This post is written by Results for America and Resource X.

  • **The problem: **Local government leaders face increasing pressure to align budgets with equity goals and outcomes.
  • **Why it matters: **Substantial differences in wealth, safety, and health exist among different individuals and groups.
  • The solution: Convert the budgeting process from a line-item-driven budget to a programme-based budget.

ResourceX partnered with Results for America to work with a cohort of cities on the What Works Cities City Budgeting for Equity and Recovery (CBER) programme across the US. Cities in this programme endeavoured to define equity for their communities and align resources accordingly through programme-based budgeting. This is one of many data-driven approaches to incorporating equity into budgetary process and planning.

Driven by the pandemic and the need to address historically systemic racism, city leaders face mounting pressure to better align budgets with equity goals and outcomes. Equity as an outcome is a tremendous opportunity. Riddled with significant challenges, it must be addressed to acknowledge and reconcile how substantial differences in wealth, safety, and health exist among different individuals and groups in a community. While most city leaders desire to be responsive to resident and community feedback, there is a pressing need for transparent decision-making platforms and processes to align public resources with equity goals, among other city priorities, and tackle today’s societal challenges.

Budget reform is not a new topic

The budget process that many communities depend upon to deliver on the promise of prosperity often comes up short. From zero-based budgeting, to budgeting for outcomes, to performance-based budgeting, budget reform is not a new topic. Cities long for a clear and attainable breakthrough – one that would be easy on staff to implement, powerful in the way it equips decision-makers, and meaningful for the residents whose lives depend on it.

One of the most direct breakthroughs in delivering on the fulfilment of budgeting for equitable prosperity is the ability to convert the budgeting process to a true programme budget. This entails:

  1. Transitioning from a line-item-driven budget to a programme budget.

  2. Budgeting programmatically within the context of priorities, from equity to climate, safety to infrastructure, health to arts and culture.

In short, creating a clear, data-driven, programmatic path from resources to results. Here we look at four examples from around the US, and four steps to build a programme-based budget.

Example 1: A programme-based open data portal in Lawrence, Kansas

The city of Lawrence adopted a new programme-based open data portal to make budget information and data more accessible to the public and is now able to graphically depict the allocation of resources to the various programmes and services provided by the city. This helped them develop an equity initiative that will repurpose $900,000 annually towards scholarships for underserved youth.

Example 2: a programme budgeting approach in Unified Government of Wyandotte County and Kansas City

The government adopted a programme budgeting approach to advancing fiscal sustainability.

  • Using these tools, the Unified Government was able to bridge a substantial budget gap that was exacerbated by COVID-19.
  • Through a cross-departmental analysis of software licensing costs, they identified that the licensing of redundant software systems across departments was causing them to overpay, as well as create data silos.
  • They created an internal efficiency group that identified $1 million in savings annually through the centralisation of system acquisition, integration, and implementation.
  • Using open forms, they generated a $100,000 reduction of staff time.
  • They repurposed that $100,000 to hire two budget analysts to operationalise programme-focused opportunities and help foster a culture of continuous improvement.

Example 3: a new equity impact screening tool in Pueblo (CBER programme participant)

  • The city created and formally adopted a new equity impact screening tool to evaluate the city’s $70.7 million budget.
  • Using this tool, the city created a $1 million reading challenge for ARPA funding, providing youth $100 for checking out ten books from the library and submitting a written report.
  • The programme benefited 9,000 children from Pueblo from June to August 2021.
  • The city identified 14 concrete opportunities to improve equity outcomes.

Example 4: a programme scoring matrix in Pittsburgh, Pennsylvania

  • The city adopted a unique programme scoring matrix to evaluate 249 programmes across 23 city departments aligned with equity goals and the city’s climate action plan.
  • Former Mayor Bill Peduto issued executive orders for the city to adopt programme-based budgeting to implement climate impact scoring when crafting budgets.
  • Using these tools, the city identified their procurement programme as a significant opportunity to modernise waste collection systems, improve education around waste diversion efforts, increase composting, decrease carbon emissions, and enforce waste policies, forecasting $6 million in savings by reducing paper expenses and reducing waste.

4 steps to building a programme budget

Here are four core steps in the development and application of a programme-based budget:

Step #1: Programme inventory

The first step in the programme-based budgeting implementation process is identifying a programme inventory. This step produces immediate value by stating and describing all of the services your organisation provides to your community. The shared programmatic language provides an easy-to-understand list of services that connect staff, leaders, and citizens in a way that a line-item budget cannot. 

A programme inventory expresses local government activities in units (programmes) directly relevant to how citizens experience public services. For example, instead of focusing the budget on a department like public works, a programme inventory identifies a programme or service that the department provides, such as removing snow. The programme inventory allows a local government to ask: how does a proposed expenditure expand opportunity and access for individuals to the needed government service?

Step #2: Programme costing

The most transformative step of building a programme budget, cost and revenue allocation, takes the static line-item budget and applies each cost and revenue (as applicable) to a programme. Cost allocation creates a view into the budget that could not exist in a traditional line-item budget – the ability to decide on funding within the programme that a particular decision will impact. A programme budget provides the actual cost of doing business and ensures that funding decisions are based on the true cost and/or revenue of providing that service.

"Before, we would make decisions by reducing lines. The new method provided a tool that clearly showed exactly what our departments were working on and how much our programmes cost. We could then ask whether there were opportunities. The more we started looking at what we were spending time on, the more ideas we generated for making improvements." - Jen Carlson, Finance Director, City of Duluth, Minnesota_

Step #3: Programme evaluation & alignment

Transitioning from a line-item budget to a programme budget creates a clear path from resources to results. Through a self-generated scoring process, organisations can evaluate each programme against a set of results identified and defined by their own community. Additionally, a set of basic programme attributes can be utilised to determine the level of demand from the community, cost recovery, and population served. 

Defining what equity means to your community is a pivotal piece of the evaluation and alignment process. Equity can and does apply to gender, ethnicity, income, age, geographic location (e.g., urban vs. rural), language, physical or mental ability, family structure, or any other characteristic so that local governments can align services with the varying needs across communities. But what does it mean to your residents? How must you move the needle through programme evaluation and modification to address the issues specific to your community successfully? Once you have a clear definition of equity established, then every programme in your inventory can be evaluated against this definition to find where equity is lacking and how you can address it within every programme.

**Step #4: Applying programme data for decision makers **

Programme-centric budgets clarify which details and goals are most important to decision makers. Each programme clearly states the purpose of the programme, how much it costs to deliver, and how it aligns with the overall priorities of the community. Additionally, programme data includes necessary information about mandates and the community’s reliance on the organisation to provide this service. This level of understanding communicates the impact of funding changes in a way that line-item budgets cannot.

In conclusion

Local governments must deliver programmes and services equitably and fairly to every citizen in the community. For budgetary, finance, and policy leaders, programme-based budgeting provides a clear pathway for cities to understand what services they are providing and the associated impact each has on their community’s well-being. By establishing a clear equity mission and clearly defined goals, evaluating and adjusting existing programmes, starting new programmes to meet equity goals, and solidifying funding for these equity-focused programmes within the budget, local governments can enter a new era of citizen-focused governance with an equity focus. 

_Results for America (RFA) supports local, state, and federal government in using data and evidence to better serve residents. _

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