Yesterday, I had the pleasure of moderating an incredible webinar about public sector budgeting: “Budgeting for Success Amid Uncertainty.” Veteran Finance Directors Bill Statler (retired from San Luis Obispo, California); Boulder City, Nevada’s Finance Director Hyun Kim; and OpenGov’s VP of Government Finance Solutions Mike McCann (retired from Ukiah, California) each shared their perspectives based on their professional expertise and experiences as local finance directors.
Nearly half of all U.S. states are facing revenue shortfalls this year. As governments actively face the near-term prospect of either an economic downturn or the one of the longest growth periods in our nation’s history, the panelists discussed the natural challenges associated with budgeting effectively in such uncertain economic environments –both strong and weak environments. The session melded theory with practice, focusing on providing insights and solutions. In an era compelling governments to constantly do more with less, they noted that modernizing public sector budgeting and planning approaches would be critical to achieving success.
Preparing for the Next Downturn
Bill Statler spoke specifically to strategies for preparing for the next economic downturn. While most local governments have recovered from the Great Recession and have experienced recent growth, future downturns and other uncertainties are inevitable. Those organizations that are planning now are best-equipped to succeed through future challenges. “If you can’t prepare for these in the best of times, when can you?” Statler posited.
He honed in on specific challenges, including economic outlook, unaddressed infrastructure needs, and pensions and retiree health care. To address them proactively, he suggested five strategies for ensuring long-term fiscal health:
- Engage your community and align resources with priorities. “At the end of the day, it’s not about the numbers, it’s about the community,” Statler said. The governing body must lead the way while engaging the community early.
- Use your favorable results for one-time purposes. Fund capital improvements you deferred and address unfunded liabilities. He said, “Today is your base,” which means there is no catching up. Operate from your current reality and minimize program expansion until your infrastructure plan is caught up and liabilities are sufficiently funded.
- Implement fiscal policies. Fiscal policies (such as balanced budget, CIP management, minimum fund balance, etc.) are preventative and curative. According to Statler, they are your “guiding North Star,” providing continuity and articulating organizational values when the organization is under less stress. “If you have a notion of where you want to be, your chances of getting there are significantly enhanced.”
- Plan for the long-term. Financial planning forces you to think about factors that affect your fiscal health. Forecasts provide a powerful context to gauge how you are doing, and how best to frame policy decisions for what lies ahead.
- Create a contingency plan. What is your strategy? A clear response plan and guidelines, communicated to both residents and internal staff, will enable you to respond to adverse circumstances smoothly. Identify triggers for implementing the plan and engage employees early on when seeking solutions.
Planning for Change, a Case Study
Hyun Kim spoke of how Boulder City, Nevada has navigated post-recession dynamics to while striving for long-term fiscal sustainability. His federally-planned city – originally founded to house Hoover Dam construction workers – grappled with how to do more with less while also anticipating an inevitable growth slowdown. While tourism provides opportunities, Boulder City faces aging demographics that can’t fund growth in perpetuity due to strict growth ordinances.
Beyond demographics, Kim spoke of very practical budget process concerns. He arrived in his position in the middle of its budget season, and he was unfamiliar with the City’s existing Enterprise Resource Planning (ERP) system. Thus, he faced firm budget deadlines amid ever-shifting circumstances such as ongoing labor negotiations and personnel shifts – all while trying to navigate a new ERP system.
He discussed the benefits of long-term planning and leveraging non-traditional approaches within the public sector. For instance, by leveraging cloud technology, he said his team has realized operating and cost efficiencies. In addition to other workflow processes, his team started using OpenGov’s cloud-based budgeting solution, which he said allowed him to leverage existing ERP data through a simpler interface. Whereas static spreadsheets would be stale by the time they made it to council, the new software provided solutions that were “living” – allowing for automatic updates, collaboration, and a faster online process. “We were able to see changes being made in a centralized spot from various departments. It saved our weekends,” he said.
Empowering Stronger Public Sector Budgeting
Mike McCann concluded with brief remarks from his own perspective as both head of OpenGov’s in-house team of finance experts on the Government Finance Solutions team and as a veteran finance director himself. He explained that he joined OpenGov for its mission – to empower more effective and accountable government. That mission exists to help everyone in the industry. He noted that the effort is centered around designing a set of solutions focused on the budget as the heart of government. As capabilities are added, the outcomes increase in turn.
If you were unable to join the live webinar on March 21st, be sure to watch it yourself for more takeaways and first-hand perspectives from seasoned professionals in the field.
Autumn Carter leads Government Affairs at OpenGov.