Six ways to improve your budget process and increase transparency

 A good budget reflects the priorities of government and its elected officials, such as public safety and other community programs. Government leaders have to make choices about the services that are important and the plans to finance daily operations and capital items. These choices are reflected in the dollar amount of appropriations that are ultimately voted on and approved in each year’s budget; but the numbers themselves do not generally communicate the thought process behind those appropriations. Our six tips will help you expand beyond the basics to build a robust budgeting process that provides a written record of your policy reasoning, and greater transparency to your constituents — the citizens, bond holders, business leaders, government employees, elected officials, and surrounding communities.

Before some governments can legally incur obligations to spend any resources, annual budgets may be required. Many governments also budget for other operations, even if not required, to show there is a plan in place and to establish accountability, efficiency, and limits on what can be spent. Multiyear budgets also allows governments to view future expected financial impacts and adjust them sooner. For example — a declining revenue source that may not be felt now but will require future adjustments. Changes can gradually be made to the budget, rather than abruptly down the road when the issue is more pressing. Because circumstances are always changing (new laws, changing property tax base, lawsuits, union negotiations, etc.), a budget can help decision-makers navigate the impact each change has on their ability to deliver services.

Utilizing the budget process effectively will convey the government’s policies and financial plan to those it serves.

Additionally, many communities use their budget as a communication device. They spread their message through citizen focus groups, town hall meetings, public budget workshops, video presentations, website feedback, and even social media. Since the budget puts policy decisions in writing, getting the message out there helps government decision-makers gain support and trust for their mission. The budget process and budget documents should focus on transparency. This means not only providing access to the information and data, but the process itself should be transparent.

The goals of transparency

• Provide information in a clear and easy-to-understand manner
• Accessible from central location or single website
• Update regularly and often
• Honest and accurate
• Design from the citizen's perspective - attractive/intuitive presentation

Why should transparency be taken into consideration? It enables citizens to 1) actively participate in policy discussion, 2) give feedback to elected leaders, and 3) hold government decision-makers accountable for their actions. The budget process and document is a link from the citizens’ needs and desires in the community to the government leaders acting on their behalf. Utilizing the budget process effectively will convey the government’s policies and financial plan to those it serves.

Here are some practical ways to produce a budget document that is transparent and easily understood:

1. Develop a timeline: The timeline should start early enough to allow citizens and other stakeholders to voice their opinions. The process should start at least six months before the budget is approved to allow sufficient time for all levels of review and input.
2. Establish a strong message: Communicate the importance and priorities of the budget to department heads.
3. Review the budget centers: Do budget centers align with how each operation is managed? Does the budget make your department heads responsible? This is the time to make changes to consolidate or create more budget centers.
4. Determine target fund balance goals: Addressing this up-front will help determine spending limits.
5. Develop a solid financial budget for each fund: Ensure planned expenditures align with the revenue sources/fund balance available. Are the broad organization goals of the community being met? Present your financial plan in an easily understood format. Consider the audited financial statements and use similar formats.
6. Provide a clear and concise written message: This might include an executive summary to highlight the mission of the budget and priorities. It’s also helpful to have individual fund summaries stating the purpose of the fund and budgetary highlights. Pictures and charts can make the budget more interesting to nonfinancial readers.

Does this all seem like too much? One common complaint we hear is when a council person looks at their neighbor’s budget document and process and says, “This is all too much — this is too much time and effort for our community!” We get it. You don’t just go from a skeletal budget process to a robust process overnight. The good news is that you can gain a significant portion of the benefits by starting with the low-hanging fruit:

• Start with an executive summary for your budget. Keep it relatively short. In just two or three pages, most communities can lay out the essence of their financial plans and outlook. This by itself can allow constituents to gain a basic understanding of the local unit’s financial overview.
• Next, ask each department head to write a short (one half to two pages) description of what that department is doing and its budget impact. This can be included within the budget document next to each department’s budget proposal.

From there, you’re free to expand the process to the point where you feel the benefits match the effort. Preparing a good budget takes some work but the benefits certainly pay off. Leading a government and protecting its resources is an important job. Having a strong budget that maintains financial health and delivers excellent services is something the entire government can be proud of.