Better budget management: financial modeling and maximizing existing resources in Glendale, Arizona.

• Author: McClendon, Charles

An action plan educated the council, management team, and many other city employees about the importance of integrating fiscal policies, financial planning strategies, and forecasting information.

Each year the Government Finance Officers Association bestows its prestigious Award for Excellence to recognize outstanding contributions in the field of government finance. The awards stress practical, documented work that offers leadership to the profession and promotes improved public finance. This article describes the 1997 winning entry in the policies and procedures subcategory of the budgeting and financial management category.

Until 1992, the budgeting process in the City of Glendale (population 186,500), Arizona, generally resembled that of most southwestern municipalities of comparable size. In the face of dwindling resources and increasing citizen expectations, conflict and competition for funds were an integral and seemingly unavoidable part of the budgeting process. The harder the economic times, the more difficult and adversarial in nature budgeting became. The six-month budget cycle took up hundreds of hours of council, city manager, deputies, and department managers' time and involved numerous professional and support staff. Most of the technical budget and finance presentations to city council were virtually unintelligible to many local residents and some staff members who attended. The general view of the budget process was that of a painful yearly exercise inflicted on city staff.

Within five years, however, the City of Glendale has successfully improved and enhanced its budgeting process from the perspectives of utility and outcomes. Attitudes toward budgeting have evolved into viewing the process as a functional learning activity that has been woven into the fabric of the organization at many levels. The innovative steps in budget development that spurred this new budgetary culture were

* revitalizing three key strategic documents - the strategic financial plan, city finance policies, and the five-year financial forecast - and educating the staff in how to read and apply them;

* ensuring that the guiding principles in each document are consistent with and strongly reinforce each other;

* integrating the underlying philosophy, concepts, and policies contained in these documents into all levels of city government throughout the budgeting process; and

* publishing the documents in its annual budget so that citizens, the news media, and other readers will have the opportunity to learn and understand more about the financial environment and its effects on the government's operating capacity and to participate more fully in the decision-making process.

A Painful, Volatile Process

Prior to its redesign, the budget process started in January with the mayor and six council members establishing their individual and collective goals, objectives, and priorities for the year. The council's goals, the city's overall financial status, predicted local and state revenues, and growth-related service and personnel needs were analyzed and discussed with the city manager and the management team. Administrative controls were formulated to evaluate departmental supplemental requests that might permanently impact the "ongoing" base budget.

The city manager and the management team communicated council goals and objectives to individual departments, which then developed their ongoing budgets using their prior-year base budget as the starting point. One-time expenditure requests and requests to increase existing service levels, add or reclassify positions, or fund new services were submitted through supplemental budget requests.

In order to reach a balanced budget, as required by Arizona law, the management team had to work its way through every department's budget. A large volume of competing supplemental requests had to be reviewed and either...