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Leadership Development: Building Budget Skills Early

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Thomas E. Poulin
June 26, 2021

Creating budgets for projects or programs is relatively intuitive, more so as you become more experienced with the activities. Familiarity permits you to identify resources and planning necessary for success, providing a template for determining costs. It is a relatively straightforward process in program or project management, but it becomes far more complex when exploring the development and administration of budgets for an entity such as a county, city, state or federal government, or for a special service district. Too often we hear anecdotes of people promoted to a position with budgetary authority who have never been exposed to it. To prepare people for success, we need to provide them with budget skills early in their careers, particularly in the areas of budget creation, budget mechanics and budget reductions.

Budget Creation: Creating a budget for a governmental jurisdiction is more complex than doing so for a program or project because of competing needs and expectations within the community. Typically, agencies can defend program and project costs in a robust fashion, based on agency priorities. However, when a legislative body for a government entity reviews the budget, they use a differing lens. An axiom for public administration is that there will never be sufficient funding to provide services for everyone in the community at levels acceptable to all. There will be competing visions for the community requiring reflection by the legislative body to determine funding priorities. The potential priorities vary widely. Instead of considering cost-effective services of an individual agency, the legislative body must compare schools against roads, law enforcement against libraries and social services against public works. They will be seeking to provide the highest quantity and quality of public services with available funding; a public budget is a financial representation of community priorities.  This means not every budget proposal by individual agencies can be supported. New leader-managers must understand this, preparing to discuss budgets within the larger framework of how proposed expenditures achieve the priorities of the community, not just the priorities of their agency.

Budget Mechanics: While all public agencies will have their own budget, they tend to be components of a larger budget covering the entire jurisdiction, though in special service districts the agency and the government are one entity. Regardless, while an agency’s leadership team has control over their budget, it is not unfettered. Externally, there will be laws related to the legal and ethical use of public funds. Internally, there will be policies and procedures related to areas such as requisitions, purchasing, accounting and accountability. On a routine basis, bookkeeping activities fall within the scope of a few specialists in budget and finance offices, but anyone in a leadership-management position in any agency would be well served to understand the basic mechanics of the budget process, even if they are do not become masters of the forms and policies. They should understand how to request or approve expenditures in a legal, ethical and appropriate manner. They should be familiar with points-of-contact for relevant issues, some of whom will be in other departments, and they should understand the timelines created by policies. From a practical standpoint, anyone who might be tasked with program and project management must understand how to track funding approved for their programs and project to ensure they work within their approved budgets. If you are to operate the system, if only in part, you must have some idea how the system works.

Budget Reductions: Years ago, it was impressed upon me that budget creation was far easier than budget cutting. Budgets are created through a paced, collaborative and transparent effort facilitating reflection and debate on community needs and expectations. On occasion, it will be necessary to reduce a budget for reasons such as revenue shortfalls, unexpected costs or changes in political will. In such circumstances, the calls for budget reductions might be strident and urgent, limiting the time available to consider the consequences of budget cuts. If completed imprudently, budget reductions might create greater problems, and we might find funding cut from higher government priorities rather than lower ones, which is contrary to the budget model. New leader-managers must understand how their agency budget supports the overall community-wide goals, permitting them to prioritize the spending of their agency. This will facilitate more rationale budget reductions which focus first on meeting community needs and expectations, and then on meeting the goals of the agency. In extreme cases, this might suggest reducing budgets within your own agency to maintain funding in the budgets of others, if the activities of these other agencies are more integral to achieving the community’s priorities.

Like any skill, budget proficiency comes with study and practice. To support the success of leader-managers, their agencies and the community itself, we need to begin developing the budget-related skills of new leader managers early in their careers. If we wait until they are at an executive level to expose them to spreadsheets and the budget process, we might be setting everyone up for failure.

Author: Thomas E. Poulin, PhD, MS(HRM), MS(I/O Psych.), EFO is independent scholar and HR Consultant. focusing on leadership development in the public sector. He served in local government for over thirty years and as full-time faculty in public administration-related programs for more than ten. He is the President of the Hampton Roads Chapter of the American Society for Public Administration. He may be reached at [email protected]

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