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2009_0209_Packet
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2009_0209_Packet
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Outcome-Sased Sudgeting Overview <br />The concept of outcome-based budgeting is not new, but it has received added emphasis in the past few <br />years in response to the numerous financial uncertainties facing governments, as well as the ever-increasing <br />demand for services and accountability. <br />While many versions of Outcome-based budgeting exist, they are all premised on the fundamental concept <br />of allocating sufficient funds to achieve a desired outcome. For example, if we established a goal of having <br />the Fire Department arrive at the scene of a fire within 3 minutes of the 911 call, then we would determine <br />what that will cost and allocate an appropriate amount of budget dollars. This is in contrast to how we <br />typically allocate new dollars, which is to take what we allocated last year, add some percentage increase, <br />and make our best effort. <br />In addition to aligning resources with outcomes, outcome-based budgeting can also ensure that those <br />services that matter the most are properly funded. It is conceivable that the City is providing a high level of <br />service for a program that creates nominal value, at the expense of another that creates greater value. An <br />outcome-based budgeting approach would help demonstrate how the City can achieve the greatest value <br />overall. <br />Generally speaking, the steps under this new budgeting process are as follows: <br />1) Establish what the customer (taxpayer) is willing to pay overall for services <br />2) Establish the City's program priorities (outcomes) and rank them <br />3) Systematically allocate resources sufficient to achieve priority (outcome) #1, then outcome #2, etc. <br />For Step #2, it is suggested that the City Council assign program priorities in the following general order: <br />1) Federal and state mandates <br />2) Adherence to the City's Financial Policies <br />3) Strengthening funding mechanisms for the replacement of City assets <br />4) Adequately funding non-discretionary services <br />5) Providing funding for higher-valued discretionary services <br />It should be noted that the ranking process can go through many iterations and in most situations shouldn't <br />be done in a vacuum. For example, we may establish an outcome of having a high quality and safe park <br />system. To achieve this, we would likely need to assign a high funding priority for parks and police patrol. <br />In addition, we may find after only one or two iterations that a program with strong intrinsic value isn't <br />funded at an appropriate level. Through the next iteration, we can go back and assign a new budget amount <br />to it and readjust other programs accordingly. The ranking process should remain fluid until a final <br />consensus is reached. Sut once it's finished, it's important to move forward. <br />Step #3 is repeated until we've exhausted all available funding. Under this process, we would expect to run <br />out of money before we run out of priorities. When the funding is exhausted, we suspend all unfunded <br />programs. For those programs that don't receive any funding, it's important to keep in mind that while they <br />create value, they create less than those that were funded. <br />Page 2 of 3 <br />
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