Watch the webinar and discover the first steps toward local government finance innovation and successfully implementing priority-based budgeting.
Many finance leaders have recognized the cracks and ineffectiveness in traditional local government line-item budgeting. There are too many missed opportunities to fund projects that could benefit communities. Luckily, new ideas and better technology have opened up the possibility of profound change in the budget process.
Priority-based budgeting, allocating funding based on what matters most to the community, is one of the strategies innovative governments use to invigorate stale processes. But not all PBB is created equal.
New research shows that resident engagement makes PBB reallocation three times more impactful.
In this webinar, government finance leaders discuss PBB and how engagement makes it stronger. Plus, get two examples from communities that have successfully implemented priority-based budgeting.
Community engagement can amplify these levels of mastery. However, where governments typically use engagement in the PBB process is not the most effective.
In most cases, residents participate in the goal-setting stage. However, Mitchell's research shows that using the resident voice at this point results in only a tiny change in funding allocation compared to not being involved at all.
The graph above shows the percentage of funding reallocation discovered at different stages of PBB and different levels of engagement. Residents participate in the involve, collaborate, and empower levels of engagement. The inform level is staff only. The consult level includes staff and council only.
However, including residents in the prioritization and allocation stages resulted in three to four times the amount of reallocation dollars discovered.
"The traditional notion that public engagement only occurs in the goal-setting arena is flawed," he said. "We need to pay attention to the prioritizing and allocating arenas as well."
The City of Lawrence recognized the need to implement PBB and involve residents in the process.
To get started, the City put a lot of energy into strategic planning. Over 3,000 residents participated in this process, which included surveys and other research. Lawrence also used the Budget Simulation by Polco to get resident feedback.
The simulation mirrors the City's real-life budget. Residents add or subtract funding items based on what matters most or least to them. The process teaches participants how the budget works while giving city leaders data on budget priorities.
Pictured above is an example of a balanced Budget Simulation.
"If we didn't have [the planning] foundation, the rest of the budget work and using these great tools really wouldn't have been as elegant, and it really wouldn't have worked as well," he said.
City officials also identified the cost of every program to understand expenditures better.
With PBB, data, and engagement, decision-makers crafted a budget that was as objective as possible.
"I boldly say this isn't just budgeting—this is democracy. And so we're trying to give those handles to the community. We need them to see it is not the city manager's diabolical plan; it is your plan," Owens said.
The City of Fort Worth is early in its PBB journey. About nine of the City's 25 departments have gone through the process thus far.
Sloane says it's a misconception that PBB tells governments exactly what to do. Instead, PBB gives organizations information to help them make better decisions.
She says the City's departments that have done PBB have a better understanding of what everyone else is doing internally and how it connects with the City's overall strategy.
"We are marrying everything together," she said.
For the engagement piece, the City also uses Budget Simulation to see what residents think about council priorities.
Sloane says that once they fully implement PBB, the City aims to get more input on critical decisions. She said it would be tough to enter that space without the work they have done now.
Chris Adams, Executive Strategist at Polco, discovered three keys to successful budget engagement. Using engagement methods that use these keys results in more reliable data for better informed PBB.
The Budget Simulation (used by Fort Worth and Lawrence) includes all three keys. It restricts participants from making decisions outside of spending limits. It includes information icons to provide more context. It also demonstrates the trade-offs users might have to make to allocate money for their top priorities.
"By putting people in the shoes of decision-makers—just temporarily in a simulated exercise—is a great way to enlist residents as allies in helping to make some of these hard decisions," Adams said.
Get started with the Budget Simulation to receive better data for priority-based budgeting. The Budget Simulation gives you reliable information on your community's priorities while educating residents on how government spending works. Take the first step toward better budgeting and transform your community!
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