How can cities and states budget based on outcomes: Baltimore’s story
Andrew Kleine became Baltimore’s budget director in 2008, after nearly 15 years of federal government service. He has been one of the leaders of Baltimore’s efforts to implement outcome-based budgeting in his city. The goal has been to aid Baltimore’s leaders when it comes time to prioritize spending — an issue of particular concern when cash is short, and cuts must be made. Kleine is one of the nation’s more articulate spokespeople for this kind of effort, and so we solicited his input for the Barrett and Greene, Inc. website “guest column” slot.
He was kind enough to agree, and the fruits of his labor follows:
by Andrew Kleine, budget director, Baltimore
When I arrived in Baltimore in the spring of 2008, the budget office was finishing up work on the Fiscal 2009 budget publications for the City Council. Six weeks later, I would be in front of the council defending a budget I had no role in assembling, but that’s a story for another column (or maybe a movie screenplay).
After the budget was adopted, I was told by the Finance Director that one of my jobs was to explain how the budget supports the Mayor’s objectives. “Okay,” I said, too embarrassed to admit that I had never heard of the Mayor’s objectives. I asked around the budget office and got mostly blank stares. After a few days hunting through City Hall, I finally found them on the desk of the communications director. I asked him if I could make a copy. “You can have that one,” he said, between bites of a sandwich.
There is perhaps no force in the universe greater than the inertia of a city budget, which is why the Mayor’s objectives were an afterthought instead of the inspiration for Baltimore’s spending plan. From the moment I swiped those objectives off the communications director’s desk, my mission was to seek the real prize, public management’s Holy Grail: a budget that maximizes results per tax dollar spent, otherwise known as Value.
In Baltimore, we have pioneered CitiStat, gone all-in on Budgeting for Outcomes, created an Innovation Fund, and used Lean business process improvement. Heck, we even started a Good Government Book Club! These initiatives have rewarded entrepreneurial managers, even if they haven’t converted everyone to the new religion of data and evidence.
A few years ago, a small group of us zealots got together to reflect on where we were as a city government and what our labors had amounted to. We agreed that it was easy to take for granted our culture of measuring and monitoring performance, using performance information for budgeting, and thinking about long-term outcomes. At the same time, we felt like we were about as close to the Holy Grail as Monty Python. We concluded that our performance management efforts were disconnected from each other and from honest-to-goodness strategies for achieving the outcomes we wanted.
We were tempted to just keep griping about how things would be different if everyone else cared as much as we did about performance management, but we ultimately decided to actually do something constructive. Our idea was to combine three best practices – Results-Based Accountability, Outcome Budgeting and CitiStat – in a way no other city had ever done. We called the combination OutcomeStat. Here’s how it works:
START WITH OUTCOMES
To prepare for Budgeting for Outcomes (which we call Outcome Budgeting), the Mayor and her senior team came up with a set of Priority Outcomes – Better Schools, Safer Streets, Stronger Neighborhoods, etc. This is the Motherhood and Apple Pie stuff that city leaders can rattle off when they are talking to residents. The real action is in the measurable indicators that get specific about the big things city government is trying to accomplish. For Baltimore, these include the number of shootings, opioid deaths, the recycling rate, and the percent of children ready for kindergarten.
Of course, having goals is nothing special. It’s what you do with them that counts.
Strategic planning was the missing link in Baltimore’s performance management chain. The connection was made by one of our Good Government Book Club selections, Trying Hard Is Not Good Enough by Mark Friedman. Friedman’s Turn the Curve planning method made perfect sense to us. For each of our indicators, we would follow these steps:
1. Gather at least five years of historical data and project where the trend will go in the next five years if nothing changes. That’s your curve.
2. Tell the Story Behind the Curve. You need to understand as deeply as possible why the curve is shaped the way it is. Demographic changes and the economy are often part of the story, no matter what the issue happens to be, but what you really care about are the factors you can influence.
3. Find your partners. City government can’t solve the toughest problems alone. Turning the Curve takes the coordinated efforts of all levels of government, the business community, non-profits, clergy, universities, and more.
4. Discover What Works. Look at how other cities have taken on the same challenges, read the academic literature, and reflect on your own experience. Make a list of best practices and new ideas.
5. Come up with an Action Plan. Set a target for where you want the curve to be in five years and agree on realistic steps to get you there.
In Baltimore, we got our Turn the Curve planning going by bringing together 200 partners for two days of facilitated group work. We learned that it’s harder than it looks. Friedman says to go through the steps in an hour. That’s a good exercise for surveying the territory, but the trail to a complete, robust plan is what you might call a “Huffa Puffa.”
FUND YOUR PLANS
This is where Outcome Budgeting (OB) comes in. The Turn the Curve plans tell agencies what the Mayor is looking for in their service proposals. I don’t have room to fully explain OB, but what you need to know is that 1) it allocates available dollars to Priority Outcomes instead of agencies and 2) budget proposals for each city service are reviewed by teams of city employees and citizens who recommend funding strategies to the Mayor.
If you want to learn about OB, add The Price of Government by David Osborne and Peter Hutchinson to your summer reading list.
TRACK YOUR PROGRESS
Many cities and counties now have Stat programs modeled on Baltimore’s CitiStat. The leading edge of Stat work has moved beyond routine reviews of each agency’s operational metrics. Modern Stat programs are collaborative and issue-focused. OutcomeStat goes even further by convening partners to review the latest indicator data and progress on Turn the Curve plans.
With help from What Works Cities and Johns Hopkins University’s Center for Government Excellence, Baltimore held its first OutcomeStat session last fall, on our three Growing Economy indicators: jobs, resident employment rate, and tourism. Probing the data on these indicators pointed to some new strategies, such as improving adult education to boost high school attainment, targeting 45-54 year old men whose work force participation rate has slipped badly, and expanding the region’s export sector.
Baltimore received the Government Finance Officers Association’s 2016 Award for Excellence for the OutcomeStat concept, but much work remains to realize OutcomeStat’s full potential and find that elusive Holy Grail. I hope to see more cities join us on this quest.