A critical element of the City's efforts to create long-term stability is evaluating how resources are used, and how those uses align with the priorities of our community. In 2015, Kalamazoo implemented Priority Based Budgeting, an approach to budgeting that assess the desired results of a community against the programs the government is currently offering and how impactful those programs are in achieving the desired outcomes.
In 2016, the City continued efforts to implement Priority Based Budgeting. PBB introduced a new online tool which allows the city to easily manage all data and update programs, scores, and costs on-line. A review of the PBB program inventory resulted in a reduction of programs from 1088 to 514 with total direct program costs of $97.4 million and 610 full and part-time employees. This reduction was primarily due to the removal of redundant programs and combining programs across departments that were previously tracked separately.
During 2017, the departments will be identifying priority programs to measure outcomes and determine if the city is meeting the goals and objectives outlined in the new Imagine Kalamazoo 2025 Strategic Vision, estimated to be finalized in early summer 2017. This new vision will align with PBB by providing revised community result maps used for scoring. In preparation for the 2018 budget, all programs will be scored based on the updated community results, and staff will be using PBB to score and prioritize the city’s capital improvement projects.
Priority Based Budgeting documents are available here.
The philosophy of Priority Based Budgeting
The underlying philosophy of Priority Based Budgeting is about how a government entity should invest resources to meet its stated objectives. It helps us to better articulate why the services we offer exist, what price we pay for them, and, consequently, what value they offer citizens. The principles associated with this philosophy of budgeting are:
Prioritize Services: Priority Based Budgeting evaluates the relative importance of individual programs and services rather than entire departments. It is distinguished by prioritizing the services a government provides, one versus another.
Do the Important Things Well: In a time of revenue decline, a traditional budget process often attempts to continue funding all the same programs it funded last year, albeit at a reduced level (e.g. across-the-board budget cuts). Priority-driven budgeting identifies the services that offer the highest value and continues to provide funding for them, while reducing service levels, divesting, or potentially eliminating lower value services.
Question Past Patterns of Spending: An incremental budget process doesn’t seriously question the spending decisions made in years past. Priority-driven budgeting puts all the money on the table to encourage more creative conversations about services.
Spend Within the Organization’s Means: Priority Based Budgeting starts with the revenue available to the government, rather than last year’s expenditures, as the basis for decision making.
Know the True Cost of Doing Business: Focusing on the full costs of programs ensures that funding decisions are based on the true cost of providing a service.
Provide Transparency of Community Priorities: When budget decisions are based on a well-defined set of community priorities, the government’s aims are not left open to interpretation.
Provide Transparency of Service Impact: In traditional budgets, it is often not entirely clear how funded services make a real difference in the lives of citizens. Under priority-driven budgeting, the focus is on the results the service produces for achieving community priorities.
Demand Accountability for Results: Traditional budgets focus on accountability for staying within spending limits. Beyond this, Priority Based Budgeting demands accountability for results that were the basis for a service’s budget allocation