budgeting for outcomes/lean: a better process for better

Budgeting for Outcomes/LEAN: A Better Process for Better

Results Presented by

Mike Shockley, Budget Administrator

Department of Management and Budget

Roanoke, Virginia

Roanoke, VA

A little background

Roanoke – from…

Railroad Town High Tech to

Diverse & Welcoming Community

More to Life, both Inside…

….and Out!

The challenges Roanoke has faced • Declining local tax revenue • Massive cuts in funds from State of Virginia • Increasing capital and operational needs

(general fund and school division) • Reduced budget $31 million in last 5-6 years • Reduced number of positions by 10% in last 5

years • Affordable Care Act requirements • Retirement contribution for employees • Compensation increases

Revenue History

Revenues for all fiscal years have been adjusted for tax rate changes and day care revenues for comparability

Red line represents inflation adjusted buying power in 2008 dollars 9

Topics • What is Budgeting for Outcomes? • How is BFO different from traditional

budgeting? • How does the BFO process work? • LEAN Six Sigma

Budget Development

Ideas for Improvements

LEAN Six Sigma

Process Changes

Budget Process

What is Budgeting for Outcomes?

• BFO is a method that begins with identifying community-based priorities and then through a sequence of steps helps governments choose programs by which to pursue results within each priority

• This process replaces traditional incremental, department-by-department budgeting

• BFO provides a strong foundation not only for better allocating scarce resources, but for managing resources throughout the year because it affects all phases of the management cycle: planning, budgeting, management and assessing results

How is BFO different from traditional budgeting?

• It’s more strategic

• It’s more evidence-based • Departments prepare programmatic offers, not departmental

budgets.

Some limitations of department by department budget

• Departments are focused on executing programs well; need also to show how programs serve overall goals

• Traditional departmental budgets tend to focus first on departmental concerns, second on organization-wide priorities

• Departments often “own” issues and “own” a base budget

• A department-by-department budgeting process makes cross departmental collaboration and innovation difficult – Anything new is considered an “add”; less focus on

programs that already exist – Departments are in competition for funding – little incentive

for cooperation

BFO compared to Traditional Budgeting Traditional BFO

Focus Add to or cut departmental “base budgets”

Fund programs and activities that support priorities and strategies

Budget requests Departments ask for amount that can be justified based on ongoing activities (plus a little extra)

Results for a price (value): Departments propose programs likely to produce desired results, efficiently

Budget office job Find places to cut, balance the budget

Test the logic of proposed solutions, provide efficiency tools, Balance the budget

BFO has been implemented in all types of governments

States

– Washington – Iowa – South Carolina – Michigan – Louisiana Dept, of Culture,

Rec & Tourism – Oregon Dept. of Education – Manitoba

School Districts – Jefferson County, CO – Billings, MT

Cities

– Redmond, WA – Spokane, WA – Tacoma Metro Parks – Azusa, CA – Savannah, GA – Dallas, TX – Ft. Collins, CO

Counties – Snohomish, WA. – Multnomah, Oregon – Mesa County, CO – Polk County, FL

Benefits of a BFO Process • Pushes lower-value spending out of the budget,

moves high value to top of list • Focuses on results, not just inputs • Looks at all programs in government-wide context,

not in isolation • Enables managers to explain how spending is linked

to results • Produces information that helps citizens see the

value they get from taxes and fees

In times of fiscal stress, BFO • Offers a rational alternative to across-the-board cuts,

treating last year’s budget as the “ideal”

• Provides a structured process

• Focuses everyone on how best to spend the revenue

• Emphasizes the price of government (a value concept), not just the cost

BFO’s Eight Steps

1. Identify available revenue – all of it 2. Set high level priorities 3. Allocate all revenues to the priorities 4. Create “Request for Results” 5. Invite/prepare offers 6. Rank Offers 7. Decide what offers to “buy” 8. Present the budget

Getting Started: The First 3 Steps • These 3 steps set the stage for the rest of the

process 1. Determining total revenues 2. Setting the big priorities 3. Allocating revenues to these priorities

• Do at the beginning of the process and

require a citizen perspective

BFO Step 1: The Revenue Decision

• How much – from all fund types – is available to fund programs and services

• What is your revenue outlook? • Make the revenue decision up front and

communicate it

BFO Step 2: What Results Matter Most? Choosing high level priorities

• Build on existing work, 1. Vision or priority statements 2. Strategic plans 3. Many governments already have high level priorities

• Elected leaders make the final decisions • Citizen input is most valuable up front • State priorities from a citizen perspective

Setting priorities is the job of leaders

• Understand the public’s needs, likes and dislikes – Use citizen input mechanisms

• Analyze objective data about the community

• Identify issues and opportunities through an environmental scan

Mesa County, CO Citizen Priorities

Mission Statement In partnership with citizens,

Mesa County will maintain and enhance quality of life by effectively

providing community services that ensure public health, safety, and well

being in a transparent and equitable way.

Slogan Mesa County—Creating a community

of opportunities for all residents with a focus on the future.

I want Mesa County to manage and preserve public resources.

I want to feel safe anytime, anywhere in Mesa County.

I want a community where citizens of all ages can be

healthy and successful.

I want plans and infrastructure that

maintain quality of life in the face of rapid growth.

I want Mesa County to have a Variety of industries that will promote a healthy economy.

Continue to efficiently and effectively protect and manage all public resources

Continue to promote and protect public safety

Continue to promote and protect public health and the success of all citizens.

Create well-planned and developed communities

Promote economic vitality in Mesa County

Creating Performance Indicators for each Priority

• So we can recognize success or failure • Only have a small number (2 to 4) • Don’t try to cover everything, pick key

indicators for that priority

City of Savannah / Department Name / Title of Presentation

BFO Step 3: Allocating Funding to Priorities

• How much is each priority worth? – Not: How much do they cost?

• What is the relative value of each? – It’s a value judgment, not science.

• Resistance is common • Fund accounting is not the same as

budgeting – And it does not drive citizen needs/wants – So it shouldn’t drive the budget

Asuza: Pricing Priorities

Outcome Goals Improved economic vitality 9%

A safer community 30%

Better cultural, recreational, and learning opportunities.

10%

A healthier environment 13%

Improved neighborhoods 8%

Improved mobility 10%

Improved efficiency and customer focus 18%

ECONOMIC VITALITY

7%

HEALTHY & SUCCESSFUL

CITIZENS21%

WELL MANAGED PUBLIC

RESOURCES15%

PUBLIC SAFETY27%

WELL PLANNED COMMUNITIES

30%

Proposed Budget Allocation

What We Have Learned about Pricing the Priorities

• There will be resistance to doing this upfront and not all governments do this

• However, assigning dollars makes the process “real”

• Allocations can be adjusted later in the process, just as in traditional budgeting

BFO in Practice: Priority-Setting and Pricing the Priorities in Roanoke

and Savannah

Economy

Livability

Safety

Infrastructure

Human Services

Good Government

Education

Cultivate a thriving business environment and innovative workforce opportunities to ensure the prosperity of our community.

Foster an environment for lifelong learning which encompasses cradle to career and beyond through shared services and community involvement.

Provide effective government which maximizes resources to ensure an open, responsive, and innovative service to the community.

City of Roanoke Priorities

Foster a caring community that utilizes a regional and collaborative approach which encourages self-sufficiency while providing a social safety net to citizens when they are most vulnerable.

Assure community safety needs are met and promote a safe and desirable region.

Maintain and build quality infrastructure that supports healthy residential neighborhoods, successful commercial areas, and accessible public facilities and amenities.

Enhance Roanoke’s exceptional vitality as an attractive, diverse, culturally inclusive, vibrant and active city in which to live, work and play.

Savannah will be a safe

environmentally healthy and economically

thriving community for all its

citizens

Budget Priorities

I want to be safe and feel safe from crime, fire and other hazards anywhere in the City

I want to live in a city of strong and vibrant neighborhoods that are clean, safe, and encourage a sense of community

I want to live in a community that reduces poverty by empowering motivated people to become economically self-sufficient

I want to live in a community that provides recreational and cultural opportunities that will keep my mind and body active and that recognize the diversity of its citizens

I want a fiscally responsible, accessible and responsive government that maximizes use of public resources for services I need

I want to live in a community that promotes health through good infrastructure (e.g., water, sewer) while preserving the environment for future generations

I want to live in a city that encourages & supports appropriate economic growth that creates jobs, expands city revenue and improves neighborhoods and commercial corridors

Savannah Budgeting For Priorities

City Manager

City-wide Priorities Team City-wide Value Team

Position Review

Buildings & office space

Vehicles & Equipment

GIS services

Technology

Mowing & Litter Coordination

Automatic vehicle locators

High Performing Gov’t

Public Safety

Neighborhood Vitality

Poverty Reduction

Economic Growth

Health & Environment

Culture & Recreation

Results Teams

Efficiency

Task

Forces

Mayor & Aldermen

Customer Service Coordination

Stormwater Utility

Economy1%

Human Services

18%

Safety26%Education

33%

Infrastructure11%

Good Government

6%

Livability5%

Roanoke Priority Funding Allocations

Savannah Funding by Priority

BFO Step 4: Creating Requests for Results Using Cause and Effect Analysis

• Teams are selected for priorities. • Each team prepares a “Request for Results”

(very similar to an RFP process) • Use cause-and-effect analysis, strategy

mapping to identify effective strategies, interventions – Departments also use this approach to develop

their programmatic proposals • RFRs from all teams become the budget

instructions/preparation forms

Strategies Address… • What to spend money on

– “Favor funding prevention over remediation” – “Favor funding children over adults”

• How to spend the money – “Give to the customer to make choices” – “Give to efforts that show collaboration”

• Relative priorities – “Most money will be spent on ‘x’ but some also on ‘y’ – “This is the order in which we will spend money”

• Specific things we want to buy – “We will like an offer that creates more activity

downtown.”

What We Have Learned about Purchasing Strategies

• Pay special attention to purchasing strategies --- tend to be the weakest and they are critical.

• Maps lead to purchasing strategies --- where do we want to put our money for the best leverage?

• Some purchasing strategies are used for all priorities (e.g., innovative offers and partnerships)

BFO in Practice – Cause and effect analysis and strategy development in

Roanoke and Savannah

Economy Cultivate a thriving business environment and innovative workforce opportunities to

ensure the prosperity of our community.

Asset Development

Asset Promotion

Business Development

Human Capital

Investment

•Strategic Programming

•Vibrant Places

•University Collaboration

Indicators:

•Tax Base

•Net Job Growth

•Average Wage

•Commercial & Industrial Real Estate Market

•Market & Brand Awareness

•Job Growth

•Job Opportunity Awareness

•Retain & Attract People

•Higher Wage Jobs

•Responsive Government Processes

•Regional Partnering

•Premiere Business Environment

•Increased Attractions & Tourism

•Information Accessibility

•Brand Awareness & Effective Marketing

•Trusted Leadership

•Confident & Consistent Direction

Education Foster an environment for lifelong learning which encompasses cradle to career

and beyond through shared services and community involvement.

Support of K-12 Academic

Programs

Adult Learning

Early

Learning/ School Readiness

•Successful students

•Families & community value & support learning

•Children ready for schooling/formal learning


•Productive & educated citizenry

•A skilled workforce

•Lifelong learning opportunities


Indicators: •Phonological Awareness Literacy Screenings (PALS) scores

•Accredited schools

•Graduation rates

•Adult learning opportunities

Human Services Foster a caring community that utilizes a regional and collaborative approach

which encourages self-sufficiency while providing a social safety net to citizens when they are most vulnerable.

Intervention

Caring Community

Accessibility to Services

Prevention •Early Identification

•Family Involvement/ Holistic Approach

•Integrate Citizens into Society

•Deinstitutionalization

Indicators:

•Citizen survey results

•Socio-economic and quality of life trends

•Meeting regulatory and legal obligations

•Sufficient capacity to reduce demand

•Promote Healthy and Safe Neighborhoods

•Promote Positive Youth Development

•Prevent Poverty

•Promote Self-Sufficiency

•Public Awareness and Education

•Service Delivery

•Empowerment

•Involvement

•Foster positive adult relationships

Infrastructure Maintain and build quality infrastructure that supports healthy residential

neighborhoods, successful commercial areas, and accessible public facilities and amenities.

Environment

Technology, Buildings and

Equipment

Neighborhood Improvements

Transportation •Clean Air, Land and Water

•Sustainability

•Stewardship

•Conservation

•Regionalism

Indicators:

•Meeting Regulations/Legal Mandates

•Citizen Survey Results

•Environmental Trends

•Proactively evaluate and maintain infrastructure

•Functional – Planning/Design

•Safe and Well Maintained

•Multimodal

•Regionalism

•Safe and Well Maintained

•Attractive Streetscape

•Plan Implementation

•Adequate Storm Water Systems

•Collaboration & Communication

•Accessibility (Proximity / Maintenance)

•Functional (Useable / Reliable / Accessible)

•Enduring (High Quality)

•Sustainability

Livability Enhance Roanoke’s exceptional vitality as an attractive, diverse, culturally

inclusive, vibrant and active city in which to live, work and play.

Attractive Community

Quality Amenities

Valued, Engaged & Informed

Community

Accessibility

•Safe, clean and attractively maintained community

•Home ownership

•Zoning, land use and codes compliance

•Compatible design and well-maintained structures

Indicators:

•Community and Neighborhood Desirability

•Community Engagement

•Community Satisfaction

•Participation in Community Activities, Events and Exhibits

•Community involvement

•Active neighborhoods

•Public-private partnerships

•Personal enrichment

•Effective communication thru diverse media

•Diverse offering of cultural events and exhibits

•Recreational opportunities

•Vibrant neighborhoods and healthy business districts

•Maintain natural environment and unique assets

•Safe, accessible, bicycle and pedestrian friendly

•Public transportation

•Regional connectivity

•Convenience of public services

BFO Step 5: Inviting and Preparing Offers

• Internal agencies (and maybe others) create offers as responses to the Requests for Results

• Offers explain how proposed program or activities will achieve desired results - a performance commitment at a price

• Offers assume no guarantee of funding based on historic funding levels

• Offers are opportunities for change – New, innovative practices encouraged

Offers need to explain links in the priority-strategy-program value chain

• Offers need to show the link between what we spend money on (our activities) and priority results

• Value for citizens means getting results at a good price, so efficiency matters too

• Offers (programs) must include measures of performance so later performance can be compared to the upfront commitment

The concept of buyers and sellers

Buyers:

• Taxpayers and citizens

• Elected representatives

• Results Teams that “wear the citizen hat”

Sellers:

• Departments • Partnerships (of

departments, of departments and others)

• NGOs

What we’ve learned about preparing offers

• Leadership should be clear about offers they want to see and assign responsibility for creating these offers

• Coaching makes a big difference: Ask “what would you really like to do?”

• Innovation is difficult • Departments have been well trained to talk

about inputs, but not about results

The BFO logic model

Inputs Purchasing Strategies Outputs Community

Outcomes

To perform a level of activities, we need to provide people, materials, equipment, etc.

To get good program results, we need to do a certain level of activities

To produce priority results, we need to pursue effective strategies

We need to produce priority results

Program Outcomes

To pursue these strategies, we need choose good programs and get good program results

Step 6: Ranking Offers

• Buyers (Results Teams) seek the most for the money – what is most likely to achieve the desired result?

A typical ranking process

• Results Teams do first ranking of the offers in each priority area

• At this point mandates and restrictions on funding sources ignored

• Feedback given to departments about their offers so they can be improved for the second round of ranking

Second Round of Ranking

• Based on feedback and first ranking departments improve offers or may be allowed to propose new offers

• Mandates, funding sources are factored in at this point

• All team rankings are recommendations to decision makers!

55

Spokane Example: Buying Learn and Grow Offers

BFO in Practice: Ranking in Savannah and Roanoke

57

Neighborhood Vitality Offers • Home Purchase Program • Park Maintenance • Flood Mitigation • Urban Forestry • Tree Ordinance Admin • Sanitation Code

Enforcement • Property Maintenance Code

Enforcement • Development Permitting &

Inspections • Assistant City Manager – PD • Clean Sweep/Derelict Rental

• Housing Improvement Program

• Sidewalks/Curb & Gutter ADA

• Playground equipment maintenance

• CDBG Planning/ Implementation

• ROW Vegetation Maintenance

• Historic Preservation • Neighborhood

Documentation Project

Ranking offers – Results teams seek the best outcomes for the money

• Forced ranking process (e.g.,15 offers only 5 can be “excellent”, 5 “very good” and 5 “good”)

• First round ranking ignore mandates and revenue sources

• Start buying from the top and draw a line when money runs out

• Send offers back to “sellers” after round one with suggestions for improvement

59

Good Nutrition Priority (Example)

• GN-01 We seek offers that provide vegetables for neighborhood children. Specifically vegetables that: – Have a high vitamin and fiber content – Are locally grown – Are versatile (can be used in soups,

salads, cooked, or eaten raw) – Children will eat (e.g., they taste good)

Forced Ranking Process

Score Bob Rochelle Willie Stephanie Charles Joe Chris

Broccoli G V E E E E E

Squash V G V V V V V

Tomatoes E G G E V V V

Carrots E V E E E E E

Brussel Sprouts V G G G G G E

Celery E E V V G G G

Parsnips G V E V E E G

Peas V E G G G G V

Onions G E V G V V G

E = Excellent; V = Very Good; G = Good

Forced Ranking Process Round 1


1 Carrots 20 3 2 3 3 3 3 3

2 Broccoli 18 1 2 3 3 3 3 3

3 Parsnips 15 1 2 3 2 3 3 1

4 Tomatoes 14 3 1 1 3 2 2 2

5 Squash 13 2 1 2 2 2 2 2

6 Peas 12 2 3 2 2 1 1 1

7 Celery 12 3 3 1 1 1 1 2

8 Onions 12 1 3 2 1 2 2 1

9 Brussel Sprouts 10 2 1 1 1 1 1 3

E = 3; V = 2; G = 1


1 Carrots 20 3 2 3 3 3 3 3

2 Broccoli 18 1 2 3 3 3 3 3

3 Parsnips 15 1 2 3 2 3 3 1

4 Tomatoes 14 3 1 1 3 2 2 2

5 Peas 13 2 1 2 2 2 2 2

6 Squash 12 2 3 2 2 1 1 1

7 Celery 12 3 3 1 1 1 1 2

8 Onions 12 1 3 2 1 2 2 1

9 Brussel Sprouts 10 2 1 1 1 1 1 3

Forced Ranking Process Round 2

E = 3; V = 2; G = 1

Example of process

I want to be safe and feel safe from crime, fire and other hazards anywhere in the community.

• Safe Neighborhoods • Well-Designed &

Maintained Infrastructure • Public Education • Successful Children • Multi-Agency Engagement

• Effective Communication Systems • Appropriate & Timely Deployment • Interagency Cooperation • Capable Response & Recovery

• Enforcement of Codes & Laws • Offender Accountability • Auxiliary Services

• Effective Plans • Trained, Equipped &

Practiced Responders • Effective Emergency

Warning Systems • Public Education • Inter and Intra-Agency

Cooperation

Primary Factor: Prevention

Primary Factor: Responsiveness

Primary Factor: Preparedness

Primary Factor: Enforcement

Indicators:

• Response Time to Calls for Service for Emergencies

• Results of Citizen Survey

• Part I Crime Rate (by type & by neighborhood) • Casualties and Value of Property Loss from Fire and Other Hazards

Reduce Risk

Increase Protection

Public Safety Results Team Revised 21 April 2009 Other Hazards include natural & man-made disasters, structural

hazards, vehicular & pedestrian hazards, and mass public gatherings.

Public Safety

Public Safety Results Team Members

• Jerry Cornish, Information Technology • Gerry Long, Metro • Ben Morse, SF&ES • Carol Bell, Central Services • Jennifer Payne, Citizens’ Office • Barry Baker, Recreation Services • Luciana Spracher, Research Library • Martin Fretty, Housing • Brian Hollis, Risk Management • Julia Durrence, Budget

• Response Time to Calls for Service for Emergencies

• Citizen Perception of Safety • Part I Crime Rate (by type & by

neighborhood) • Casualties and Value of Property Loss

from Fire and Other Hazards

Rank Offer Number Offer Name Amount 1 101-4210-01 Police Patrol Operations $28,268,243 2 101-5140-07 Fire Operations $21,186,088 3 101-5101-04 Fire Training $344,933 4 241-4251-02 Consolidated 911 Emergency Dispatch Center $5,294,148 5 101-4262-02 Police Training Unit $932,060 6 101-5101-01 Fire Administration $752,772 7 101-4201-01 Police Bureau Management $755,062 8 101-4220-01 Police Investigations $6,518,370 9 101-4220-02 Police Forensics Services $1,620,188

10 101-5101-02 Fire Prevention Program $581,251 11 101-4240-01 Police Support Services $3,202,742 12 101-1120-01 Recorder’s Court Services $2,026,029 13 101-4210-03 Police Traffic Enforcement $641,561 14 104-5155-06 Fire Hazardous Materials Unit $404,944 15 101-1109-01 Emergency Management Coordination $105,412 16 101-4261-01 Counter Narcotics Team (CNT) $3,149,888 17 101-4231-01 Police Traffic Investigations Unit $1,499,325 18 101-2103-01 Vehicular/Pedestrian Traffic Flow & Safety $2,465,852 19 521-3104-02 Fire Hydrant Testing & Maintenance Program $457,951 20 561-1113-04 Red Light Camera Management and Enforcement $427,325 21 101-4201-03 Police Public Information Service $212,542 22 101-2103-03 Street Lighting Maintenance and Operation $3,446,193 23 101-2104-02 Stormwater Conveyance Systems Maintenance $2,849,037 24 101-4264-01 CrimeStoppers $227,429 25 101-4201-02 Police Savannah Area Regional Intelligence Center $1,400,344

Priority List continued 26 101-2104-04 Stormwater Pump Station Maintenance $1,099,598 27 101-2104-03 Stormwater Conveyance System Repair $772,263 28 101-4201-04 Police Court Liaison $89,068 29 101-4262-01 Police Internal Affairs Investigations $798,123 30 101-4235-01 Police K-9 Unit $538,538 31 101-4233-01 Police Marine Patrol $728,973 32 101-4237-01 Police EMS Coordinator $95,390 33 101-4230-01 Police Special Operations Administration $579,145 34 101-4250-02 Police Records Service $1,330,808 35 101-2105-03 Street Repair and Maintenance $1,342,320 36 101-4262-03 Police Recruiting/Hiring Unit $426,531 37 101-4236-01 Police Animal Control $820,052 38 561-1113-01 Public Transportation Regulation Program $344,933 39 101-4250-03 Police Customer Service Desk $498,914 40 101-4210-02 Police Crime Prevention $421,686 41 101-5101-03 Fire Public Education/Public Information $86,333 42 101-2104-01 Stormwater Capital Projects Engineering $538,894 43 101-4263-01 Offender Reentry Services $1,270,162 44 101-4265-01 Offender Re-entry-Job Development $288,002 45 101-4234-01 Police Mounted Patrol $530,537 46 101-0150-02 Neighborhood Traffic Calming Program $54,500 47 101-4232-01 School Crossing Guard $256,240

TOTAL $101,705,666

Enhanced Purchases

Partially Funded Services •Significant reduction in funding for both SIP and Work Ventures •No impact in Level of Service due to creative application of Dept of Labor stimulus grants •7 sworn officers will move from SIP to the street

•School Crossing Guards •Service will be provided by School Board with subsidy from the City during transition of service provision responsibility

Items to Evaluate Next Year

• Take home vehicles • Increase fiscal responsibility in Precincts

and Fire Stations • More effective Overtime systems • Cost-sharing for events • Combine Police front desk

with 311 • Fuel efficiency

BFO Step 7: Decide What to Buy

– Results Teams do final ranking of offers based on what contributes most to achieving the priority

– Decision makers get involved at this point to decide what to buy

– An entire “shopping cart” of programs must make sense for the community

• Typically some rankings change and funding moves among priorities at this stage

– The final package becomes the proposed budget.

Final Rankings = Proposed Budget

• Team recommended rankings given to CEO

• CEO looks at entire budget across priorities and may move money and programs

• We’ve learned that there are always changes but not usually large changes (a 6% shift of dollars among priorities in Redmond, for example)

BFO Step 8: Present, Discuss and Adopt the Budget

– Present the Budget as “keeps” not “cuts” – Budget is organized around priorities, not

departments – Council has information on offers and rankings – In deliberations, focus is on what works to achieve

the priorities – Debate what works best (do you agree with the

rankings?) – Single-issue advocates must say what “above the

line” services is less important than what didn’t get funded

Implementing the Budget and Tracking Performance

• Performance agreements negotiated with department directors

• Method for monitoring developed • Performance management system

needed to track and report performance

Organizing BFO Teams/Roles • City Council • Mayor/City Manager • Guidance Team (optional) • Steering Team • Results Teams • Process Support Team

A Typical BFO Process Structure The Public

Mayor or Manager

Results Team 1 Results Team n

Steering Team

Results Team 3 Results Team 2

Process Support Team

City Council

Governing Body

• Sets price of government • Decides citizen priorities • Provides comments on Requests for

Offers • Conducts budget discussions based on

what works to achieve priorities • Makes final budget decisions • Supports the process

CEO

• Champions the process and assigns staff to carry it out including Results Teams

• Approves requests for results • Proposes a budget to elected body based on

the rankings (but may revise) • Trusts the process and uses results in

proposed budget • Communicator-in-chief: Regularly updates stakeholders

Guidance Team (Optional)

• People respected in community and trusted by elected leaders

• Advises elected leaders • Assures legitimacy and integrity of

process • Always asking - Does the process have

value?

Results Teams

• Composition varies, but you want a combination of expertise and strategic thinking

• Pick your “best and brightest” • A few members from outside the organization

can be helpful in getting “outside the box” • Wear a “citizens hat”

Project Team • Composition varies, but includes budget

staff • Oversees process and communications

--- reviews materials, identifies problems, etc

• Organizes internal and external communications including rumor control

How Long Does it Take?

• BFO has been done in 10 weeks and as long as 9 months

• By starting early you have more time to get the tasks done and less stress

• You may need to re-think your traditional budget calendar

Assessing BFO Readiness • Do you have the time? • Do you have the talent? • Are your elected officials on board? • Do you have support of top

management? • Do you have the technology? • Can your organization deal with change? • Do you have a communication strategy? • Can your organization deal with the fact

that it is an art not a science?

Lessons Learned… • Get governing board bought in early • Determine level of outside help you need • Build off existing foundations where you can

(e.g. performance measurement, citizen input)

• Put the “best & brightest” on teams – don’t choose by titles

• Communication is key throughout process • Must continue to challenge the status quo • You can’t do it part way

Unanticipated Consequences • New leaders emerged • The level of discussion and debate in the

organization has elevated • Finally linked performance measures directly

to results • Built tremendous capacity throughout the

organization • Level of understanding and cooperation

between departments increased substantially • Elected officials feel much more

knowledgeable and involved in budget process

There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Nicolo Machiavelli

Budget Process

Budget Development


LEAN Six Sigma

Process Changes

We responded by

• Reduced capital plan by over 40% • Maintained capital infrastructure • Limited growth of new ongoing

expenditures • Built adequate reserves • Invested in neighborhoods and

economic development

We have to Change the Culture to Change the Game

• Accountability, Diversity, Customer Service • Young professionals • Resiliency approach • Shift culture to sense of individual

responsibility and empowerment • Equip all employees with tools needed to

make change happen

What is Lean?

Delivering the most value to the customer in the most efficient

way

Lean Goals • Improve quality • Eliminate waste • Minimize cost • Reduce time • Improve services

Remove activities that don’t add value Continual improvement

Our Approach to Lean Thus Far

• Two-Pronged Approach – Senior Design Projects

• Virginia Tech – Blacksburg • City Departments • Greater Roanoke Transit Company (GRTC) • Roanoke City Public Schools • Management and Budget

– Internal Education Plan • Virginia Tech – Roanoke Center • City Departments • Human Resources • Department of Management and Budget

VT Senior Design Projects

• Collaboration with Virginia Tech • Trained senior ISE students with faculty

advisors • Internal staff development – overseeing

projects • Free up internal staff time

Senior Design Technical Areas

• Business process improvement • Capacity planning • Data management • Ergonomics of human factors engineering • Facilities planning and/or design • Lean methods • Logistics • Materials handling • Product design or development • Quality or reliability • Scheduling • Supply chain • Training design or redesign

Senior Design Projects • Police

– *Civilian Employee Workflow Analysis – Crime Analysis Unit and Administrative Staff

Review – *E-Summons Workflow Analysis and

Implementation – *Technology Analysis

• Social Services – Streamlining Intake Services

Senior Design Projects (cont’d)

• Planning, Building and Development – E-Submissions – Paperless Permitting Application – Comprehensive Development Review plan review

• Transportation – Right of Way Mowing

• GRTC – Inventory Control

• Roanoke City Public Schools – *Grounds Inventory Management

Internal Leadership Education on Lean Management

• VT Lean Process Management Program • Lean foundation and learning using Lean tools

– Participants prepared to: • Conduct Lean projects in their work area • Progress to Lean Six Sigma (LSS) certification

• Core Lean Team trained • Support for Lean processes and projects

throughout the organization • Continual improvement with support and Lean

expertise

Internal Leadership Education and Lean Six Sigma

Management • Second phase • Lean -> Lean Six Sigma

– Voice of Customer – Process Analysis & Improvement – Employee Engagement – Statistical Root Cause Analysis

• Executive Support

Improvements

• Efficiency gained (time) • Hard cost savings • Estimated salary savings • Processing times • Form efficiency • Standardization • Use of technology

% Time Reduction

The Lean Six Sigma Model • Lean Six Sigma training and certification

– Statistical, analytical method focused on improving quality and reducing defects

– Participants prepared to utilize tools and techniques focusing on customers and quality

• Nationally recognized Green Belt certification • 19 participants in 3rd training cohort each

beginning a project; graduation planned for spring/summer 2015

LSS Organizational Structure and Support

• Executive Team – City Manager – Assistant City Manager for Operations – Assistant City Manager for Community Development

• Steering Committee – Constitutional Officer – Council Appointed Officer – Community Development Cluster directors – Operations Cluster directors – Human Resources staff support – Department of Management and Budget staff support

LSS Support Duties • Executive Team

– Vision and oversight – Steering Committee composition – Quarterly LSS SC meeting

• Steering Committee – Communication – Promote collaboration – Project assignments and success tracking

Benefits of the Lean Six Sigma Model

• Employee benefits: – Highly valued skillset – Portfolio of projects – Leadership development and project

management skills – Demonstrated organizational value – Competitive skills – Career enhancement

Benefits of the Lean Six Sigma Model (cont’d)

• Organizational benefits: – Customer service improvements – Cost reductions and excellent ROI – Improved business processes – Success replication – Enhanced employee engagement

Ultimately, the organization benefits from

• Improved quality • Reliably repeatable successes • Reduction in defects • Elimination of waste • Minimized cost • Reduced time • Improved services

Budget Development


LEAN Six Sigma

Process Changes

Thank you! Mike Shockley

[email protected] 540-853-6403

budgeting for outcomes/lean: a better process for better

Documents