Memorandum

City of Lawrence

City Manager’s Office

 

TO:

Tom Markus, City Manager

FROM:

Casey Toomay, Assistant City Manager

CC:

Diane Stoddard, Assistant City Manager; Brandon McGuire, Assistant to the City Manager

DATE:

March 1, 2018

RE:

Priority Based Budgeting Implementation Update

 

Background

One of the priority initiatives of the City Commission identified through the 2017 strategic plan was to “develop a plan to implement Priority Based Budgeting and enhance communication in the annual budget process.”  An action plan was developed and can be tracked at https://dashboard.envisio.com/lawrenceks/Goal-2939/Strategy-19999. 

 

Pursuant to the action plan, staff contacted the Center for Priority Based Budgeting (CPBB) and was invited to attend Priority Based Budgeting Bootcamp, a five-day intensive workshop for organizations across the country at various stages of implementing Priority Based Budgeting (PBB).  The training provided an opportunity to learn not only from the staff of the CPBB but also from people using it in various stages of implementation in communities across the US. 

 

The training provided an overview of the process to implement Priority Based Budgeting and even included a 30 day trial of their web-based software system and assistance getting started identifying a program and assigning costs using actual data from the City.

 

While there is a great deal of merit to the concepts of PBB, embarking on a process change of this magnitude requires a significant investment in staffing resources in almost every department in the City.  Given other priorities, it was not possible to dedicate adequate resources to put together an implementation plan for the 2019 Budget.

 

Staff from the Center for PBB will be visiting with the City’s Management Team this month.  We hope to strategize with them and develop a reasonable implementation plan and timeline, with the hopes of having the systems in place in time to build the budget for 2020. 

 

What is Priority Based Budgeting

According to the Center for Priority Based Budgeting, “Priority Based Budgeting provides a comprehensive review of the entire organization, identifying every program offered, identifying the costs of every program offered, evaluating the relevance of every program offered on the basis of the community's priorities, and ultimately guiding elected and appointed officials to the policy questions they can answer with the information gained from the Priority Based Budgeting process.” 

 

Why Implement Priority Based Budgeting

There are over 150 communities in the US and Canada that have worked with the Center for Priority Based Budgeting to implement PBB.  Each community uses the processes and tools differently.  Ultimately, however, the goal of implementing PBB is to enable communities to link funding decision to their priorities.

 

By identifying all of the programs the City provides and calculating the true cost of providing the programs (including indirect cots), decision makers can better prioritize limited resources.  One of the final steps of fully implementing PBB is eliminating programs that are low priority and reallocating funds to higher priority programs.  There are very few communities that have actually achieved this stage of implementation. 

 

Current Obstacles to Implementation

Implementation of PBB would require a significant investment in staffing resources from almost every department in the City.  It can also take a significant investment in time.  For instance, one of the first steps in implementation is identifying all of the programs offered by the City.  While this may seem like a simple exercise, some organizations reported spending between 2 and 3 months to complete it. 

 

Implementation also requires staff to use new software to assign staffing and other costs to programs, determine priority scores for programs, etc.  Every department will need staff to learn the new system which will also take time.  The Finance Department will be needed to provide support to all department as they work to compile their program cost information.  The Information Technology Department will also play a significant role in integrating the software with our other systems. 

 

As the Commission is aware, the Finance Department has been focused on improving the fundamentals of the City’s financial operations.  Much progress has been made, but work continues to implement the recommendations of the Accounts Receivable Review, as well as continued implementation of software for Budgeting and Financial Management, financial forecasting, cost allocation, etc.  There is insufficient capacity in the Department to dedicate to implementation of this initiative at this time without reprioritizing the current workload. 

 

the Information Technology Department has a long list of technologies and software systems waiting to be implemented for nearly every City department (examples include Innoprise modules, a work order management system, a capital asset management system, automated meter reading system, new utility billing software system, FMLA management software.)  Given this workload, there is insufficient capacity to dedicate to the implementation and maintenance initiative at this time. 

 

The City Commission will likely see a budget request for 2019 for the resources needed to dedicate to this initiative.  At a minimum, positions in Finance and IT would be recommended as well as the resources needed for the acquisition and annual maintenance costs of software systems. 

 

Conclusion

The concepts of Priority Based Budgeting have merit, but implementation will take a significant investment in staff time and resources and will likely require additional resources.  Given the current workload of existing staff, a plan to implement Priority Based Budgeting has not yet been developed.  We will continue to work with the Center for Priority Based Budgeting and will return to the Commission with a plan in the future.