Resources, Budget and Finance Michigan State University Judicial Administration Program

1. Resources, Budget and Finance Michigan State University Judicial Administration Program National Association for Court Management Conference July 2011

2. Learning Objectives • Understand the relationship between judicial independence, inter-branch relations, and funding the courts. • Learn alternative court budget planning formats, know about their advantages and disadvantages, and engage in skill development in their use.

3. Learning Objectives • Learn about the different types of information and analysis used to support budget requests and budget allocation planning and decision making. • Know about trends in public budgeting in times of resource constraint and impacts on the rules and procedures governing budgeting.

4. Learning Objectives • Apply the principles involved in planning and implementing budget reductions, program downsizing or elimination, and budget re-allocations in the interest of reducing costs, improving court effectiveness, and preserving essential components of court mission and roles.

5. Learning Objectives • Link sound problem diagnosis and goal setting in order to build a case for resource requests and for accountability in using resources.

6. Exercise 1 • What does “budgeting” mean to you? • What is the purpose of the budget process? • What do you expect to accomplish through the budget process?

8. Agenda • Context of Court Funding • Basics of Public Sector Budgeting • The Budget Process • Trends in Public Sector Budgeting

9. Resources, Budget and Finance Fundamentals Context of Court Funding

10. Characteristics of Public Sector Funding • Public expectations • Era of structural deficits • Trends limiting available resources • Shifts in budgeting philosophies • No “profit margin” yardstick • Level or workload is not related to level of revenues

11. How is Judiciary funding different? • No authority to raise revenues • Funding level set by legislative branch • But what to do and how to do it is prerogative of the judiciary • Separation of powers - budget negotiations between constitutional co-equals

12. Exercise 2 What examples can you provide of these phenomenon? • Has your jurisdiction experienced limitations in revenues? • How have public expectations about performance impacted your court? • Are there examples of other branches attempting to control or influence how the court operates?

13. Resources, Budget and Finance Fundamentals Basics of Public Sector Funding

14. Methods of Budgeting Alternate budget formats: • Lump Sum budgeting • Line Item budgeting • Program budgeting • Zero Base budgeting

15. Methods of Budgeting Elements of a Budget Request: • Base budget • Adjustments • Incremental budget request • Re-allocating base budget resources

16. Revenue Sources of Revenue to Fund Courts: • General Fund Appropriation • Special Fund Appropriation • Program Subvention • Block Grant • Grant

17. Revenue General or Special Funds Revenue Sources • General purpose taxes • Revenues raised through courts: • Filing Fees and Surcharges • Fines and Penalty Assessments • Cost Reimbursement • User fees

18. Revenue Role and Limitation of Courts in Raising Revenues: • Courts are not self-funded • “Net county cost” concept • Court budget not linked to revenues raised by the court

19. Separation of Powers and Inherent Power Concepts: • What is all the fuss about? • What is the judiciary protecting? • Decision Making • Perception of fairness and equality • Equal protection

20. Separation of Powers and Inherent Power • Uses and limitations of inherent power for: • Resource Acquisition • Resource Allocation • Accountability • Discretion – wise use

21. Exercise 3 Application of Concepts of Separation of Powers and Inherent Powers • Selection of court employees • Operation of court support programs • Court record • Drug Court treatment program • Case management system • Court facilities

22. Resources, Budget and Finance Fundamentals Budget Monitoring

23. Budget Cycle

24. Budget Submission and Approval • Who approves your budget within the court? • Who do you submit your budget to? • Who can change your budget submission? • Who approves your budget?

25. Budget Discretion During the Fiscal Year • Moving money between line items • “Overspend” one line item if funds available in another line item • Unanticipated expenditures • Unanticipated revenues

26. Building a Budget A court budget should: • Be responsive and persuasive to court purposes and vision • Be responsive and persuasive to court goals and objectives • Demonstrate the identification and diagnosis of court budgetary and performance problems

27. Building a Budget A court budget should be responsive and persuasive to: • Executive branch decision-makers and their budget analysts • Legislative branch decision-makers and their budget analysts • Stakeholders and the community served

28. Importance of Credibility Good budget success requires skill in: • preparing, • presenting, and • advocating the court’s budget • in writing and • in person

29. Importance of Credibility • Is the Court perceived to be spending the funds allocated to it wisely? • Spend money on what you say you will • Know the status of both expenditures and results on a real time basis • Evaluate practice and programs for efficiency and effectiveness • Stay on top of what is working and what isn’t • Being willing to change

30. Importance of Credibility • Is the Court perceived to be spending the funds allocated to it wisely? • Answer queries honestly and forthrightly • Be a “Team player” both as to goals and priorities and working with other justice system entities • Consider regular information briefing sessions for funding authority

31. Importance of Credibility • Need for good personal relationships • With budget analysts • With the funding body • With support groups of court programs (constituents, service providers, etc.) • With the community • With the public and media

32. Typical Sources of Budget Increases • Factors which may require budget increases year-to-year • COLA – cost of living adjustments • Employee benefits • Legislative mandates • Judicial mandates • New programs

33. Typical Sources of Budget Uncertainties • “Uncontrollable” Costs • Indigent defense • Interpreters • Jury Fees • Competency evaluations

34. Budget Preparation and Defense • Perceived Weaknesses and Vulnerabilities: • Public criticisms • Frivolous spending • Unpopular programs or litigants • Programs providing little benefit or impact • Extraneous activities

35. Budget Preparation and Defense • Perceived Strengths: • Well run programs or services • Cost saving or cost reduction activities • Popular programs or services • Programs with visible benefit or impact

36. Budget Preparation and Defense • Cutback Strategies: • Raise or enhance revenues • Nick and cut • Rearranging the Deck Chairs • Rational Deconstruction

37. Monitoring Expenditures and Revenues • Why Monitor Expenditures and Revenues? • To be responsive to and consistent with the court’s role and vision • To implement budget goals and objectives • To identify and diagnose budgetary and performance problems

38. Monitoring Expenditures and Revenues • Methods of Monitoring Expenditures and Revenues: • Claims and invoice processing • Monthly Reports • Cost Accounting • Monitoring against targets and patterns • Monitoring by line item or program area • Monitor of staff behavior

39. Monitoring Expenditures and Revenues • Monitoring Revenues: • Posting of revenue • Distribution of revenue • Enhanced revenue collection • Enforcement of court orders

40. Monitoring Expenditures and Revenues • Monitoring Expenditures and Revenues relative to: • Court purposes and goals • Court budget objectives • Legislative and executive branch expectations • Stakeholder and public expectations

41. Monitoring Expenditures and Revenues • Accounting and Auditing Principles: • General financial record keeping and accounting for the public sector • Financial audits, interpretation, and significance • Legal requirements and business practices that protect courts against fraud, theft, or embezzlement of cash and other assets

42. Monitoring Expenditures and Revenues • Accountability for: • Applicability of performance standards • Selection and management of fiscal staff • Management of the Court’s budget process • Awareness of expectations of other branches, stakeholders, and the public

43. Resources, Budget and Finance Fundamentals Trends in Public Sector Budgeting

44. Expectations from Funding Bodies Budgeting for Performance • Budgeting for outcomes • Distinction of inputs, outputs, and outcomes • Identifying relevant performance measures • Efficiency and effectiveness measures • Articulating both benefits from funding and consequences of not funding

45. Expectations from Funding Bodies Budget preparation and monitoring: • Fixed ceiling and base line budgeting • Priority setting • Partnering in requests for new funds • Core judicial functions funded • Performance Measures • Multi-year perspective • Cost containment

46. Expectations from Funding Bodies Collaboration and Partnering • Cost-sharing partnerships • Shared support services • Shared information technology applications • Jointly operated programs

47. Expectations from Funding Bodies Outsourcing and Contracting Out: • With another public agency • With the private sector • With performance expectations • With appropriate safeguards

48. Expectations from Funding Bodies Mechanisms for delegating greater budget discretion: • Authority to move funds across line items and program elements • Lump Sum Budgeting • Carry forward across fiscal years • Use of special funds

49. Concluding Summary • Third branch – independence and responsibility • Authority, limitations, and discretion • Credibility, credibility, and credibility

50. Discussion and Feedback • Based on what you heard today: • What is one thing you will do differently when you get to work tomorrow? • What is one thing you need to learn how to do, or do better? • What is one relationship you need to build, or repair, to improve your budget success?