15-outcome-based-budgeting-making-government-work-for-residents-first

Numbers And Finance, a Creative Commons Attribution (2.0) image from kenteegardin’s photostream

Einstein said, “We can’t solve problems by using the same kind of thinking we used when we created them.” If we’re going to make Pittsburgh’s government work for residents first, we’re going to have to make sure that we are using your money most effectively, even if it means breaking free of our old habits. We need to budget taking the real needs of the people into account, not excuses like “because that’s the way it’s always been done.” Around budget time every year, we see the Mayor and City Council make small tweaks here and there and move funds between departments, but we have never taken the opportunity to completely reexamine our budget and start from zero. I will use new tools to reexamine our budgeting process and make sure that we are spending money prudently and where its impact is most felt.

1. New Approaches to Budgeting

Corporations and governments around the country use a non-traditional form of budgeting to make sure that their resources are being effectively used.  Called outcome-based budgeting or performance-based budgeting, this process looks at every department and justifies every expenditure. Instead of looking at what the department spent last year, outcome-based budgets look at the costs and benefits of various levels of service, regardless of what happened in the past. The process engages stakeholders at the front-end and works to set short- and long-term goals. They then determine how best to fund each department to be able to meet those goals. At the end of the fiscal year, the goals are evaluated and progress is charted. If the goals are met, only small changes may be needed. However, the process resets and a new budgeting process is initiated if they are not met.

While it will take some time to be able to fully adopt the practice of outcome-based budgeting, we can implement some elements. For example, we can require that each department go line by line through their budget and recommend areas of cost savings. Or we could require that each department come up with several different funding levels to be able to match the right amount with the need.

The state of Oregon and Florida’s Broward County are implementing outcome-based budgeting to better face fiscal challenges and be more accountable to residents. They have found that the practice of thinking about their budget more holistically has revealed efficiencies and cost savings that haven’t be considered. As part of a clean sweep of our city government, outcome-based budgeting will be a priority for my administration.