Everyone benefits when government budgets are more transparent and can demonstrate success through measured outcomes. But to achieve that, public leaders and agencies need to change how they operate.
$3.25 trillion: That’s how much public money our 19 million-plus state and local government employees are entrusted with every year. That money touches everything from the frontlines of the opioid crisis to the backyard sprinklers that water our public lawns. Deciding how it’s spent is about more than just dollars and cents. Budgets are critical policy documents that dictate what’s a priority, and what’s not.
Government officials across the country are working earnestly to align expenditures to the priorities of the constituents they serve. Too often, though, outdated processes and technologies hamper this ambition. Critical data is habitually stashed away in silos, making access to any serious insights a distant dream. Budget decision-makers aren't able to see a full picture of where their agency stands, much less where the money needs to go.
There’s a trend materializing in the public sector to better align spending with the community’s priorities. Many governments, including the city of Redmond, Wa., are embracing budgeting for outcomes, which allocates money toward a community’s priorities and then tracks performance against those priorities.
“It forced us to focus on what residents really want from their local government, to prioritize those things and to innovate and collaborate to achieve them,” Fort Collins City Manager Darin Atteberry recently wrote in an article for the American Society of Public Administration. It also recently inspired City on the Line by Andrew Kleine, who had impressive success using the model while he was budget director for the city of Baltimore.
No doubt, government leaders are realizing the need to budget better, budget smarter. That’s half the battle. These agencies also need modern solutions to remove operational barriers, open up collaboration, “take the pulse” of stakeholders, and track changing priorities, all with relative ease.
If government agencies are going to improve the way they serve the public, they need to first improve the way they operate. To get there, governments are turning to the Internet. No, not just Wikipedia or YouTube for insights, but software-as-a-service (SaaS) solutions to open up and unify operations, shed the growing costs of on-premises technology maintenance, shrink implementation times, and promote data integrity. In fact, the National Association of State CIOs (NASCIO) has named “Cloud Services” as their second most important 2019 strategy and “Cloud Solutions” as their foremost area of focus for technologies, applications, and tools in 2019.
Applied to budgeting, this movement to the cloud means starting to disband dependence on static spreadsheets and data silos in favor of integrated, flexible, and accessible solutions that aggregate and organize data from ERP or HRIS systems and spreadsheets; promote collaboration; and are transparent and always on. This allows leaders to streamline and transform their end-to-end budgeting process, seamlessly tie budget dollars to key organizational initiatives, accurately forecast workforce costs, effectively manage capital budgets, and draw actionable insights from a full-perspective view that can maximize performance outcomes.
Governments small and large are benefitting from this modern approach to budgeting. Klarryse Murphy, CFO of Ravalli County, Mt., manages a $35 million annual budget and has recently transitioned from a long-standing manual budget process to a collaborative, integrated cloud solution. Klarryse reports that her transition to a cloud-based budgeting solution has saved her over 30 percent of the time it used to take to compile the budget manually and has found an annual savings to the tune of one FTE’s total cost, which is a big deal for a county of this size.
On the other end of the size spectrum, the Office of the Illinois State Treasurer also leveraged a collaborative cloud solution to streamline operations and unify data — and employees reported they went from spending nearly four hours a month on data reports to just 45 minutes. That is an 80 percent savings in staff time. This has allowed internal stakeholders to focus more of their time addressing strategic priorities versus tedious data collection and analysis.
The cloud system sits over existing ones to pull data, so no matter the size, agencies don’t have to install a new system. In most cases, data migration takes weeks, not months. With a smoother system in place, officials can make better decisions and dedicate more time to performance outcomes. In Ashland, Ore., city staff launched an interactive, cloud-based budget book for taxpayers and they are making use of their vendor’s performance solution to ensure the city stays accountable.
“Think about it: We spend months producing this budget book and printing it for people who never look at it,” said former Administrative Services Director Mark Welch, “We can start to track how we’re performing (actuals versus budget) and improve our ongoing operations.”
In a study, Truth in Accounting — a non-partisan, not-for-profit government watchdog — found that 40 states and 63 of the nation’s biggest cities do not have enough money to pay all their bills, largely due to unfunded retiree benefits.
The group contends that many government agencies do not fully report these debts, giving the public a misconception that the budget is balanced. This leads to a lack of trust in government and doubt about whether taxpayers are getting the whole story on spending. Governments can attack this problem head-on by leveraging newfound workforce budgeting functionality that calculates fully burdened labor costs — benefits included — of individual employees or the overall workforce.
Trust is hovering near an all-time low in the U.S. Government agencies share the bottom of the list with media organizations, and are trusted less than business and non-government organizations. The Edelman Trust Barometer shows the general public’s confidence in government only earned 47 out of 100 points.
Beyond that, today’s taxpayers expect the public sector to deliver the same rapid-response, high-performance, feedback-induced service as private companies, such as Amazon. This phenomenon, known broadly as the "Amazon Effect," is proof the public sector must keep pace with the rest of the modern world.
All of this underscores the need for government agencies to start turning the tides. Doing it well will take work — but given the consequences of the status quo, incremental improvement is the right direction.