis, estimates from another government or consulting firm)?

If revenues are projected based on trend information, are both those trends and the underlying assumptions adequately described?

Capital Expenditures

Are capital expenditures defined?

Do the materials indicate the total dollar amount (for both sources and uses) of the capital program for the budget year(s) and/or multiyear capital plan?

Are significant nonrecurring capital expenditures described along with dollar amounts?

Are significant nonrecurring capital expenditures described along with dollar amounts?

What is the process to identify funded projects?

Is there a description and quantification of how specific nonrecurring capital projects will affect the current and future operating budget?

Debt Service

Are debt limits and coverage requirements described and calculated?

Is the amount of principal and interest payments presented through maturity for each fund?

Are bond ratings shown?

Department Goals

Are departmental/program goals and objectives described?

Are departmental/program goals clearly linked to the strategic goals of the entity?

Are objectives quantifiable?

Are timeframes on objectives noted?

Performance Measures

Are performance data for individual departments or programs included in the document?

Are performance data directly related to the stated goals and objectives of the department or program?

Do performance measures focus on results and accomplishments (e.g., output measures, efficiency and effectiveness measures) rather than inputs (e.g., dollars spent)?

Charts and Graphs

Are charts and graphs used in the document to convey essential information (e.g., key policies, trends, choices and impacts)?

Are graphics explained?

Source: Government Finance Officers Association, Distinguished Budget Presentation Awards Criteria (not a complete list)


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