At the end of November, a survey was released that investigated how local government finance leaders feel about their current budgeting practices and their readiness to embrace modernized approaches. It was conducted by Polco, a community engagement and civic analytics govtech company, in partnership with the Government Finance Officers Association, with collaboration from Envisio, a maker of government planning software, and Euna Solutions, a creator of budgeting software. 

The 285 respondents were either directly responsible for the budget (77%), part of the budget team (15%) or staff members who oversaw the budget department (12%). Respondents were asked to rate their current budget methodology based on 15 budget quality characteristics, with ratings ranging from 100 (excellent) to 0 (poor.) One cautionary note, according to the report which was titled Rethinking Budgeting: Results from the Local Government Budget Survey. “These results come from higher performing organizations based on surveying GFOA’s distinguished budget award winners. Results from local government budgeting in general, would likely show less innovative practices.”

While the survey found that local governments are inclined to take into account the priorities of elected officials and staff, when it comes to listening to residents, the results were somewhat bleaker. As Michelle Kobayashi, principal research strategist with Polco told us in a conversation last week, “Traditionally, it's been difficult to incorporate stakeholder opinion in the budget process and this study confirmed that.”

A few of the findings that buttress that point:

• When respondents were asked “how would you rate your current budget methodology/process on incorporating residents,” only 41 percent indicated it was excellent or good.

• Insofar as allowing residents to help in the decision-making process, taking into account important tradeoffs, the numbers were even worse, with only 21 percent saying that was excellent or good.

• In terms of building trust with residents, 48 percent said their entities were doing a good or excellent job.

The study also examined the degree to which decisions were data driven and focused on results and outcomes. When asked “how would you rate your current budget methodology/process insofar as focusing on the outcomes or results delivered by government activity,” 56 percent said it was excellent or good. When respondents were asked how well they integrated with their organization wide strategic plan, 61 percent said the effort was excellent or good.

As Kobayashi told us, “Focusing on inputs rather than outcomes makes the budget less interesting to external stakeholders, and also makes collaboration a greater challenge. . .  Again, this area did not score well in the assessment and many organizations would benefit by incorporating a stronger focus on results in their processes. This is a really good way to make budgets more actionable.”

A third major take-away from the survey, reported Kobayashi, was that there’s a lack of transparency in the budget process and document itself. “That’s another area, that we scored very low,” she said. “There are mandates on public information sharing around the budget – host a meeting and let residents respond – but the organizations were weaker at disseminating information in a way that helps constituents understand how you’re spending the money and why you’re spending the money.”

Armed with the information gathered in the survey, the Government Finance Officers Association will release a self-guided tool to help individual entities assess how well they’re doing in the various areas covered by the study. The tool was created by the same group that launched the survey, with particular support from Kobayashi and her data science team. The goal would be to use it as a guide for a gathering of staff, elected officials, residents and other stakeholders to talk about how well the budget process serves them in a variety of vital areas.

Kobayashi: “They can use the tool to assess their current budget status and brainstorm things like how well we are doing in terms of say, welcoming residents into this process and what can we do better? At the end of this assessment, the group would then decide if there were areas where they could move forward. It might be focusing on outcomes, participatory budgeting or readiness to train staff on new technology. And then GFOA could provide them resources to help them move forward in these areas.”

The ten different dimensions of the readiness assessment include:

• Alignment with strategic plan and/or current organizational priorities

• A results/outcome orientation

• Collaboration across departments

• Collaboration with elected officials 

• Constituent engagement

• Transparency and opportunities to build trust 

• Change management

• Empowered budget staff 

• Dedication to human capital/staff training

• The use of integrated, agile technology

Naturally this process won’t change things overnight. “You find two or three top areas you can work on,” says Kobayashi, “and not overwhelm people with the process of change, so that overall, you’re evolving over time.”