Using a service-level budget to evaluate and prioritize your government's goals.

• Author: Munro, Melinda

It's a scenario many of us are familiar with. Participants at a municipal budget discussion are talking about funding an upgrade of streetlights from incandescent to LED. The general manager of social services is frustrated by what she sees as an endless engineering debate; it just doesn't seem as important to her as the long list of people waiting for social supports.

Governments have a limited amount of money to spend, and therefore must determine their spending priorities--but that process can be difficult. Many governments lack a strong statement of priorities or a specified way to rank them. Governments are complicated, and it can be challenging to prioritize the long list of important, but seemingly disconnected, issues that arise at budget time. A single municipality can have more than 500 items in its priority-based analysis.

Some government decision makers see the primary mandate of the public sector as developing and maintaining infrastructure, others focus on public safety, and so on. Given these differing viewpoints, how do we resolve the question of what gets funded?

The answer is to analyze the relationship between your government's goals and its spending.

KNOW YOUR GOALS

Oscar Wilde said, "A fool is a man who knows the price of everything, but the value of nothing." Knowing the price of things is not enough; we need to understand how our spending priorities affect the strategic priorities we establish in our communities. Evaluating the cost of government is a complex accounting exercise, but before we even get to the math, we need to know what we're counting, and why.

Every government has high-level strategic goals for the community they serve. These encompass a wide range of social supports, community services, and transportation alternatives, as well as the promotion of an active lifestyle. It's common for a government to state its goals in broad terms, which is not itself a bad thing; we gravitate toward positive statements of the future with which we can all agree. But broad and general goals are difficult to cost, deliver, and evaluate. More specificity is needed.

Services, Outputs, and Outcomes. Once the broad goals are stated, it is the job of the government's administrators to identify the dials or levers the municipality can manipulate to achieve results. This is where things start to get more complex. It is helpful to distinguish among services, outputs, and outcomes. Services are the dials or levers can use to adjust to deliver different outputs. Outputs are specific and measurable, like acres of parkland or nights in a homeless shelter. Collectively, outputs create the conditions that enable outcomes.

For this exercise, your main area of focus should be services. Services are not the chart of accounts, nor are they the organizational chart. Such tools can provide clues, but services are "sets of processes, activities, and resources that together deliver a valued, measureable, and repeatable output to a measureable and repeatable client." (1)

This definition comes from a business reference model called the Municipal Reference Model, which was developed in Canada. The concept of the business reference model will be familiar to some accountants and information architects as critical to understanding the complex linkages between processes and activities, and how they create business value. This idea is considerably less well known in the public sector, which is why the Municipal Reference Model is so valuable--it was developed by government, for government.

Service Inventories. You can use the Municipal Reference Model (or any other business reference model you prefer) to build your service inventory, which will probably comprise more than 10, but less than 100, services. In the service inventory schematic shown in Exhibit 1, the right side represents the organizational chart. This is the stewardship view, showing who is responsible for money...