Recommended Budget Practices

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Recommended Budget Practices:
A Framework for Improved
State and Local Budgeting
Government Finance Officers Association of Arizona
Thursday, October 25, 2012
Eric R. Johnson
Hillsborough County, (Tampa) FL
Issues with the Distinguished Budget
Presentation Awards Program
 Focus on a document, not a process
 Form over content?
 How to move forward?
GFOA Strategy
 Bring together interested participants
 Develop a “white paper”
1994 National Symposium
 What are the principles of good
budgeting?
 What are the barriers to good budgeting?
 How to encourage best practices?
White Paper
 Establish a national council on budgeting
 Systematically identify best practices
 Provide a mechanism to share the best
practices
National Advisory Council on State and
Local Budgeting
 Invite all major players to participate
 3 Year sunset to the Council
National Advisory Council on State
and Local Budgeting
 Association of School Business Officials
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International
Council of State Governments
GFOA
ICMA
National Association of Counties
National Conference of State Legislators
National League of Cities
U.S. Conference of Mayors
Industry, Labor & Academia
Results of the NACSLB
 Publish framework, practice statements and
examples
 Develop research and sharing tools
 Encourage member institutions to further roll
out the results through training, tools, and
techniques.
Focus on Best Practices
 Intended to educate
 Intended as “benchmarks”
 Intended to improve capacity
 Intended to promote further
enhancements
Final Report
issued
December 15, 1997
 Council work completed
 Plan for dissemination
 Tremendous resource
 Baton passed to the major organizations
 GFOA has used the results most
extensively
What are the Recommended Budget
Practices?
 A comprehensive set of processes &
procedures that define an accepted
budget process
 A goal-driven approach that spans the
planning, development, adoption and
execution phases of budgeting
Benefits of Recommended Practices
 Helpful tool for governments seeking to
improve budget process
 Educate on potential of budget process
 Help assess existing budgetary processes
 Guidance on improving budget practices
 Promote education, training, and research on
effective techniques
Recommended, not Required
 Blueprint for governments wanting to
improve budget practices
 Implementation likely take place over
number of years
 Apply to variety of management and
political styles
 Account for governmental differences:
State/local laws, political aspects,
management needs
Definition of the Budget Process
Activities that encompass the
development, implementation and
evaluation of a plan for the provision
of services and capital assets.
Essential Features of a Good
Budget Process
 Incorporates long-term perspective
 Establishes linkages to broad
organizational goals
 Focuses budget decisions on results &
outcomes
 Involves and promotes effective
communication with stakeholders
 Provides incentives to government
management & employees
Mission of the Budget Process
 Help decision makers make informed
choices about the provision of services
and capital assets, and
 Promote stakeholder participation in the
process
Stakeholder Involvement Vital
 Involve all stakeholders: Elected officials,
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administrators, employees, citizen groups,
business leaders
Identify stakeholder issues & concerns
Obtain stakeholder support for overall
process
Achieve stakeholder acceptance of
decisions regarding goals, services and
resource utilization
Report to stakeholders on services and
resource utilization
Four Principles of the Budget
Process
1. Establish broad goals to guide
government decision making
2. Develop approaches to achieve goals
3. Develop a budget consistent with
goals, policies, plans, etc.
4. Evaluate performance and make
adjustments
Twelve Elements of the Budget
Process
 Principle 1: Establish Broad Goals to
Guide Government Decision Making
1. Assess community needs, priorities,
challenges and opportunities
2. Identify opportunities and challenges for
government services, capital assets &
management
3. Develop and disseminate broad goals
Twelve Elements, cont’d
 Principle 2: Develop Approaches to
Achieve Goals
4. Adopt financial policies
5. Develop programmatic, operating and capital
policies and plans
6. Develop programs and services that are
consistent with policies and plans
7. Develop management strategies
Twelve Elements, cont’d
 Principle 3: Develop a Budget
Consistent with Approaches to Achieve
Goals
8. Develop a process for preparing and
adopting a budget
9. Develop and evaluate financial options
10. Make choices necessary to adopt a budget
Twelve Elements, cont’d
 Principle 4:Evaluate Performance and
Make Adjustments
11. Monitor, measure and evaluate performance
12. Make adjustments as needed
59 Recommended Budget Practices
 Procedures that assist in accomplishing
principles and elements of budget
process
 Multiple practices usually associated
with each budget element
 Appropriate for all governments, all
circumstances and situations
The next slide provides a sample practice.
Develop Policy on Use of One-time Revenues
Practice: A government should adopt a policy limiting the use of
one-time revenues for ongoing expenditures.
Rationale: By definition, one-time revenues cannot be relied on in
future budget periods. A policy on the use of one-time revenues
provides guidance to minimize disruptive effects on services due
to non-recurrence of these sources.
Outputs: One-time revenues and allowable uses for those
revenues should be explicitly defined. The policy should be
publicly discussed before adoption and should be readily available
to stakeholders during the budget process. The policy, and
compliance with it, should be reviewed periodically.
For detail on the 59 practices, go to
www.gfoa.org
and select the link for “Budget Practices”
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