a lmost everything you always wanted to know about budgets, but were afraid to ask presented by:...
TRANSCRIPT
ALMOST EVERYTHING YOU ALWAYS WANTED TO KNOW
ABOUT BUDGETS, BUT WERE AFRAID TO ASK
Presented by: Lori Albin, Director
Fiscal Policy Center
National Juvenile Justice Network
Leads and supports a movement of state and local juvenile justice coalitions and organizations to secure state and federal laws, policies and practices that are fair, equitable and developmentally appropriate for all children, youth and families involved in, or at risk of becoming involved in, the justice system.
The Fiscal Policy Center is supported by generous grants from the Public Welfare Foundation, Tow Foundation and John D. and Catherine T. MacArthur Foundation.
THE BUDGET
Why do we care?
The Budget is about making choices
WHAT GOES INTO A BUDGET
Projections Revenue projections
Expenditure projections
Five parts: Operating budget Capital budget Tax expenditure budgets Forecasting Adjustments
BUDGETING IN TIMES OF FISCAL STRAIN
Projections problematic Shortfall in revenues Increase in demand for some services
Government must make adjustments Increased revenues (i.e., taxes) and Cut spending
Budget debate moves from marginal changes vis a vis prior budget to in-depth examination of whether programs (spending) should be continued
THE PLAYERS
The Chief Executive The Executive Budget Office
Develops and defines the budget process Presents a plan that considers program priorities
The Legislature Budget Committees Leadership
Executive and Legislative Budget Staffs Provide Technical Assistance during process Often draft fiscal notes
FUNDING STATE SERVICES
FUNDING STATE SERVICES
Generally, numerous sourcesFederal Funding Debt Financing Lotteries/GamingFees/LicensingIncome TaxesAd Valorum Taxes
Federal Funds27%
Income Taxes19%
Other Special10%
Higher Ed11%
Ad Valorem19%
Busi-ness and
other3%
Lottery
2%
Trans-fers
3%
Other6%
State RevenuesState of Maryland FY 2012
Legis, Jud., Legal2%
Health Care28%
Education20%
Human Resources8%
Pub. Safet
y5%
Transpor-tatio
n10%
Other6%
Pub. Debt3%
Higher Ed16%
Nat. Res.2%
State SpendingState of Maryland FY 2012
Higher Ed14%
Transporta-tion10%
Oper-ations
6%DSHS31%
Other8%
Public Schools24%
Nat Resources3%
Special App4%
Washington State 2009-11(total funds)
Med Assist43%
Long-term care16%
ESA12%
MH8%
DDA9%
Child & Fam6%
Juv Rehab1% Other
4%
Washington State DSHS
OPERATING BUDGETS
OPERATING BUDGETS
The portion of the budget that addresses program activities and services authorized by the state’s legislature and governor.
The construction and renovation of buildings and the purchase of major equipment is not included in the operating budget, but is instead addressed in the capital budget.
OVERALL PROCESS1. Executive
Preparation –Executive agency reviews,
prepares and presents budget to Governor
and Governor presents budget to General
Assembly
2. Legislative Consideration –debate and
approval
3. Budget Execution –
Agencies spend their allotted
money to support public structures
4. Audit and Evaluation –
Examination of agency records,
Ensures legal compliance
Prior FY Budget +Audit/Evaluation
Governor + Executive Budget Dept.
Agency
Governor + Executive Budget Dept.
Internal Hearings
Published(made public and sent to legislature)
PLANNING PROCESS
LEGISLATIVE PROCESS
Public Release
of Budget
Legis. Considers Budget
Comm. Hearings
Votes-Reconcili
ation
Sent to Gov for
Signature; Veto
FINDING THE NUMBERS(MORE TO COME IN FUTURE TRAININGS)
Budget Bill is Published (enrolled) Reconciliation Bill is Published (enrolled) Budget by agency is published (Budget
Books) Agency Publications Grant proposals C/B studies
Look at related issues – drug courts Public Information Act requests
FUNDAMENTALS OF BUDGETING
THE WORK OF GOVERNMENT The work of government can be depicted as
a system of: (1) obtaining resources (or inputs); (2) putting those resources to work (or
processing them) so that; (3) a service (or output) is provided, and, as a
consequence; (4) a desired result (or impact) is produced for
the people of the jurisdiction.
input process output impact
BUDGET FORMATS
Different methods of looking at the work of governmentLine-item budgetPerformance budgetProgram budget
Most states use a mixture of the above
Why?
I want to hire more probation officers.
input
inputBecause we need to lower caseloads.process
Why?”
So that we can increase public safety.output
input process output impact
LINE-ITEM BUDGETING
PROGRAM BUDGETING
Looks at spending proposals in terms of services the programs are intended to provide
Program (and sub-program) refer to Provides information on what is produced Budget is focused on: What does government want accomplished –
Lower recidivism rate
impact
output
process
input
output
impact
impact
output
process
input
How do we reduce recidivism by 10%?
By implementing realignment.
What is involved in realignment?
What is the monetary effect of realignment? input
process
output
impact
PERFORMANCE BUDGETING Allocates money to various activities or
programs Describes the work output that the
organization will produce with this money
Advantage: Shows activities of government and Service levels of the activities
PERFORMANCE BASED BUDGET EXAMPLES
PERFORMANCE/PROGRAM BUDGETS(AND A LITTLE LINE-ITEM THROWN IN)
Most states use a combination of the presented formats
Here are some examples: Oregon Texas
Check: Uncodified language Riders Reconciliation Bill (BRFA) Conference Committee Report
PROGRAM PORTION
PERFORMANCE PORTION
RIDER
ZERO-BASED BUDGETING Process (or tool for creating budgets) The key characteristics of zero-based
budgeting process are: It begins at zero resources. It forces the ranking of organizational
purposes and programs. It requires a clear focus on the priorities of
and alternatives to the entity’s operations. Analyzes the essence of a program, agency,
department to determine its value and worth to residents.
Limited use
CAPITAL BUDGETS
DEFINITIONS
By statute For state governments, the span of capital
projects typically includes: state buildings, special use state facilities such a prisons and mental hospitals, life safety, modifications to conform with the Americans with Disabilities Act (ADA), public infrastructure such as water systems and wastewater treatment, and other basic requirements.
In some jurisdictions, capital items also include major items of equipment, technology systems, and special use items such as aircraft.
PERFORMING FINANCIAL ANALYSIS OF CAPITAL PROJECTS
Needs analysis is often/sometimes required for certain capital projects.
In some jurisdictions, there is a regular or prescribed cost benefit analysis model that is followed in evaluating capital projects.
When the final recommendations are made, the strength of the needs analysis, the financial analysis, and the ability to document that analysis will allow it to stand up to scrutiny from policy makers and staff in both the executive and legislative branches.
CAPITAL BUDGET EXCERPT
POST BUDGET PROCESS
Capital Budget Signed
Budget Board
Agency Requests
Public Hearing
Decision
FINANCING OPTIONS
Gift or GrantPay cash or borrowPrivatize Project (followed by
lease/purchase)Still uses RFP/IFB system
ADDITIONAL RESOURCES
www.njjn.org http://www.vera.org http://www.nasbo.org http://www.pewcenteronthestates.org http://www.naco.org http://www.ncsl.org http://www.gfoa.org http://www.cbpp.org http://www.wsipp.wa.gov/rptfiles/
costbenefit.pdf http://www.usgovernmentspending.com http://www.census.gov/govs/estimate/
CONTACT INFORMATION
Lori Albin Director, Fiscal Policy Center National Juvenile Justice Network 1710 Rhode Island NW 10th Floor Washington, DC 20036 202-467-0864 ext. 126 [email protected]