Current local government budgeting practices.

• Author: O'Toole, Daniel

Survey data from a sample of the Government Finance Officers Association membership delineate the current state of the budgeting art.

What budgeting practices do local governments use today? The answer to this question illustrates the current state of the art of local government budgeting as well as the impact various practices now have on it.

While the budgeting literature contains descriptions of and recommendations for budgeting practices, it includes little information about the extent to which local governments use them. This article examines local government budgeting and provides information, based on data from a recent survey, on current practices, primarily

* the organization and conduct of the budget function - how it is organized and what responsibilities it includes - and

* the use of various tools, techniques, and mechanisms to help prepare, obtain citizen input on, and monitor compliance with the budget - how extensively various tools are used and how influential they are in the budget decision-making process.

Analysis of the relationships between the budget practices discussed in this article and jurisdiction size, type (e.g., city vs. county), and regional location revealed that jurisdiction size has the most significant associations with these practices. Due to space limitations, this article will focus mainly on the relationships between the budget practices and jurisdiction size.

The Survey

The source of information on budgeting practices is a survey of local government budget practitioners which the authors conducted during 1996. The survey questionnaire collected information on not only budget practices but also other aspects of budgeting that are beyond the scope of this article.(1) It consisted of questions in each of the following five areas:

* background information on the respondent and type, size, and regional location of the respondent's jurisdiction;

* the organization and responsibilities of the jurisdiction's budget office;

* the jurisdiction's use of various budget preparation tools, including those pertaining to planning; revenue and expenditure estimating and forecasting; the budget format; and measures of workload, efficiency, and effectiveness;

* the nature of the jurisdiction's budget consideration and approval process, including mechanisms used to obtain citizen input on the budget; and

* tools the jurisdiction uses to set budget policy and to implement, monitor, and evaluate the success of the approved budget.

The survey used a sample of 750 local government budget practitioners drawn from the active membership roster of the Government Finance Officers Association (GFOA). An initial mailing of the survey questionnaire to this sample and a subsequent mailing to those who had not replied to the initial request yielded 510 responses from 510 different jurisdictions, for a 68 percent rate of return.

Respondents were primarily budget officers, finance officers, business managers, clerk-treasurers, and top managers of local governments. Approximately 58 percent of the respondents were employed by cities, municipalities, towns, townships, and villages; about 22 percent were from counties and regional governments; and the remainder consisted of school district officials (10 percent) and special district officials (9 percent). They represented local government jurisdictions located throughout the United States. By Census Bureau region, 12 percent of the responses came from the Northeast, 33 percent from the South, 27 percent from the Midwest, and 28 percent from the West. Twenty-five percent of the respondents are from jurisdictions serving a population of 25,000 or less; approximately 18 percent serve 25,001 to 50,000 people; 18 percent serve 50,001 to 100,000; 16 percent serve 100,001 to 250,000; and 23 percent serve populations exceeding 250,000.

Budget Organization

A key budgeting consideration is how to organize and conduct the jurisdiction's efforts in this area. It includes how to perform the budgeting function and the responsibilities it should encompass. The survey results suggest that the organization of the budget function at the local level typically involves the use of a budget office, with 73 percent of the jurisdictions having a budget office to help carry out this activity. Analysis indicates that the larger the jurisdiction, the more likely it is to have a budget office.(2)

The budget office can be found in a number of different arrangements within a local government's structure. Among the jurisdictions that have a budget office, it is most often in a unit that contains other fiscally oriented activities (54 percent). Other organizational locations reported in the survey are as a separate department (16 percent), as a part of the top manager's office (14 percent), and in a division of administration that also contains sections on general services and administrative analysis in addition to...