Michigan Municipal League Center for Priority Based Budgeting Priority Based Budgeting:

1. Michigan Municipal League Center for Priority Based Budgeting Priority Based Budgeting: Identification of Public Values and Public Priorities through Citizen Engagement in the Government Budgeting Decisions Priority Based Budgeting Workshop Ann Arbor, Michigan Dr. Sheryl Mitchell April 9, 2014

2. Agenda Overview of the Study What is PBB? PBB and Engaging Citizens Values Based Budgeting Framework Questions

3. Michigan Overall, 29% of jurisdictions say they are better able to meet their financial needs this year, while another 29% say they are less able to do so. Demands for public services (e.g., infrastructure and public safety) continue to increase, with half (50%) of all jurisdictions across the state, and 71% of the largest jurisdictions, saying they have increased infrastructure needs this year. Government officialsexpress ongoing concerns about their jurisdictions’ fiscal health, with 30% feeling it will be worse a year from now and 28% feeling they will be better. Declining property tax revenues are still reported by 48% of all local governments in 2013 University of Michigan - Center for Local, State, and Urban Policy - Michigan Public Policy Survey 2013, Michigan local government fiscal health continue gradual improvement, but smallest jurisdictions lagging

4. Why? • Fiscal crisis is not a temporary trend, but the “new normal”(NACo, 2012, p.1) • Persistent fiscal challenges faced by state and local units of government over an extended period due to: • Economic downturn • Housing and mortgage foreclosure crisis • Long-term unfunded pension obligations • Bureaucratic paralysis – government uncertainty as to how to address current fiscal realities and still meet the expectations of their constituents (Fabien, Collins, & Johnson, 2008). • Crisis in trust - lack of inclusion, access, and transparency, by government leaders fosters citizen distrust

5. Crisis in Government • Traditional governmental budgeting methods are generally an accounting exercise that are incremental in nature and do not provide decision-makers with a tool to identify strategic priorities to guide budgeting decisions • Crisis in government - The traditional approaches to government budgeting an organizational culture that is prone to uncertainty of its purpose, strategy, priorities, integrity, and focus

6. From Problem to Opportunity • Priority Based Budgeting (PBB) offers • a new government budgeting process • PBB provides the alignment of expenditures with the values and priorities of the community • There is limited understanding relative to PBB and the role of citizen engagement

7. Purpose of the Study • The purpose of this study was to understand and explore the Priority Based Budgeting (PBB) process • Learn how PBB can be used by government leaders to effectively engage citizens in identifying public values and priorities • Discover if the PBB process, by reframing dialogues and focusing on values and priorities, can provide guidance for budget expenditures and thereby align resources with public values and priorities

8. Literature Review • Classic Public Administration • Public administrations are a vehicle for expressing the values and preferences of citizens, communities, and society as a whole. • Top-down vertical hierarchy for power and decision-making. • A closed environment; allowing for minimal discretion. • Citizens feel excluded from the process that gave all of the decision-making power to elected officials, administrators and lobbyists – who serve to promote their own self interest and not that of common good (Bourgon, 2007).

9. Priority Based Budgeting (PBB) Figure 2.4. PBB process model. From “Anatomy of a Priority Based Budget Process” by Kavanagh, S.C., Johnson, J., & Fabian, C. (2010). Anatomy of priority-based budget process. Government Finance Review, 26(2), 8-16. PBB Steps: Identify Available Resources Identify Priorities Define Priority Results Prepare Decision Units for Evaluation Score Decision Units Against Priority Results Compare Scores Between Different Programs/Services Allocate Resources Create Accountability for Results Create Service Efficiencies and Innovation

10. Existing PBB Studies • The Center for Priority Based Budgeting (CPBB), the primary consultant and subject matter expert for PBB has only been in existence since 2008. • Oettinger (2011) - Study of 12 communities that first implemented the PBB model used a case study analysis with the purpose of understanding the motivating factors to use PBB, the short-term impact, and the long-term budgeting outcomes. • Findings: • Increased trust and transparency between the government and citizens. • The approaches to planning were more strategic and enabled communities to prioritize expenditures. • Limitations of this study: only one budget cycle within each of the participating communities.

11. Existing PBB Studies • Middleton (2013). Priority based budgeting: A model for the City of Oakland’s long term fiscal sustainability. Study of five cities. • Compared with the budgeting models of budgeting for outcomes, performance based budgeting, and participatory budgeting. • Findings: • Identified that PBB emphasizes: prioritizing services, doing the important things well, questioning the past patterns of spending, spending within the financial means of the organization, acknowledging and respecting the true cost of doing business, and providing transparency in identifying community priorities and their impact. • Civic engagement was recognized as a major component of the PBB model.

12. Data Collection • In-depth semi-structured telephone interviews (45-60 minutes each) • Interviews conducted Summer 2013 • Interviews were electronically recorded and manually transcribed • Attended national CPBB conference (generated field notes) • Published case stories, articles, field notes, and other archival data • Interviews generated 195 single spaced pages of transcripts • Data collection / coding of data continued until theoretical saturation was achieved

13. Study Participants 10 PBB Practicing Governments

14. Study Participants Non-Governmental Unit Participants

15. Interpretation of Findings PBB - Citizen Engagement and Transformation • PBB process has been found to be an effective tool in engaging citizens, identifying public values and priorities, and reframing dialogues to provide guidance for prioritized budget decisions. • By engaging a cross-section of citizens in deliberative dialogues, PBB creates a shared sense of community, builds trust, and provides transparency in the sharing of information. • PBB serves as a catalyst for changing the government budget paradigm from one that is based on exclusivity, incremental decision-making processes, and has disconnected lines of communication.

16. Interpretation of Findings PBB – Organizational Transformation

17. Interpretation of Findings PBB – Process / Procedure Transformation

18. Interpretation of Findings PBB – Communication Transformation

19. Interpretation of Findings Emergent Themes • Public Values - PBB process reframes dialogues to transforms the values and priorities of citizens and government leaders into budgetary decisions. • Civic Innovation– PBB provides a paradigm shift in the government budgeting with an expanded platform for internal collaboration and external citizen engagement through the use of technology, social media, internet, and web-based platforms. • Multiple entry points / eliminating barriers • Transformation- PBB process is a catalyst for civic engagement, dynamic conversations, and positive approaches to changing the organization culture and community building.

20. New Development • Created a Values Based Budgeting Framework that extends and leverages the PBB process by incorporating • Civic Engagement • Civic Innovation • Capacity Building alternatives in program and service delivery and • Citizen-driven Performance Measures • Development of the Civic Engagement Framework, to illustrate that government entities serve numerous constituencies in addition to citizens and elected officials

21. Evolution of Budgeting

22. Values Based Budgeting Framework Civic Engagement Public Values and Priorities Identify Available Resources Identify Priorities Define Priority Results More Precisely Create Accountability for Results Allocate Resources Compare Scores Between Different Programs / Services Score Decision Units Against Priority Results Prepare Decision Units for Evaluation Create Service Efficiencies and Innovation Capacity Building Civic Innovation MML/PBB Workshop 04.09.2014 -- S. Mitchell

23. Civic Engagement Framework

24. Understanding PBB • The meaning of PBB that emerged from the responses defined PBB as a tool that can be utilized to engage the whole system, particularly citizens, in collaboration and meaningful conversations. • Through dialogues that are deliberative, PBB identifies public values and aligns government budgeting with public priorities. • Strategic Process • Long-term Financial Planning • High Performing Organization • Organization Transformation • Citizen Engagement

25. Propositions

27. Summary • PBB is a tool for engaging citizens in a strategic planning process that identifies a shared vision for a preferred future within results oriented government budgeting. • Public values and public priorities are a basis to strategically prioritize government budgeting decisions. • PBB and citizen engagement build the social value of government entities by increasing access, inclusion, transparency, trust, respect, and accountability, which contributes to promoting a shared sense of community and opportunities for capacity building partnerships. • The Values Based Budgeting Framework was developed to leverage the implementation of PBB. • The Values Based Budgeting Framework shows how civic engagement and civic innovation can invoke dynamic dialogues to identify public values for government budgeting. • The Values Based Budgeting framework leverages the implementation of PBB: • To align public values with budget priorities, • Supports capacity building for the delivery of public programs/services, • Incorporates accountability through the adoption of measurable outcomes, and • Creates sustainable capacity through continuous improvement.

28. Recommendations • Create a Culture of Engagement • Identify Public Values and Priorities • Educate and Inform all Stakeholders • Seek Partnerships to Build Capacity for the Delivery of Public Services/Programs • Develop Strategies to Integrate Performance Measures into the Organization

29. Questions

30. Thank You !!