O’Leary: A Path Forward To Budgeting For Results

Los Alamos County Councilor Susan O’Leary during a video taping at the Los Alamos Daily Post headquarters Monday in which she discusses her ideas for ensuring the County’s budgeting process is results oriented. Photo by Carol A. Clark/ladailypost.com

  • To watch a video of Councilor Susan O’Leary discussing budgeting ideas, click here.
 
By SUSAN O’LEARY
Los Alamos County Councilor

In May, I wrote a column called Follow the Money, and in that column I suggested taking the County’s budget discussions to a new level; adopting an approach that would allow the public, the County staff, and Council members to better focus on the link between costs and service outputs; rather than focusing on costs by County department. 

That approach would enable more public involvement in how tax dollars are spent. It would also provide important decision information to help elected representatives and County staff consider the trade-offs necessary to balance the budget; and it would help us understand how well our actual spending aligns with the goals outlined in our Strategic Plan. It sounds obvious. Decide what’s important through Strategic Planning, then frame spending decisions in a way that shows whether spending actually flows to the highest priorities.

Getting us to that kind of a budget approach isn’t as easy as it is obvious, but it’s achievable; and worth the effort.  In fact, in a period when the County government expects revenues to remain essentially flat, when the County anticipates increased costs (i.e. healthcare, utilities), increased citizen demand for new services (i.e. leisure pool) and increased economic development opportunities (i.e. Manhattan Project National Historical Park, ski hill, etc.), we’ll need a more rational budgeting approach to consistently make decisions that deliver the most value.

How to get there from here

Currently, LAC uses a Departmental Budgeting approach in which the Council reviews and approves the County’s annual budget based on the County organizational chart. That budgeting approach supports the Manager’s need to understand how spending authority should be distributed to his department heads; and it’s required by state statute and to conform to audit requirements.

An additional approach called Programmatic Budgeting allows for the evaluation and consideration of county operating expenses from a service or functional perspective as well. It allows for cost evaluation of County services and outputs rather than cost evaluation by County department. It’s an approach that focuses on outcomes and outputs rather than departmental structure.

By incorporating performance measures and cost information for each service and for different service levels, decision makers and community members can evaluate spending options in the context of service impacts.

By inviting public involvement into the tradeoff decisions between service levels and cost, LAC can settle on defensible service levels that reflect community priorities; an aim that’s very difficult to achieve using only a Departmental Budgeting approach.

Stakeholder Involvement

Three groups need to be involved in the evaluation of County costs under a Programmatic Budgeting approach.

Citizens need to validate that services are needed and important. They need to provide feedback about acceptable service levels and weigh in on trade-offs among service level alternatives.

County Staff needs to actively participate in this process from a managerial viewpoint. They need to develop the data that provides cost visibility, showing the sensitivity of cost variation with service level variation. Staff also needs to provide programmatic links between the activities we’re paying for and the overall missions or goals that are being pursued. 

The third group of stakeholders, the Council, needs to participate by leading the discussion and by settling on decisions; considering costs and trade-offs in relation to the county’s strategic goals.

I believe that by building a process that benefits from the participation of all three stakeholder groups, we’ll get a County that does a better job of meeting community needs over time.

Recommendation:  Establish a Budget Review Committee

LAC has recent experience with a Charter Review Committee that successfully drew on community involvement, staff competence, and Council leadership to develop and implement several changes to the LAC government structure.  The Charter Review Committee achieved a comprehensive review of the Charter, proposed many significant updates, and sparked broad public discussion on key issues.

We can use this model to achieve a thorough cost evaluation of county services and to enhance alignment between service delivery and citizen needs and priorities. One possible approach would involve the following steps:

  • The Council would establish a Budget Review Committee (BRC) made up of citizens, county staff members, and up to three Council members. The committee would be advisory to the Council; its recommendations would be considered by the Council as the Council fulfills its governing responsibility of resource allocation. 
  • The Council would define the duties of the BRC with a scope of: (1) conducting programmatic cost evaluations of County services; (2) recommending performance measures for service delivery that incorporate public input and consideration of approaches used by benchmark communities; and (3) identifying opportunities to modify or eliminate services as appropriate.
  • The Council would select the citizen members of the BRC, looking for budgeting, analytical, and/or broad community experience.
  • The BRC would create a work plan and calendar to focus their efforts on specific services that are identified in advance by the Council; with particular emphasis on high cost and high priority services. 
  • The BRC would be responsible for incorporating public input into the process. It would also be responsible for benchmarking with other communities that have been recognized for success in evaluating cost and services tradeoffs.
  • The BRC would hold quarterly or other periodic updates with the Council, County Manager and the public.

Next Steps

Creating a Budget Review Committee to take our budget discussions to a new level is one of the ways we could choose to move forward. The Council will discuss that idea at its July 21 Work Session in White Rock. I encourage you to attend the meeting and share your thoughts.

I’m sure that other Councilors and members of the public will have other good ideas for improving the budget process, and I’m very open to hearing all of them and to supporting those that make the most sense. For me, the most important thing is that we make some progress; and I hope that we can firm up our plans this summer, so that the County staff and Council can integrate some real improvements well before the next budget cycle begins.

I think it’s safe to say that all of us want to see the County deliver better value for the money we’re spending. I expect we’ll have some disagreement about how to get there, but it should be pretty clear to everyone that it’s worth the effort to improve our budgeting approach so that our decisions better reflect goals, and better leverage outcomes. I’m hopeful that if we devote some time and energy to this opportunity this summer we can deliver real results for the County in the next budget cycle. We need to be ready to move forward with an 80 percent solution that can deliver progress sooner, rather than later; and we can build on that.

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