Performance-Based Budget Analysis: City of Lakeland, FL

Introduction

In order to understand how a new performance-based budgeting process could be utilized by the City of Lakeland, it is essential to conduct a review of the City's Annual Budget, with a detailed description of how the budgeting process works from beginning to end.

Lakeland's budgeting process is divided into parts, with each part designated a specific calendar month in which it receives attention. The tasks associated with the budgetary process are sequential and proceed in an orderly manner; once the first steps are taken and accomplished, the next steps may be conducted.

Monthly Steps in the Budgeting Process

The first steps begin in the month of February. The Revenues Manual supplied by the City is utilized to understand and predict the City's revenue and revenue sources, using a systematized method of documentation that serves as the basis for framing and guiding the decisions that must be made when deriving the budget. The Manual records receipts and indicates what variables impact the revenue cycle, and how taxes, special assessments, franchises, intergovernmental revenue, interest, and service charges factor in as potential revenue categories.

During this same month, the City submits a list of projects with attendant costs derived from estimates provided by associated departments. The Manual is reviewed, and new costs for any new projects are tallied.

The month of March proceeds with the next two steps in the process: first, use of the financial trend monitoring system; second, budget system training. In the first step, pivotal financial and economic predictors and indicators are used to gauge the City's economic condition. The City's financial health is expressed through ratios that provide a basis for comparing the City to other municipalities across the nation as well as to other service organizations. Items compared in this step include debt structure, liabilities, operating cash flow, revenues and expenditures, resources, and community indicators. Comparing the City's standing on these items to that of other cities provides context for how the City's budgeting compares to the status quo. The second step for this month is to provide training for new members of the budgeting staff.

April and May together encompass three steps in the process. First, the results of the City's Core Services are given a final revision, including discussion of how the revision will affect the new cycle going forward. Second, the capital improvement plan (CIP) is revised according to the project requests made in February and the analyses conducted in March. Third, the goals of the coming cycle are assessed and used to make adjustments, if necessary, to the Core Service ranking and grading conducted to prioritize projects over the course of the year.

In June, the City begins its budget kickoff: a business plan package is reviewed along with staffing needs, the operating budget, and the CIP. A directional strategy is developed at this point, along with instructions for preparing the budget's resource development in relation to the needs of the business plan. Because some time has passed since the last submission of capital projects, new submissions are accepted along with the associated costs derived from priorities and actionable items.

July's steps consist of an administrative review of each department's operational budget. Important in this step is having a detailed list of the various staffing structures, line items, and performance measures that will be used by the departments, along with a table of organizations with which they will be associated. The City Manager makes a tentative determination about the proposed budget at this point. During this month, the City Manager and Finance Department also submit a final recommendation for a CIP for the year.

August begins with a legislative review of the recommended budget from the prior month. Fund summaries — consisting of a revenue and expenditure balance sheet — are submitted along with the various projects from the City's departments, which should include operating and performance budgets. A tentative budget is then prepared and provided both to the City Commission and to all stakeholders.

In September, public hearings are held — as required by law — regarding the implementation of the recommended budget and the establishment of property tax rates. A second hearing is also required by law for the same purpose, giving the public a chance to voice concerns regarding the proposals put forward by the City. Finally, the legislature approves the City's recommendations for the tax millage rate and the budget is passed.

In October, the City's budget is published.

In November and December, feedback is gathered and reviewed from users within the City's budgetary system. This feedback is directed toward identifying overall improvements to the budgeting process and implementing a policy of exceptional application.

Prioritizing Based on Performance and Relevance

The City's budget is guided by the principle of prioritization and can be assessed as a performance-based model in the sense that priority is given to projects that perform well. The strategic operating plan (SOP) of the City reflects the City's goals, values, and desired outcomes for the community. At the heart of the process is the City's Commission Retreat, which serves as a platform for members to come together, present, and develop expectations for the year. Presentations are given by various entities — from Economic Development groups to Education, Neighborhood Associations, and City Commissioners. Input and feedback are provided for every presentation, and they are ranked according to their relevance in helping the Office achieve its established goals. They are thus assessed on a performance basis.

The goals for the City include generating a high quality of life for community members, improving communication, expanding economic opportunity, ensuring fiscal management, and managing growth. The Core Services that reflect these goals depend upon the City's ability to align itself with a process that enables the budget to come to completion.

Conclusion

The City's feedback loop helps to shape the budget for the following cycle. Input and analysis are critical in effecting the next year's budget and CIP funding, which in turn is distributed to customers. The process repeats annually.

References

City of Lakeland, Florida. (2016). Fiscal Year 2016 Annual Budget.