Community Values. Citizen Preferences. Priority Based Budgeting.
In FY2017, the City of Rapid City began its full implementation of the Priority Based Budgeting (PBB) process, which is recognized as a best practice by leading government administration associations such as ICMA and GFOA. Unlike the traditional incremental approach to government budgeting, where the current year’s budget becomes the basis for the next year’s spending plan, the innovative PBB process allows communities to understand their core values and then budget according to these values. Not only does the PBB framework allow our City to make better short-term resource allocation decisions based on the relative priority of the programs and services it offers, but PBB also provides a new way to link budget decisions to the strategic results and outcomes that our City wishes to achieve for the long-term. These strategic results are the seven core values that were identified in the Rapid City Comprehensive Plan, which was developed through extensive stakeholder and citizen engagement and was adopted in April 2014. The core values are:
- A Balanced Pattern of Growth
- A Vibrant, Livable Community
- A Safe, Healthy, and Skilled Community
- Efficient Transportation and Infrastructure Systems
- Economic Stability and Growth
- Outstanding Recreational and Cultural Opportunities
- Responsive, Accessible and Effective Governance
The underlying philosophy of Priority Based Budgeting is about how the City government should invest resources to meet the above stated objectives. The principles associated with the Priority Based Budgeting process are:
- Prioritize Services. PBB evaluates the relative importance of individual programs and services rather than entire departments. It is distinguished by prioritizing the services a government provides, one versus another.
- Do the Important Things Well. Cut Back on the Rest. In a time of revenue uncertainty, a traditional budget process often attempts to continue funding all the same programs it funded last year, albeit at a reduced level (e.g. across-the-board budget cuts). PBB identifies the services that offer the highest value and continues to provide funding for them, while reducing service levels, divesting, or potentially eliminating lower value services.
- Question Past Patterns of Spending. An incremental budget process doesn’t seriously question the spending decisions made in years past. PBB puts all the money on the table to encourage more creative conversations about services.
- Spend Within the City’s Means. Priority Based Budgeting starts with the revenue available to the government, rather than last year’s expenditures, as the basis for decision-making.
- Know the True Cost of Doing Business. Focusing on the full costs of programs ensures that funding decisions are based on the true cost of providing a service.
- Provide Transparency of Community Priorities. When budget decisions are based on a well-defined set of community priorities, the government’s aims are not left open to interpretation.
- Provide Transparency of Service Impact. In traditional budgets, it is often not entirely clear how funded services make a real difference in the lives of citizens. Under PBB, the focus is on the results the service produces for achieving community priorities.
- Demand Accountability for Results. Traditional budgets focus on accountability for staying within spending limits. Beyond this, priority based budgeting demands accountability for results that were the basis for a service’s budget allocation.
Priority Based Budgeting Implementation Timeline
Although the preliminary work began many months prior to 2016, the "on-the-ground" implementation of the Priority Based Budgeting started in April 2016, when the Center for Priority Based Budgeting team provided their first orientation to the City staff, leadership, and elected officials. Since then, the following milestones have been achieved:
April - August 2016: Program Inventory Development and Review. All City Departments identified and catalogued programs (or services) they provide.
November - December 2016: Development of Results Definition and Creation of Results Maps. The scoring criteria for the results were defined.
August 2016 - January 2017: Departments completed allocation of 2017 appropriated funds - both personnel and non-personnel - to programs. Program-specific revenues were also identified and allocated.
January - February 2017: Departments and peer-review teams scored all programs based on their contribution to the City's core values and based on their basic program attributes such as the level of mandate, reliance on the City, percentage of the population served, change in demand, recovery of costs through program-generated revenues.
April - August 2017: Departments and City Leadership applied PBB data to prioritize resource allocations for the 2018 budget.
November - December 2017: Rapid City rolled out its first Citizen Budget Priority survey, which sought to get more citizen input into how the scoring criteria should be weighted. 1,665 completed survey responses were collected. Full report of survey findings is available here.
October 2017 - January 2018: Departments optimized their program inventories to improve their functionality and minimize redundancy. As a result of this optimization effort, the total number of the programs was reduced from 1,136 to 817.
November 2017 - January 2018: Departments allocated the 2018 appropriated costs to programs.
January - February 2018 (expected): City Departments and peer-review team(s), composed of City staff and City Council members, will score new programs.
February - March 2018 (expected): Updated PBB data for 2018 will be made available to City decision-makers and the public to guide the 2019 budget year resource allocations.