Budgeting
Minnesota Chiefs of Police Association
C.L.E.O. & Command Academy
June 10, 2015
Chief Tim Fournier
New Hope Police Department
(763) 531-5141
tfournier@ci.new-hope.mn.us
Overview
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Purposes of budgeting
Revenue sources
Various types of budgets
Steps in the budgeting process
Budgeting guidelines
A sample template
Definition: Budget
A budget is a detailed plan for the
acquisition and use of financial and other
resources over a specified period of time.
It represents a plan for the future
expressed in formal quantitative terms
A budget it more than just
numbers...
It is a financial roadmap to the future
It’s a plan expressed in financial terms
Budgeting is the process of allocating
available resources among competing
demands.
…a reflection of values. Whose values?
Budget as a Tool:
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Facilitates Communication
Establishes Priorities
Determines Programs and Their Contents
Exercises Control of Operations
Evaluates Performance
Why have budgets?
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Legally required
Accountability
Evaluation
Planning
Information
Conflict Resolution
“Fiduciary Responsibility”
“Of or relating to holding something in
trust for another”
Key Feature: Expenditures must not
exceed revenues
Specific Forms of Budgets
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Line-Item Budget
Performance Budget
Program Budget
Zero Based Budget
Enterprise
“Hybrid”
Line Item
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Each category of activity is documented
and receives a funded amount
Advantages: Simple to construct; Easy to
compare one year to the next
Disadvantages: Lines tend to perpetuate
themselves from one year to the next
Assumes that we begin with last year’s
allocation
Performance Budget
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Instead of focusing on programs…focuses
on tasks or activities that staff performs
Advantages: Does a good job of depicting
unit costs ie. Cost per patrol mile
Disadvantages: Emphasis upon quantity,
not quality of activity; some things are
difficult to measure.
Program Budget
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Each service program is listed in the budget and
then broken down further by listing budget
allocations as is done in a line item budget
Advantages: Focus is upon services; easy to
show priorities
Disadvantage: Stakeholders have ownership in
programs…can cause conflict it they are
unwilling to collaborate
Zero Based Budget
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A process of budget development in which every
program and activity must justify its existence
and how it relates to the organization’s mission
and goals…everything is on the table. Starting
over from scratch.
Advantages: Eliminates “We have always done it
this way”; Forces innovation and efficiencies.
Disadvantage: Very, very time consuming
Enterprise Budget
Funds earmarked for a specific service
provided by a municipality. Examples
would include ambulance services, utility
funds, liquor operations.
Normally, the money collected is used to
maintain that specific program.
In reality….we use a combination
of all these types of budgets.
We use a “Hybrid” budget
Two general types of budgets
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Annual Operating Budget
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1 year (municipal)
Capital Outlay Budget
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5 year +
Tangible things
Sources of Revenue
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Taxes (property)
Fees for Service
- copies of reports, photos, videos
- license related background checks
Fines
Intergovernmental Revenue Sharing
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Local Government Aid (LGA)
State Peace Officer Aid
Grants
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Timeline
Fiscal Year (Municipal and State are different)
A continual process
Often created 6 months before it will
begin and 18 months before it will finish
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Process
Executive Development
Legislative Consideration (City Council)
Adoption
Execution
2016 Process/Executive
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May 22:
Bud Wage allocations complete; 5 year CIP
updated
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June 4:
Budget kickoff meeting with city manager and
department heads
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June 13:
Distribution of May financial reports
2016 Process/Legislative
(Council)
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June 15:
Meet with City Council to review the
legislative activity in the 2015 session;
Request Council input of budget priorities and
define 2016 program, projects and priorities.
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Aug. 13:
Preliminary budget to Council – Staff presents
draft department requests
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Sept . 7:
Council adopts proposed budget and certifies
property tax levy to County Auditor for 2016
2016 Process/Adoption
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Nov.:
County mails notices of proposed property
taxes to the owner of each individual parcel
of property.
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Nov.:
City publishes prior and holds hearings on
proposed budget.
2016 Process/Execution
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Dec/Jan:
Hearings complete, Council
officially executes adopted
budget.
Nuts & Bolts....
....time to make a budget
First things first….
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What should we be doing?
What are we doing?
Should we be shedding services?
Should we be adding services?
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What are our values?
What should be our priorities?
What threats / opportunities will we be
facing in the next year…in years to come?
What will be the internal and external
expectations?
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Review past expenditures by category
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Personnel
Commodities
Schools & Conferences
Contractual Services
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Review expenditures by line
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Salaries - Regular
Salaries - OT
PERA
Health Insurance
In-service Training
Fuels
Extrapolate
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Are you where you are supposed to be?
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Project expenditure to year end
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Are there unusual circumstances?
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What will you spend next year?
Scan the environment
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What is happening with your region’s
economic health?
What is happening with your
city’s/county’s economic health?
What are the finance people providing as
a guideline?
What are the goals of the City Council?
What will your needs be within the org?
Ask for input
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From supervisors and line employees
From your boss
From finance people
From other stakeholders (city divisions)
Do your home work…what are other
organizations in your area doing, asking
for, addressing?
“Windows of Opportunity”
Go to it...
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Line Item
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Items in appropriate categories?
What don’t you have control over?
Capital Outlay
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Develop replacement schedules 5-10 years
out
Life expectancy of equipment?
 Justification sheets
 Trade-in values
 Consider other departments…build alliances
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Present it...
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Cover Letter
Budget Summary ( by category)
Line Item (by line)
Line Item Notes
Capital Outlays
Capital Outlay Justifications
Capital Outlay Replacement Schedules
New Hope Police Department
General Fund
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Public Purpose: Provide a wide range of law enforcement
services that include 911 response, emergency medical
assistance, traffic enforcement, assistance in resolving
community issues, criminal investigation, maintaining peace
and order, crime prevention at various community services,
and problem resolution. The functional programs include
Response Services, K-9 Unit, Investigation, School Resource
Officers, Drug Task Force officer, Community Services, Staff
and Services (Records and Jail), SWAT Team members, Field
Training Officer, Community Service Officers, and
Administration.
Goals for the 2015 Budget
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Continue providing effective and efficient services in all functional
programs.
Continue effective delivery of Community Service programs and
operations that support those programs, including the creation of a
full-time Crime Prevention Analyst position.
Continue training less experienced officers, identify officers capable
of increased responsibilities, and keep all staff current with new
trends and developments.
Continue working closely with the schools, addressing issues and
maintaining safe educational environments.
Continue to develop skills of command level positions and new first
line supervisors.
Begin utilization of a full-time traffic car for more targeted
enforcement of traffic laws and inter-jurisdictional traffic projects
providing for more widespread awareness of traffic issues. The
position will also provide a positive data/revenue stream which will
self-sustain the position and associated costs.
Line Item Notes
Explains what each line item is / dollar
increase or decrease / reason for decrease
or increase / why additional or less
funding is requested in the budget
proposal
Line Item Notes
Light Bar for Marked Squad (1)
The life expectancy of emergency light bars that are mounted on the roof of a
marked squad car are between seven and nine years. This light bar will replace
one that will be 8 years old in 2012. This light bar will be the same as those that
we replaced in 2011 it will be an LED light bar that means decreased
maintenance, brighter light, and lower profile which decreases wind drag and
should have a corresponding positive impact on gas mileage.
2011 Allocation:
2012 Request:
$7,960
$1,695
Capital Outlays
Capital Outlay by Category
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prioritized 1-3
Capital Outlay Notes…Explain the need
Capital outlays are funded with revenues
or certificates of indebtedness
Notes explain why capital outlays are
needed, whether the equipment is
additional or replacement, what will
happen to old equipment, EST tradein/auction values, etc.
Replacement Schedules
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What are the items you will be replacing?
Balanced or spiked expenditures?
Life expectancies?
How far out?
A Special Fiscal Planning Tool
Capital Improvement Plan (CIP)
A CIP is your best guess as to major
expenditures facing your department and
the other municipal departments in years
to come. It is not a budget…it is a long
range capital expenditure plan.
Capital Outlay (CIP) for 2015 includes the following items:
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Replacement of (17) squad mobile data terminals
(MDC); $82,000.
Replacement of (1) laser radar (LIDAR) unit; $3,400.
Replacement of (2) squad radar units at end of life
cycle and no warranty $4,800.
Overall, CIP costs are slightly higher but still below the
five year average.
An additional hand held laser radar unit for traffic car will
be purchased using seized vehicle funds.
Other Concerns
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Packaging
Forming of alliances
Conditioning the environment
Buy in
Communicating
Tracking expenditures
Contingency
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Transfer of funds
Spending of funds
Spend it or lose it
Building in a cushion????
The audit
What will get you into trouble?
Remember…
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Budgeting is a continual process
It’s your “best guess”
“Full disclosure”
It isn’t just the $6,000 that you can’t account for
that will get you in trouble…it’s the $600 or any
amount…Follow procedures and document!!!
The bottom line in any business, public or
private, is fiscal
Budget allocation is built upon trust
Don’t take this stuff too seriously…
Questions