At the Center for Priority Based Budgeting (CPBB), we're constantly impressed and amazed at just how innovative local government communities can be. Through our concepts of Fiscal Health and Wellness through Priority Based Budgeting, we've partnered with communities to define exactly what the community is in business to achieve and then prioritize scarce resources (tax dollars) to meet those community results. This work has allowed over 120 cities, counties, school districts and special districts across North America to completely redefine their communities.
The CPBB is now working with the City of Toledo to bring priority based budgeting to the city. What is extremely unique about this venture is that this project was made possible with partnership and financial assistance from the Toledo Regional Chamber of Commerce. This represents the very first P3 (public-private partnership) priority based budgeting project in North America!
The City of Toledo is now the 3rd municipality in Ohio to implement priority based budgeting, joining the City of Cincinnati and the City of Blue Ash in this innovative approach to ensuring a city’s long-term financial sustainability and will ultimately allow the City of Toledo to also serve its residents in the most effective, efficient and fiscally responsible manner possible.
At its core, Priority Based Budgeting is a process to ensure that your community is getting the best bang for the taxpayer dollar. At the end of its work, the City of Toledo will have the data, powered by a sophisticated software model, to marshal and re-direct all of a community’s resources (our taxes, our people, our public and private institutions) to dramatically improve how we achieve safer communities, healthier people, sound infrastructure, efficient service delivery, thriving local economies and the results that serve the betterment of society.
Priority-Based Budgeting was declared a Best Practice by the International City/County Management Association (ICMA), urging every local government in the world to approach resource allocation decisions in the context of what matters most to its community. In 2009, the Center for Priority Based Budgeting was created as a mechanism to help local governments implement PBB, as nothing else existed within local government public finance that truly is scalable, transferable and
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 priority based 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. Cut Back on the Rest. 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 based 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 based 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 based 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.
The City of Toledo has just launched its implementation of Priority Based Budgeting, with the development of its Program and Services Inventory. In essence, the City is hard at work defining “what are the vast array of services that our government provides, and how much do each of them cost?” Not surprisingly, for most cities they will identify hundreds of services, and some identify over one thousand! Government is complex, and its service offerings are vast!
This is a crucial first step in the process, and creates the base layer of information upon which the remainder of the process will build. From here, the City will establish and define the very “Results” that define why the City government is in business – why it is relevant, in the eyes of its taxpayers, as a service-providing entity collecting and making use of the citizen’s resources. Each city service will go through a rigorous evaluation process, quantifying the degree to which these services contribute to your community’s objectives – in essence, are they being spent efficiently on programs that make the City safer, its citizens healthier, its economy stronger, and its infrastructure more effective.
A final word…
The Toledo Chamber’s jointly funded venture with the City is the first of its kind public-private partnership in the world to bring Priority Based Budgeting into a community. Certainly across the United States, as cities become more adept at gathering and measuring data, at putting data to use to create safer and healthier cities with thriving economies, indeed as cities are becoming “smart cities” it is this kind of multi-sector collaboration that is driving an optimistic future.
It is through public-private partnerships like the City’s with the Chamber that will profoundly reshape the way Toledo optimizes the use of its financial resources towards a better Toledo. We couldn’t be more proud than to be part of this team.