The Budget as an Operations Plan

As mentioned in a previous column, one of the criteria upon which the Government Finance Officers Association (GFOA) critiques budgets for the Distinguished Budget Presentation Award is that the budget reflects the operations plan of the government. In other words, does the budget of the local government demonstrate how the local government operates?

Local governments have a variety of formats in which they can present their budget information. Typically, the smaller the governing jurisdiction, the less complicated the budget document. All local governments will be bound to some extent as to content and process by a state’s general statutes on local government finance.

Let’s consider a local government adopted budget document for a small county with a population of less than 30,000. It would not be unusual for the document that the public will view to be presented strictly in a line-item format. Is it possible for dozens of pages of strictly line-item content to describe an operations plan for local government? Yes, it is. Every budget adopted by a governing board should contain information as to how the local government organizes itself to offer the programs and services to the citizens.

The public often criticizes local government leaders for not giving enough information about what is going on, for spending too much money and no one knows where it goes, or for “hiding” information about what the government is doing. The budget document, if a person knows how to “read’ it, should inform that person on how the government operates and what the government is doing.

If considering only the line-item format for budget presentation, there is still much to be learned from the document. The budget will reflect the total amount of General Fund (GF) expenditure, i.e. the amount spent on day-to-day operations of the jurisdiction for a year. Also, the budget document will reflect all of the flow-through funds that the government must account for at the end of the year. In my jurisdiction, our GF expenditures are $32,794,622 and our total expenditures are $40,654,691 – the difference being the various federal and state grants that come through our government, the capital debt service on school construction, an Economic Development Capital Reserve Fund, an E911 Special Revenue Fund and an Enterprise Fund.

The above information is presented on one page and a knowledgeable reader could readily determine that property taxes, sales taxes, fees and miscellaneous revenues – along with any monies taken from the “savings fund” or undesignated fund balance – are spent to cover the 32 million dollar expenditure for day-to-day operations.

Further, that one page tells the reader there is long-term debt for building schools, the jurisdiction is putting money in an account for economic development purposes, the jurisdiction has an Enterprise Fund (in our case, trash collection and disposal) for a service that should run like a business and it indicates that some services that the government is providing have state and federal dollars involved (again, in our case, 4-H programs and Community Development Block Grants for various services).

Going into the budget document, the reader can determine the organizational structure of the local government. As an example, expenditure information for the Parks and Recreation Department, Building Inspections, Planning and the Sheriff’s Office, tells the reader that the local government is organized by departments to offer recreational opportunities, provide services to ensure compliance with state building codes and to plan potentially for land use purposes, and to provide public safety services. The budget indicates the departments or offices where the expenditures occur. Thus, we can ascertain from the budget document the operations plan for our local government, i.e. how the jurisdiction organizes its various activities and services to meet the needs of the citizens.

To engage the public in the budget process, and to build confidence in our local governing jurisdictions, perhaps a strategy is to offer information in how to “read” a budget. This could be accomplished on a website or through a newspaper column. Of course, the difficult part is the public has to avail themselves of the opportunity and as many local governing officials know, the public often does not engage in the process of budget development, but does engage in complaining after the process. We need to make the effort to inform; it is our responsibility.

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Author: Patricia Mitchell is the county manager and economic developer for Ashe County NC, a small rural mountain county. She has served as economic developer since 2004 and was appointed county manager in 2012. She oversees the jurisdiction’s 40 million dollar budget and has considerable experience in grant writing, helping to secure more than 10 million in grant funds for various projects and initiatives. Pat has an MPA and DPA from the University of Georgia, and is an adjunct professor at Appalachian State and NC State University. Prior to her tenure in Ashe County, Pat was on the MPA faculty at East Carolina University.