Build Budgets from Basics, Use Transparency, and Save Citizen Taxdollars

I was asked about my views of building a budget from the basics, making the entire process more transparent and if savings could be found. Following is a lengthy response.

As a County Commissioner, probably the largest responsibility I have to the citizens is oversight in the creation of the budget followed by its faithful implementation.

You may have heard from some that I am critical about the County Budget. No so. Not critical about the Budget itself as much as I am critical of the way the budget is built.

I am merely on a Quest for Transparent Budget Builds.

The dollars and percentages within the county budget presentations are consistent with previous budgets, and unless the staff takes an altered course, you can as easily as I, predict future budgets.

We simply take last year and build upon it.

It is not the dollars though many know my philosophy is one where I believe we should have a “lean government” with “reduced taxes” and more efficient processes.

Some claim we have a “lean government” and I’ve asked to see the data they used to make such a claim so I may also conclude just how lean we are. I’ve heard a counter statement that it’s based upon years of experience. I’m still awaiting that data.

Some claim our budget is testimony to the county bond ratings; distinguish budget presentation awards, and awards for accounting.

Bond ratings are essentially credit scores indicating our ability and willingness to pay our debts more so than reflecting the quality of the budget.

Presentation awards reflect a document that serves as an operations guide, financial plan, and communications device; less so about the quality of the budget.

Accounting awards indicate we properly document expenditures consistent with the budget demonstrating that funds are “accounted for”, not the quality of the budget.

These awards are welcomed, earned, noteworthy, and clearly deserving for our staff; yet even in total do not mean we have the proper budget.

My issue, when I’ve spoken critically about the budget, had little to do with the specifics contained within the specific documented budget. My concerns centered on the approach we take to build the budget.

The current approach is what one may call a “Baseline” approach. This approach entails taking a previous year’s budget and aligning anticipated expenses to projected income. It allows for elected officials to see dollar figure projections for income and projections for expenses.

That Baseline approach is the same used by congress in Washington D.C. when they create the national level budget of overspending and deficits. That’s also the type of budget where projected rates of spending are reduced are so called cuts. We know these do not represent real cuts in spending.

I argue that our current Baseline budgeting prevents the level of detailed examination needed by elected officials.

Just like the Feds, we simply take last year and build upon it. That means some good programs are ensured to continue, but also means some things we ought not to do continue as well. How can the citizen know what should be or should not be included?

The current approach prevents the level of transparency our citizens deserve.

I contend that budgets are not about Dollars and Personnel Positions, nor Governmental Organization Structure. I contend budgets are about Priorities, Transparency, and Citizen Involvement.

I call for a different approach on how the budget is built. It’s not so much “Zero-Based Budgeting” as much as it is a transparent means of building the budget.

First, I oppose budgets where I cannot readily see rationale explaining 1. Why we need the number of requested employees, 2. Why we need the identified amount of income (taxes), and 3. Why we need the identified resources such as buildings and equipment.

I disagree that we produce a “conservative budget.” I do understand we error on the side of the tax payer when making estimates which as described in bond rating agency reports, is consistent with conservative budgeting practices. 

A conservative budget is more than making conservative estimates. It starts with the basics by documenting citizen needs and identifying required Functions and Services to satisfy those needs. Conservative budgets ensure that only required functions and services are funded. I support building a budget from the basics. 

We should articulate genuine guidance at the beginning of the build. Instead, departments are instructed to perform “salami-slicing” to reach the budget bottom line (now for a fourth year in a row). 

This “salami-slicing” can actually hurt needed services while protecting less critical services. To me, taking a salami-slice approach is not so much a problem as it is a symptom of a problem.

The current process lacks detailed prioritizations. When you hear elected officials say everything is a priority, then nothing is a priority. We should have greater front-end insight to more objectively determine what specific items should, or not, be funded. 

We should seek ways of reducing duplicative costs to include the Sheriff’s Office and Board of Education. We should focus on cost savings for the tax payer by targeting similar functions and services across the entire county government such as procurement and IT services. In fleet maintenance, we might find as much as 25% savings in maintenance if we take a different approach. 

Citizens ask why educators request more money while declining student enrollment since 2006, continues downward through 2016. 

The State Office of Legislative Audits conducts audit to evaluate the effectiveness and efficiency of the financial management practices of the Calvert County Public Schools (CCPS).

In 2009, the audit made 19 recommendations to enhance controls in existing financial management systems and processes in areas such as procurement, payroll, and student transportation. For example, “CCPS needs to enhance certain procurement policies and procedures and should institute better security controls over its payroll and disbursement automated systems.”

They identified bus transportation vendor reimbursement rates that should be reevaluated, as they “appear to result in unnecessarily high reimbursements, which could cost CCPS approximately $4.2 million over the life of the new buses put into service since 1998.” 

I mention this as I believe we should see what the school system has done to address those 19 recommendations before simply sending over more of your money for them to simply do more of the same. 

Notice, I did not mention the more volatile issue of teacher salary increases, but does it not stand to reason that greater efficiencies as recommended by the audit should leave more funds to support the teachers?

One citizen’s look at the school budget questions less than explicit expenditures of over half-million dollars, and if $6.6 million is really appropriate for custodial support.

Hiring more deputies and staff over the past years means less money for salary increases.

I am not critical of past budgets as they were done with the best information available at that time. During economic expansion, the process created reserves that assisted during economic contraction. Given the prolonged stagnant economy, is it not appropriate to consider relooking our build process? 

We need a different process; one with goals of reducing tax rates, identifying and eliminating duplication, ensuring greater transparency for the citizens, and increased interaction by your elected officials throughout the entire build.

I call for a Basis of Estimate for each of the positions. We should be able to explain why we need certain positions and programs, as well as why we need the numbers of each and the skill levels required.  

Here’s how I envision we should build the budget. By building the budget, I’m referring to all that stuff that currently occurs hidden from public view. That means gathering of the information and details used to create the dollar figures that are later viewed by the public.

Here’s how I’d do it. 

Document citizen needs. Not all needs are equal in terms of urgency, comprehensiveness, nor singularly. The needs, however, are probably known by the various departments as those organizations serve the citizens on a daily basis. Let’s first document those needs. It’s important to do so because the county government ought not to be doing something unless there is a citizen need. 

While each need by the citizen is their highest priority of the government, not every need is the highest priority to the government. Don’t you think that officials within the government ought to be challenged to prioritize those needs? 

After the needs are documented, we then need to document the Functions and Services that the county government uses to satisfy those needs.

Each Function describes the purpose for which something is designed or exists; role. Services describe the supplying or supplier of something helpful (i.e., products, activities). A quick detour into Process Management; Functions and Services are derived from Processes. Each process documents a series of activities; and can be used to identify Functions and Services. Activities are the basic work being performed. 

Each Department would then be required to create the Basis of Estimate. That estimate describes and justifies in detail what they envision is required to successfully perform the identified Functions and Services.

The output of the Basis of Estimate is used to identify the type of skills needed, the experience level of those skills, the minimum amount of knowledge and resources needed.

With the information derived, then the “Number Crunching” can begin which will yield the needed amount of dollars, number of personnel, and physical resources needed to satisfy the citizen needs.

It is at that point that I believe the Budget Build should begin.

We have an unprecedented opportunity to streamline processes across the county government to increase efficiency (during times of financial constraints) and to build for the eventual growth that will come. 

The only question in my mind resolves around the question if enough of my fellow county commissioners agree with the presentation I just gave you. More importantly, are citizens of this county sufficiently interested in having a more transparent process in place of the one currently established? 

Questions?