Located in the heart of Southern California’s Desert Resort communities, the City of Indian Wells is recognized worldwide for its tranquil and luxurious resort environment. Given the small population, the city is uniquely positioned to address topics of interest and concern for residents. In a continued effort to improve transparency and showcase the city’s strong financial position, the City decided to transition from department-based budgeting to program-based budgeting for fiscal years 2017/18 and 2018/19.
Much of the change began in October/November 2016, when staff from the City Manager’s office introduced the idea of workload activity measures (WAMs) to staff. The goal was to introduce the concept of performance measures so that when it came time to include them as part of the new budget, staff would be familiar with the format of the WAMs and understand their purpose. From there, the Executive Team participated in a Strategic Planning session in February 2017 where the budget was the main topic of conversation. The Executive Team returned with a collaborative sense of purpose and worked closely with their department staff to review and address their respective budgets for the coming fiscal years. Over the coming months, staff would come together as a team to develop the new look and feel for the budget.
ABOUT THE PROJECT
The city’s budget was revamped to emphasize program budgeting rather than the traditional departmental format. This new format simplifies reporting of city expenditures and allocation of resources consistent with City goals. Program budgets emphasize the objectives of the city and allocate expenses back to these objectives.
Expenditures are now allocated by program. Prior budgets offered a modified approach with direct expenditures allocated by program and general and administrative costs allocated by department. A fully allocated program conveys the true cost of each governmental service and allocates resources consistent with Council goals.
The new program budget includes initiatives which define the goals and tasks of the program, including Council goals, staffing allocations which track staffing levels allocated over time and the current staffing level needed to operate the programs, and workload activity measures (WAMs) which track the workload and the performance of the programs over time.
THE CHALLENGE ADDRESSED
The new budget aims to address the challenge of turning a budget document into something accessible for all residents. The goal was to develop an easy to read and easy to understand document that answered the age-old resident question, "How does the City spend taxpayer dollars?"
Staff is confident that this new budget format allows anyone to pick it up, look at any given program, and understand what they’re looking at without requiring knowledge of government budgeting and without having to review the document in its entirety. The inclusiveness of bringing all staff together to implement the new budget format also created an environment where employees were also able to understand and embrace the budget in a way they hadn’t before. It is altogether a much more intuitive, user-friendly document.
The most difficult aspect of the initiative was the workload required to make such dramatic changes to the budget document itself. It was a complete revamp from what had been produced before and had significantly more input from staff. It took significant work up front to come together and decide on the ‘how,’ development of the program staffing allocations. WAMs and initiatives took time to compile and design in a way that made sense to everyone. This included the incorporation of staff outside the Finance Department, some of which had never needed to review the budget, and providing them with opportunities to take significant roles in the process. Staff embraced the team aspect of the initiative and we could come together to produce a budget that is a true reflection of the entire staff.
THINKING LIKE AN INNOVATOR
It is largely believed budgets are cumbersome, bureaucratic documents written to meet the specifications of GFOA and have more jargon than not. Our rationale for moving towards a program-based budget was based by a desire to improve resident communication and provide a deeper understanding of how money was being spent. By involving all staff in the process, we could view the budget from multiple different, non-accounting perspectives. This allowed us to evaluate the best way to approach budgeting, addressing inconsistencies, clarifying expenses, aggregating similar costs, and even improving systems as we went; the City implemented new permitting software and initiated a city-wide fee study in conjunction with the improvements to the budget.
The budget process used to only involve the City’s department heads. They would review their budgets, adjust as needed, communicate to the Finance Department and there you go. This time around was truly different. All staff were involved, in some way, from the beginning. All staff were invested in the change and the outcome. It was an opportunity for the city to not only improve upon the budget, but use those changes to improve internal understanding of what the budget is, what it means, and how it can be used as a tool. This unique internal training opportunity only continued to improve the outcome. Staff are now empowered and can speak to the budget with confidence. Something we have seen reflected by our Council and our residents.
For Finance Director Kevin McCarthy, a sign of success was when he received a call from a resident who asked questions to determine if his interpretation of the budget was accurate. He had interpreted the budget with no prior budgetary knowledge or input. The budget had been presented in such a clear manner that residents could pick it up and understand what they were looking at without needing to decipher over-complicated budget jargon or superfluous information.
The new budget format significantly improved how we communicate about the budget with our residents. Transparency is the buzz word now and we could develop a budget that showcases the best in fiscal transparency which, paired with the city’s IW Open Checkbook functionality, provides an accurate, robust look at city finances in an intuitive and user-friendly way.
The WAMs provide an excellent opportunity to look to the future and use these as performance measures which can show a picture of success or show areas for improvement. Using the WAMs, we can continue to develop measures relevant to staff, Council, and residents alike, showcasing the work that’s being done in the city and using that data to address those areas in a way that is consistent and impactful.
We strongly recommend moving towards a program-based budget if you haven’t done so already. It is an excellent opportunity to provide clarity and turn something that tends to be confusing and intimidating into something that is a tool for improving resident communication, reflection, improvement, and achievement, especially at a time when transparency is so important. Program-based budgeting is an opportunity to look for improved community engagement and a method by which we can better communicate the topic of finances to residents in a positive, user-friendly way. Do not be afraid to question yourselves throughout the process. The goal is to implement a better form of communication based on developed understanding, allowing the budget to be a document that can be openly and knowledgably discussed in the community. These things lead to our top piece of advice and that is to include everyone early. This process was successful because it was inclusive in a way it hadn’t been before. Open yourselves up to constructive criticism, feedback, and input from all staff. The final product will be all the better for it and, like Indian Wells, you may find ways to improve upon other areas in the process.
MOST ENLIGHTENING PART OF THE PROJECT
In the beginning, it was difficult for staff to understand what all the different, new components meant and how they connected to each other. It was remarkable then, when presented with the final product, to see how each area seamlessly integrated into a single, clear picture of each program. Each program is formatted to start with a program narrative, moving into goals and initiatives addressed in each and showcasing the staffing allocations required over time to accomplish those initiatives. Workload activity measures (WAMs) round out this picture, showcasing true counts of work being done in each program on the day to day. These measures develop the overall story of each program, culminating in the program budget. All numbers can be followed throughout. The program budget eliminated the need to flip through the entire document, attempting to connect items from account to account. Today, everything is clearly outlined from start to finish, all data combined into the associated program, all of which are existing city services that are now clearly defined.
IMPACT THE PROJECT HAD ON YOUR TEAM
The entire effort has truly been empowering for staff. Everyone can claim a piece of the change which allowed all staff to come together as a team with a common goal. We used the change as an opportunity to conduct internal training on the budget and have all walked away with a stronger grasp of the process and the resulting document.