Budgeting Ethics
City Manager’s Futures Forum
May 9, 2011
Michael A. Gillette, Ph.D.
(434)384-5322 mgillette@bsvinc.com
www.bsvinc.com
Moral Management
and the
Process of Ethics
Leadership Ethics
“Tough Choices Part I: The Revolution”
"Lee's green jacketed troopers broke in close to the British lines, completely
upset Tarleton's dragoons in a stiff little fight, and then fell back toward
Guilford Courthouse with the whole aroused British force after them... The
stillness was broken as North Carolinians coolly ripped out the three volleys
that Greene had asked and then peeled off from the fence toward the second
line... Virginians in the second line became entangled in the woods and could
offer little resistance as the fight swept north toward a brick courthouse.
Disaster threatened, ebbed, threatened again. Washington's dragoons checked
the course of the Guards, and down from the hill came John Howard with his
Delawares is and Marylanders.
"There was wild fighting, with cocked hats, bearskins, bandaged heads, and
silver helmets tangled in a whirl of bayonet lunges, gunfire, and swinging
musket butts. The British line began to sag dangerously. Cornwallis, seeing
his own sudden peril, took the hard ... course of turning his artillery on the
confused struggle, killing Briton and American with mechanical impartiality.
Gradually, the two swaying masses drew apart.“
•
Lancaster and Plumb, The Book of the Revolution, Dell, 1975, p.317
Leadership Ethics
“Tough Choices Part II: The Pinto”
NORMATIVE ETHICS
•Utilitarianism (J.S. Mill): Always act so as to bring about the greatest good
(happiness) for the greatest number.
•Deontology (Immanuel Kant): Always treat people as ends in themselves,
never as a means only.
•Virtue Theory (Aristotle): Always act consistently with the standards
of the role you play in life.
Ethics in Supervision
“When Can I Squeal?”
As a member of the Senior Management Team, you are
aware that budgetary limitations are likely to require
reductions in staffing on certain units. You have been
asked to keep this information confidential, because the
specific decisions as to how the cuts will be made have
not yet been finalized. One of your direct supervisees is
in the process of buying a new home and has expressed
his excitement at finally having a stable enough job to
make home ownership possible. Should you warn the
employee of the upcoming cuts and recommend that he
wait on buying the house until after his position is secure?
Moral Management
“Being Nice Vs. Being Ethical”
Supererogation
Moral Management
“Identify the Default Assumptions”
Background Obligations
Moral Management
“The Source of Obligation”
What Is Your Role?
Moral Management
“The Source of Obligation II”
What Are Your Relationships?
Moral Management
“How Relationships Work”
Tacit Expectations
Explicit Promises
Moral Management
“What Ethical Leaders Do”
•Identify Default Obligations
•Recognize Distinct Obligations Across
Individuals, Disciplines and Departments
•Prioritize Conflicting Obligations
•Support Valid Processes
Methods of Doing Ethics
“Theory and Casuistry”
Theory
Casuistry
Top-Down
Bottom-Middle-Down
THEORY
PRINCIPLES
CASES
CASES
CASES
EASY
CASES
HARD
CASE
EASY
CASES
IDENTIFY THE BURDEN OF PROOF
Methods of Doing Ethics
“Method In Ethics”
Casuistry
THEORY
PRINCIPLES
EASY
CASES
HARD
CASE
EASY
CASES
Scarcity
Disaster Ethics
Triage (On TV)
Colonel Blake turned to Hawkeye with a frustrated
and demoralized look and asked “What should I do?”
He went on to explain, “This kid will take five units of
blood and three hours of surgery and he’ll still die.
With that time and those resources I could treat three
other soldiers out there who could survive, but will die
waiting.”
Hawkeye answered quickly. “Henry, he never should
have been brought in here to begin with.”
“The Zero-Sum Game”
Ms. B is carrying twins at 26 weeks, 6 days approximate gestational age.
Twin 1 is presently 789 grams on ultrasound and has moved closer to the
birth canal than twin 2, who measures 875 grams on ultrasound. Twin 1’s
membranes ruptured one week ago, and Ms. B has not progressed into active
labor. Were twin 1 to have gone into distress as little as one week ago, the
mortality and morbidity profile for a C-section would not have produced a
clinical justification for aggressive intervention. If twin 1 goes into distress
as little as one week from now, a C-section is likely to be indicated since it
would provide a significant chance of benefit to twin 1 without substantially
increasing the risks for twin 2. However, should twin 1 go into distress now,
its mortality and morbidity profile is substantially worse if not delivered by
C-section while twin 2’s chance for survival and health would be
substantially lowered if it were delivered by C-section at this time. Selective
reduction is not clinically feasible, and a C-section cannot be performed on
only one fetus. The only hope for maintaining twin 2 in utero would be to
wait for a vaginal delivery of twin 1 and then stop labor with tocolytics.
That choice, if twin 1 is in distress and needs immediate delivery, creates a
conflict of interests between these two fetuses and thus an ethical problem.
Allocation Ethics
Wait Until He Ages Out
Mr. Z is a 19-year-old individual with MR who has
been receiving specialized services through the school
system in his locality. Mr. Z has decided that he does
not want to go to school anymore and his family has
been looking for appropriate assistance in the
community. They have requested services from the
CSB but funding is scarce. Mr. Z requires intensive
supports and the CSB has determined that it would
prefer to use its resources for individuals who have no
other options. Is it ethical to refuse to provide services
to Mr. Z because he is eligible for school-based support
until he is 22?
Ethical Challenges
“No Alternatives By Choice”
Ms. E is a CSB client who recently refused to complete
the application process to participate in Medicare Part
D. Ms. E indicates that she does not want to go
through the effort of completing the paper work and
choosing a plan, and that she would prefer just to work
with the agency to utilize their medication samples to
receive free medications. Staff believe that Ms. E
would meet eligibility for Medicare Part D and wonder
if they can refuse to provide low-cost or no-cost
medications given Ms. E’s other alternatives.
Allocation Ethics
The High Cost of Safety
According to well-documented research by the National
Highway Traffic Safety Administration, the incidence of serious
injury and death are greatly increased in areas where disabled
vehicles are unable to fully pull-off of the roadway. In response
to this fact, the Department of Transportation in the State of East
Virginia has created a policy that requires all new construction
of multi-lane roadways to include a full breakdown lane on each
side of the thoroughfare. Although this policy has been met
with great approval, it was recently amended to allow an
exception for bridges. According to an internal EVDOT memo,
“while accidents can happen on bridges just as easily as on other
parts of the road, the costs associated with installing full
breakdown lanes on bridges excessive in light of the number of
lives saved”. Is this cost-benefit analysis ethically acceptable?
Allocation Ethics
“Tax Relief”
A request recently came before Council to change
the eligibility requirements for participation in the
City’s tax relief program. While maintaining other
inclusionary criteria, the proposal seeks to increase
the maximum allowable annual income level of
individuals served by 10%. City Council has
indicated that overall funding for the program will
remain fixed. Is it ethical to increase eligibility
without allocating more resources to this program?
Allocation Ethics
“Tax Relief II”
Upon closer examination of the matrix by which tax
relief awards are calculated, it became clear that
individuals at higher levels of fiscal stress sometimes
receive lower levels of assistance. If a change is
made in this regard, relief will necessarily be reduced
to individuals who have previously received higher
amounts of aid.
The Concept of Fairness:
Is Best, Best?
The Allocation of Resources
The Concept of Fairness
Movie One
5mi
3mi
A
Movie Two
8mi
4mi
5mi
9mi
2mi
Movie Three
Movie Four
3mi
B
The Allocation of Resources
Effectiveness, Efficiency, Equality, Equity
α
β
γ
δ
A
1000
950
-7
500
B
25
100
-5
300
The Ethics of Scarcity
“The Four E’s”
1.
2.
3.
4.
Efficiency: A maximally efficient outcome is one that provides the
highest ratio of output over input in a system. Efficiency does not
consider the distribution of outcomes across recipients, but only the
return on investment that is generated.
Effectiveness: A maximally effective outcome is one that maximizes
benefit to the recipient of the resources or services in question so as to
bring about the greatest gain for the chosen recipient. When we consider
effectiveness, we apply the economic principle of maximax; obtaining
the best possible best-case outcome.
Equality: An equal distribution is one that maximizes the degree of
similarity of outcome for all recipients of goods or services.
Equity: A maximally equitable distribution of goods or services is that
which minimizes harm to the non-recipient of resources or services in
question so as to bring about the least harm to all potential recipients.
When we consider equity, we apply the economic principle of maximin;
obtaining the best possible worst-case outcome.
The Allocation of Resources
The Concept of Fairness
A
β
α
B
Allocation Ethics
“The Process of Rationing”
1. A fair approach to rationing is one that
seeks to maximize benefit to the least
advantaged member of the group.
2. Once minimum standards are met for
everyone, additional resources should be
used to improve the situation of those who
are least advantaged
Allocation Ethics
“The Justification of Rationing”
Rationing a PUBLIC resource is morally justified if and only if:
1. There actually exists a shortage of the resource in question,
AND
2. An identifiable victim of a failure to ration exists,
AND
3. The victim of the adopted rationing scheme is disadvantaged
less than the victim of any other rationing scheme, including
the lack of rationing altogether.
The Ethics of Scarcity
“Altered Standards of Care”
In an environment of true scarcity, our goal
must be to minimize the harms done rather
than to maximize the benefits received.
‘Best Practice’ is a luxury for the wealthy.
When allocating scarce resources, our only
constraint on the lower end is to satisfy
minimum standards of care.
Micro-Allocation:
An Operational Algorithm
The Ethics of Scarcity
“Exclusionary Criteria”
Constituency: The facility exists as an agency within a
specific geographic and political location that is designed to
meet the needs of individuals who reside in that area. While it
may be appropriate to enter into cooperative regional efforts
with neighbors and thereby extend constituency claims in
specific ways, services should otherwise be restricted to those
individuals who are residents of the catchment area.
Inappropriate Requests: Some individuals may request
services that the facility is simply not designed, mandated or
funded to satisfy. We recommend that the organization must
clearly define what it does, and that it is ethical to refuse to
provide services that are inconsistent with its mission.
The Ethics of Scarcity
“Inclusionary Criteria”
Prior Commitment: Currently enrolled individuals
who continue actively to satisfy the terms of their
treatment plans should remain enrolled even if new
potential consumers present with equal or greater
need. We do not believe that active clients should
have their services withdrawn for so long as the
services that have been initiated are indicated.
The Ethics of Scarcity
“Inclusionary Criteria”
Alternative Resources (Need, Part I): If the
organization is defined as a safety net provider, then
this designation implies that the facility has a special
obligation to help individuals who need to be helped.
Individuals who can access services by other means
do not actually need our services. Therefore, we
recommend that such individuals may ethically be
considered as lower priority in the face of scarcity
and may be excluded from further consideration
The Ethics of Scarcity
“Inclusionary Criteria”
Need (Part II): We recommend that those individuals with
serious and imminent needs should be given priority over
those with lesser need. Need must understood to include the
risk of harm associated with a failure to access services.
When assessing need, all efforts should be made to identify
those individuals who will suffer serious and imminent risk to
life or irreversible harm. Clearly, many individuals will
present with a variety of needs. At this point in the process,
however we consider only those individuals whose need is of
a serious, emergent type such that failure to meet their needs
will likely result in A) loss of basic physiological function, B)
exposure to life and/or safety risks, C) failure to meet basic
developmental needs, or D) degeneration of condition that will
lead to one of risks A-C. These individuals should be given
priority at this step in the allocation process.
The Ethics of Scarcity
“Inclusionary Criteria”
Efficiency: Once those with serious and imminent needs
have been served, assuming that additional resources remain
for allocation, the organization should attempt to serve as
many individuals as possible. Therefore, efficiency now
becomes a relevant factor. The organization should, at this
point, rank possible allocation schemes in order to maximize
efficiency. Efficiency should be understood to include not
only serving the maximum number of individuals, but also a
cost-benefit analysis. If revenues can be generated by serving
some clients, those new revenues can then be used to extend
the scope of service. These types of efficiency calculations
are morally acceptable after we have served those already in
the system and those with serious and imminent risks
The Ethics of Scarcity
“Inclusionary Criteria”
Effectiveness: Once we have maximized efficiency,
if resources continue to be available, priority may
then be placed on individuals who show the greatest
likelihood of maximally benefiting from receipt of
services. While the concept of efficiency is applied
across a group of individuals, the concept of
effectiveness is applied to specific individuals and
indicates a desire to maximize the outcome for the
targeted individuals.
The Ethics of Scarcity
“Inclusionary Criteria”
Comparative Need: Once basic needs have been met and
efficiency and effectiveness achieved, attention may then shift
to a comparative analysis of lesser needs. At this point in the
allocation process, individuals should be rank ordered based
upon the likelihood that we can support their achievement of
better social functioning, higher cognitive development and
employment success. Needs of these types should be
distinguished from the more serious and imminent needs
addressed above, although we in no way mean to indicate that
this level of need is unimportant.
The Ethics of Scarcity
“Inclusionary Criteria”
Random Selection: Once the above delineated
criteria have been applied, it is plausible to argue that
any remaining claims on services are of relatively
equal urgency and efficiency. Recognition of this
fact generates an assumption that all additional
claims are of equal value and should be treated
equally. It is then ethically permissible to allocate
any remaining resources on the basis of random
selection. We recommend that a first-come-first
served selection model is ethically acceptable at this
point.
Macro-Allocation and
Budget Development
Macro-Allocation
“The Source of Ethics”
In a pluralistic society, ethics derives from an
understanding of the reasonable expectations
for behavior. These are generated by
identification of general roles (that produce
tacit expectations) and specific relationships
(that produce explicit promises). On the
macro level, these concerns can be shaped by
public opinion. Politics matters!
Macro-Allocation
“Exclusionary Criteria”
Constituency
Inappropriate Requests
Define the Facility’s Mission
The Ethics of Scarcity
“Macro-Allocation”
Prior Commitment  Leave Intact OR
Phase Out Over Time
Alternative Resources  Leverage Resources
Need  Apply A Concept of Fairness To The Commitment
To Comprehensive Services
Efficiency  Leave Intact
Effectiveness  Swap Order With Efficiency?
Comparative Need  Replace With Consideration
Of Public Opinion
Random Selection  Delete
The Ethics of Scarcity
“The Macro Algorithm”
1. Identify the range of services to be offered over time (begin
with mandates, mission, and the demands of considered
public opinion).
2. Maintain a commitment to provide the services identified in
step one.
3. Spend additional resources to limit the harms of the budget
cuts (equity).
4. Select programs that leverage resources to increase funding
for steps two and three (efficiency).
5. Select programs with high and measurable success rates
(effectiveness).
6. Satisfy the demands of public opinion (when these demands
are clear enough, re-engage in step one)
Macro-Allocation
“Reflective Equilibrium”
When a public agency engages in the
provision of public services, it is not
unreasonable for society to set the broad
goals of activity. Therefore, a balance
must be maintained between step one
and step six on the previous slide. This
is a bi-lateral process designed to
generate equilibrium.
Macro-Allocation
“Standard Method”
The first and most common strategy is to
state preferences for budget reductions in
negative language and then to argue about
which cuts make the most sense. While this
is how most budgets are written, it does have
a tendency to accentuate political differences.
Macro-Allocation
“Preferred Method”
Rather than ruling certain ideas in or out, proceed
by prioritizing spending options with all
expenditures placed on the list in positive language.
By prioritizing expenditures, it is unnecessary to
debate any philosophical opposition to specific
spending and the most raucous political
disagreements can be avoided. Adjust priorities
with the understanding that beyond a certain level,
no funds will be available to low priority activities.
Back To Cases
Macro-Allocation
Example Applications
The XX City Government has decided to
reorganize human services as a result of
budgetary constraints. As a result, the City
will merge the Department of Human
Services, the Community Services Board, the
Office on Women and all CSA services.
Where does prevention fit into this new
organization? What will its priorities be?
Macro-Allocation
Example Applications
In order to balance the budget, City YY will
have to make additional cuts in the range of
$100K. Two options are available: Close a
second branch of the public library or close
one venue in the City museum system.
Which option is preferable and why?
Macro-Allocation
Example Applications
City ZZ is unable to afford any additional
debt service but there are important
infrastructure projects that need to get done.
Staff has suggested diverting all CDBG
money to the CIP but many local non-profits
rely on that money to deliver public service
activities. Is it ethical to reduce allocations
to public service in order to extend bricks
and mortar projects?
THE ETHICS OF SCARCITY
“But He Can Make Us A Bundle”
As Commissioner of your Department, you have been charged with
making specific budgetary cuts. The magnitude of the cuts will require
staffing reductions, and you want desperately to maintain quality
services. Unfortunately, the most senior of your employees is not your
most productive worker. Neither is your most junior employee. You
initially contemplate laying-off the most junior of your employees, but
you then remember that he was sent to apply for a job in your
Department by a high-level State Administrator. You do not want to do
anything to attract attention to your Department as State level budgetary
decisions are made. Is it ethical to retain this most junior employee in
hopes that it may help you preserve funding?