Linking Budget to Strategy Virtual Event Recap

At ClearPoint, it is always a privilege to spend time with our community members and learn from them.  This time was no different!   We sat down with Shawna Davis from the City of Olathe, KS, Stephanie Olson from the City of Raleigh, NC, and Lawrence Pollack from the City of Fort Collins, CO to hear more about their organizations’ approaches to strategy and budget and how their commitment to align the two has led to better outcomes.

The three organizations each take a different approach, but there’s one thing that they all agree on - linking budget to strategy has made their organization more resilient and able to navigate the challenges of 2020. We walk through each presentation and provide more resources below.

And if you haven’t had a chance to read it yet, check out our whitepaper, Linking Budget and Strategy in Local Government. We co-authored this whitepaper with experts in our community to help others align budget to strategy. It includes survey data, case studies, and several approaches for budgeting.

Table Of Contents:

• City of Olathe, KS Presentation
• City of Raleigh, NC Presentation
• City of Fort Collins, CO Presentation
• Q&A Session

City of Olathe, KS

Past

Shawna Davis, Budget and Performance Analyst, shared that Olathe has a 20-year strategic plan in place with an organizational scorecard. This serves as the anchor between the operations budget and strategy, as well as the backbone for department business plans and performance measures that help them gauge success. In the past, they used a base budgeting method, categorized by the strategic plan. Their budget process also works on a biennial cycle to align with their council 2-year goals. However, in 2020, they launched their brand new 20-year strategic plan, making major changes to how they operate and connect budget to strategy.

Present

Only a few months after they adopted the new strategic plan, they had to work to reduce the existing budget in case of revenue loss due to COVID-19. Following one of the goals from their strategic plan, they needed to be resilient and make changes to the current year as well as next year’s budget. They aimed to make one-time cuts, so as to not impact their citizens’ quality of life or fall off track on the strategic plan progress.

Future

In the future, they have major plans to connect their budget and strategy even more closely. The City announced it will completely restructure its organization in order to better serve the strategic plan. Currently, they are working on aligning budget, operations, and performance measures to the strategic plan. The entire department structure will also realign. The new plan has 60+ performance measures that align with the new strategic plan. They will also move away from department business plans and instead have a City-wide business plan. This is meant to improve collaboration and remove silos between departments.

By the 2023-24 budget cycle, the City plans on completely moving to program-based budgeting that aligns with the strategic plan. While there is much work to be done, they are confident their realignment will finish by 2023!

City of Raleigh, NC

Past

Stephanie Olson, Strategic Planning and Performance Manager, opened her presentation by sharing the main takeaway: Making strategic thinking part of Raleigh’s organizational culture improved the budget-strategy process. Their first strategic plan was adopted in 2016, and since then they have developed a great system to entrench strategic thinking into their culture.

First, they hold biannual meetings with staff to discuss what was accomplished in the last six months, what will be accomplished in the next six months, and get feedback. They also launched the ‘Academy’ as an effort to ensure that the people who are responsible for implementing the strategic plan have the skills to do so successfully. They cover topics such as performance analytics, budgeting, continuous improvement, and strategic and business planning.

Departmental business plans are required from each department, where they identify connections between their own plans and the City-wide strategic plan. Finally, they require budget requests to tie back to the strategic plan, so they are funding items that impact the City strategic plan. Every department is required to meet with the City Manager’s office while they are working on their business plan and budget requests, and they get help making sure the two processes are closely linked.

Present

When the COVID-19 pandemic started, Raleigh went into a tough year with a clear understanding of what their priorities were, thanks to all the work they had put into their strategic plan and budgeting process in advance. However, due to budget shortfalls, they set three specific goals around the budget concerning taxes, their workforce, and a balanced budget. Stephanie emphasized their culture of strategic thinking helped them navigate this in a short amount of time. Their FY2021 budget and FY21-25 strategic plan were adopted in the midst of the pandemic, along with a new effort called the Program Catalog. This catalog outlines all the programs their departments provide to the community, along with an explanation of how the program contributes to the City’s strategic plan.

Future

Currently, Raleigh is working on the FY22 budget. They are holding budget prioritization exercises with the City Council due to the strain they are feeling from the pandemic’s effects. Since the council has a strong understanding of the strategic plan, it’s easy to have conversations where they can work the budget around the strategy. They are also working on developing three-year departmental plans that connect to the FY21-25 strategic plan and connecting them to the program catalog. Finally, they are developing communication guidelines for the strategic plan in an effort to better share accomplishments the City has made on the strategy.

City of Fort Collins, CO

Past

Lawrence Pollack, Budget Director, started the presentation by sharing history on the City of Fort Collins strategic efforts. In 2014, the City of Fort Collins launched their first citywide strategic plan. Since then, every budget request must be tied to a strategic objective. They also developed performance measures so they could review the impact and efficacy of the programs they were funding with the budget. Their five-year strategic plan can be refreshed every two years. This aligns with the two-year budget cycle. As Lawrence said, every budget process starts by looking at the strategy. This linkage helped them create measures, analysis, and performance (MAP) monthly reviews at the executive level.

Present

With the arrival of COVID-19, Fort Collins had to balance the budget with the strategic plan in mind. This meant minimizing the impact of service delivery to the community. While planning for the 2021 budget, they decided to use a one-year budget approach due to all the unknowns of the situation. During these planning discussions, they used the strategic plan as a guide to move forward. Lawrence says they would not have been able to navigate 2020 without the close linkage of strategy and budget the City already had in place.

Future

Moving forward, as we emerge from the pandemic, Fort Collins will return to a 2-year cadence for their budgeting process. They are working on their 2022 strategic plan, with a heightened focus on equity in the aftermath of the 2020 civil rights protests. They intend to do a better job hearing voices from underserved communities, as well as to make the budget information more accessible in a variety of ways. Their 2023-2024 strategic plan will also include new equity indicators.

Q&A Session

We had lots of great questions come in during the panelist presentations. Ted relayed these questions to the panelists, and great discussion followed.

‍Q) Stephanie, what did you mean by “putting together options for furthering priorities” during your presentation?

‍Stephanie: We asked council upfront what top five priorities they would like represented in the budget. One priority that came out of this was affordable housing, so we talked to our staff to see how things are going. The staff outlined what they’re already doing and then came up with ideas on how they can further represent this priority in the budget, by securing other funding sources or staffing resources, to continue advancing each of the five priority areas.

‍Q) Shawna, how did you manage to do all this reorganization during COVID-19?

‍Shawna: There was a gap between when the 2040 plan was adopted and where we are today. There was a limbo of time between the two plans where we had time to make changes and adapt. The decision was made at an executive level in an attempt to help the staff fully implement the new plan during the pandemic. We wanted to make sure the new strategic plan was totally in place despite the pandemic.

‍Q) How do you reconcile the council priorities with the internal departments (for instance HR, IT)?  

‍Lawrence: One of our priorities is ‘high performing government’.  The remaining are external service delivery. Council priorities inform the strategic plan, as do department heads’ concerns. This way we ensure everyone’s voices get included in the strategic plan.

Stephanie: We have an operational excellence focus to ensure all departments are included in bringing the strategic plan to life. We also bring a diverse group of employees, including from HR and IT teams, together to implement initiatives related to the strategic plan.

‍Q) Are the budgeting decisions made at one point in the year? Are there options to present during the year?

‍Lawrence: We get asked a lot, “How can you lock out for two years?” We have a revision process – if we learn about a new item or program halfway through, we can incorporate it in year two if approved. We also have a standard process for supplemental approvals which are decided on by council on a one-by-one basis.

Shawna: We have an identical process. We adopt the first year of the budget and the second year is conditional. We will still go through the budget process for the second year, but it’s approved at the beginning of the second year.

Stephanie: We do a one-year cycle. If a need arises, we have processes in place to address the request at any time.

‍Q) Are budget requests tied to department performance? Does it play into how you think about their budgeting?  

‍Stephanie: We do have a process that will ask what data you will be tracking and we look back to see the performance.

Lawrence: We budget based on program and services, rather than department.  When metrics show that we aren’t getting the results we expected out of a program, we are willing to shift the money to a different department/program/service to try a different approach.

Shawna : Departmental performance does not necessarily impact budget requests. However, every FTE or budget addition must be reported on to council with decent amount of justification that the investment was necessary. Each additional request must align with the strategic plan.

‍Q) Lawrence, organizationally, how do you deal with the fact that those metrics you discuss may nullify the need for a specific position. Do you shift them to a different area that was prioritized?

‍Lawrence: When a program is eliminated or down-sized, whether due to metrics or other drivers, the City of Fort Collins tries to connect impacted employees with other employment opportunities. Depending on the situation, sometimes that will require the employee to terminate employment with the City. And, more often we have success stories. For example, when the City implemented Advanced Metering Infrastructure, we knew that would eliminate 13 Meter Reading positions. We extended the time for when those positions would go away and were very intentional about connecting them with other available positions. Although some of those employees did find employment outside of the City, all 13 people did find other employment before their positions were eliminated.

‍Q) Strategy and budgeting must work so tightly together that it’s a partnership, not one leading the other. How good is that partnership today? Is there still work that needs to be done? Are certain pieces stronger than others?

‍Lawrence: Our budget is intended to resource the strategic plan. It’s less of a partnership and more strategy centric. If an idea or budget request is not tied to something in the strategic plan, why would we fund it? Strategy should lead budget.

Shawna: I agree to an extent. Your strategy is the backbone of organization, and the direction you want it to go. To make progress, you need resources from the budget. Olathe has more work to make strategy and budget a cohesive process where strategy leads budget.

Stephanie: The strategic plan is adopted by council as a way of communicating what its goals are and what we should fund. Since council is also approving budget, strategy really leads budget in Raleigh as well.

Lawrence: For other cities, this also depends on the strategic plan you have. At Fort Collins, every employee’s work is reflected in the strategic plan. Other cities might have plans that don’t reflect the bulk of ongoing activities, which obviously need to be budgeted for.

Want to learn more?

There’s a lot to learn about how local governments can link and align their budget and their strategic plan. Our whitepaper includes several types of budgeting you can choose and more information about how each of these cities, Olathe, Raleigh and Fort Collins, manages their budget and strategy together. If you have specific questions, schedule time to chat with one of our strategy experts today. We can't wait to talk to you then!

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