How Baltimore Switched to Outcome-Based Budgeting
November 28, 2018 – Caitlin Steel
In a recent webinar, OpenGov was joined by Andrew Kleine, former Baltimore Budget Director and author of City on the Line: How Baltimore Transformed its Budget to Beat the Great Recession and Deliver Outcomes. In the webinar, Andrew walked us through three disruptive innovations that helped him shift Baltimore’s budget process to be outcome based:
- Change the starting point for budgeting.
Traditional government budgeting is a lot like a glacier - slow to change and formed by the accumulation and compaction of layers over a long time. These layers are decisions about how to spend money, made over decades, to the point where many things in the budget can’t even be explained anymore. This happens with a base budget, where the starting point is what you spent last year and you’re moving it forward incrementally. You end up punishing high value services and protecting low value services that fly under the radar screen. What’s needed is to start the budget based on outcome goals for the future.
The first step to become outcome based is to agree on priority outcomes and how those outcomes will be measured. This data will guide budget proposals from departments and agencies.
- Put outcomes ahead of the org chart.
One major issue with traditional budgeting is that agency siloes get the money and they are protected by agency heads and their allies. This makes it very hard to work across agencies and collaborate on a common set of outcomes. Baltimore decided to stop pouring money into agency siloes and instead have pools of funding for priority outcomes. They found that senior staff assumed the budget was fairly balanced among priorities, but in reality the actual budget was not. It took time to shift the budget to reflect a true balance with the priority outcomes. To do this they had to change the conversation around the budget.
- Shift the budget debate.
Traditional budget debates focus on what to cut and often cuts are made across the board because it’s easier and seems more fair. Baltimore realized that this debate needed to shift to what priorities needed more investment to get the results they wanted. They did this by opening up the budget process and bringing in people who had never been part of it before. They also created results teams of city employees and community members for each priority outcome. These teams had to give guidance to the agencies for what was needed in budget proposals. They would review, rank, and rate budget proposals and then recommend an investment portfolio to the mayor for their priority outcome. This enabled Baltimore to prioritize spending for services that were producing results.
How to get people on board
Like all change, it takes time and education for people to embrace change. Baltimore focused on including the public in workshops that let them partake in a simulated budget process experience, and held events to educate people on how the budget process works. Mayors loved the outcome based approach, while at first agency heads felt a bit threatened as they would no longer be getting a set dollar amount and then be left to decide how it was spent. However, champions rose up and the new approach proved itself by improving service performance and clearly showing how tax money is tied to community results.
OpenGov can help
OpenGov’s budgeting and performance solution fully supports outcome-based budgeting as it is:
- Collaborative, everyone can use
- Ties outcomes to budget dollars
- Eliminates clerical work & errors
View the webinar recording to hear the rest of Andrew’s story and see an OpenGov demo.