Running head: A Continuous Process 1

Budgeting: A Continuous Process

James Kidd

University of San Diego

A Continuous Process 2

Budgeting: A Continuous Process

The city of Brownwood, Texas understands that the most important function of the

budget is accountability (Menifield, C. 2013). Accountability and financial responsibility will be

shown through the citys budgeting process. The process will include the reasons for the

recommendations and decisions made while preparing the budget. Both estimates of revenue and

anticipated expenditures by the participating members will ensure the budget is prepared in a

responsible manner.

There are several persons that provide input in the budgetary process. Initially the

department heads are involved, which include the Brownwood Police Departments Chief of

Police Terry Nichols. Also included is my contact, Assistant Chief of Police James Fuller, who is

responsible for the budgetary duties for our agency. Other players in the budgeting game are

the City Manager, Emily Crawford, Finance Director, Walter Middleton, the city council

members, and the citizens of Brownwood.

Several questions were asked of my contact which included the following:

Official start and ending date of the fiscal year.

Length of time allowed for the preparation of the budget.

Type of budgeting model used by the city.

The biggest challenge the contact sees in the budget process.

Many local governments begin their fiscal year in January, July, September, and October

(Menifield 2013). The City of Brownwood corresponds with the federal fiscal year beginning

October 1st through September 30th.

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There must be an acceptable length of time to conduct adequate research, data analysis,

and input among all the participants, before the budget can be approved. The previous budget is

constantly evaluated during the first 7 months from October 1st 2016 to late April 2017. This

planning criteria allow a portion of the previous years budget to be completed in order to have a

more accurate straight-line projection. Between May 2017 to the end of September 2017

department heads must complete budget worksheets and meetings with the finance director, city

council members, department heads, and public hearings must be conducted. Then final

approvals must be made and adopted.

The City of Brownwood (Texas), utilizes a line-item budget, rather than program or

performance budgeting. Charles Menifield suggests that, Line-item budgets are probably the

easiest of the three types to prepare (2013). An advantage of a line-item budget could be that

this system imposes the most control, (Rabin J. & Steinhauer, M 1988) this could also be a

disadvantage due to the control toward the input to the detriment of managing towards results,

(Swanson, C., Territo, L & Taylor, R. 2017). Other advantages included in a line-item budget is

that it is input oriented, easy to administer and understand, and incremental changes mean that

the budget will not be grossly inadequate, (Swanson, C., Territo, L & Taylor, R. 2017).

I observed several pros in the citys budgeting process beginning with the budgeting

model. The city utilizes a hybrid between line-item and program budgeting. The city incorporates

some elements of program budgeting in Parks & Recreation and Community Facilities. In those

two departments separate mini-budgets for different programs which include the aquatic center,

sports complex, and parks, with the facilities being the coliseum and civic center. I support the

hybrid model as I believe the line-item model is incremental and can be attractive to some as the

model is simple and transparent, but can lead to replicating over or under allocation of resources.
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The program budget presents useful information on service delivery and measure outcomes,

performance indicators. Using program budgeting specifically for parks and community facilities

reflects the citys priorities.

The budget cycle appeared to be acceptable as the time allowed for research and the

acquisition of valid data. Firm policies are in place, allowing the best chance for efficiency and

effectiveness. The department heads and finance director advised that they agree with the time

frame in place and can meet the deadlines.

The process allows the involvement of key personnel that are expected to defend their

portion of the budget. Workshops are provided to department heads and worksheets provided.

There are several meetings that involve the department heads and allows them to defend and

justify their requested budget. Chief Nichols is a new chief so he is basically using the

honeymoon phase in an attempt to receive requested funds. He is anticipating the city manager

and council members that have recently hired him to want him to succeed and show him that he

made the right choice in applying to the city. Fortunately, he has also earned a Masters in Police

Administration from Texas State University and has the knowledge to concentrate on the

numbers or budgetary facts. He will be using a political and technical budget strategy.

Some of the cons that I have observed in the process is that there is very little training

provided to the council members. Councilmembers are politicians and may say things during

their campaign that are not financial facts intentionally or due to the lack of knowledge. Our city

council is mostly business people that do have a background in finances, but there are a couple

that are extremely weak in that area. Besides a 1 hour Budgeting 101 class that the city provides,

there will need to a more substantial investment in educating and training the council.
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A recommendation to enhance council member training would be to be proactive. There

are very few citizens that, run for election. The finance director could provide financial and

budget training during their campaign so that the elected official will have an understanding of

the facts, then continue the training as early as possible in their term.

A local governments budget calendar enhances transparency by comprehensively

outlining dates, times, goals and meetings and providing an organized framework to prepare,

approve, implement and evaluate the budget. Citizen participation is extremely important and

should be valued. In some states, there are several provisions for both informing citizens and

seeking input from the public. The finance director files a copy of the proposed budget with the

clerk who must ensure that any interested citizen can inspect the budget. The clerk must publish

notice that the budget is available for citizen review, and make it available to all news media in

the county. Communicating in this way is passive. It may get information out, but does not

provide for a mechanism for receiving citizen input.

Recommendation on improving the citizen participation process would be to utilize

technology and social media. The city should actively reach out to community members in

numerous forms of social media in order to gain participation. Educate the community on the

importance of having a voice in the process.

The city finance team must continually be aware of the importance in maintaining a long-

range perspective. We are experiencing a shortfall this budget year. The forecasting on what

Charles Menifield describes as One of the largest sources of income in a state is the sales tax

(2013). The city cited that consumer spending is down due to online shopping. If the city raises

sales tax, that will push more consumers to buy online. There are several forecasting models to
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choose from. Forecasters should completely understand the revenue source, and ensure that the

variables included in the model are as perfect as possible (Menifield, C. 2013).

Recommendation for forecasting and addressing the decrease in consumer spending. A

time series analysis may not be the best tool in this situation as the online sales are increasing at

an alarming rate which may be difficult to estimate. The Status Quo Model would also be

difficult. Extrapolation Model may be a model to consider. The chosen model and explanation

should be provided in the training portion of the process.

The City of Brownwood utilizes several sub-systems in the budgeting process. These

systems include input, preparation, output, and feedback. The budget process operating

environment allows for a sound bases for decisions and provides acceptable results.
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References:

Menifield, C. (2013). The Basics of Public Budgeting and Financial Management: A Handbook
for Academics and Practitioners (2nd ed.). Lanham, MD: University Press of America.
Rabin, J. & Steinhauer, M. B. (1988) Handbook on human services administration. New York:M.
Dekker. p. 88

Recommended Budget Practices: A Framework for Improved State and Local Government
Budgeting. (1998, January 01). Retrieved April 12, 2017, from http://gfoa.org/services/nacslb

Swanson, C. R., Territo, L., & Taylor, R.W. (2017). Police Administration: structures,
processes,and behaviors. Boston: Pearson Education.
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Time Line in the Budgeting Process

Budget Calendar
Fiscal Year 2016/17

[Planning criteria for beginning budget process have at least 7 months (through the
end of April, 2017 of the budget year completed for more accurate straight-line
projections. Distribute late enough in May to have at least one check run for April
transactions.]

May 9, 2017 Distribute budget worksheets to

department heads.

[Planning criteria for pre-budget process have a meeting with the Mayor and Council
in mid-April to discuss big picture, policy issues to provide staff with direction on the
upcoming budget. Schedule in early May if Council elections occur during the year.]

May 10, 2017 Pre-budget policy meeting with City Council

[Planning criteria for turning in budget worksheets allow DHs at least four weeks to
complete paperwork for their budget requests.]

June 10, 2017 Worksheets due in from department heads

to Finance Director.
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[Planning criteria for budget meetings with DHs (1) plan on having meetings over
three or four days; (2) schedule around City Council meetings to avoid having these
meetings during the same week as a Council meeting if possible; (3) leave sufficient
time (at least 3 weeks) before Council workshops for administrative balancing of the
budget.]

June 21, 2017 Budget meetings with City

Manager, Finance
June 22, 2017 Director and department Thursday
June 23, 2017 heads.
June 24, 2017 If necessary

[Planning criteria on workshops (1) schedule around City Council meetings to avoid
holding a workshop on the same day as a Council meeting if possible; (2) plan on one
day for the workshop, but include an additional day if necessary; (3) leave enough time
between workshops and public hearings to meet requirements of TIT, LGC and charter.]

July 26, 2017 Budget workshops with City Council.

July 28, 2017 (second meeting if necessary)

[Planning criteria on additional workshop may be necessary because the BCAD does
not prepare the effective tax rate and rollback rate until early-August. Also, the BCWID
may not have their water rate available until early-August. We will use estimates for
planning the budget, but if the actual amounts are materially different, we may need
another workshop to reconcile the numbers.]

August 9, 2017 Additional budget workshop with City

Council (If necessary after receiving
effective tax rate, rollback rate and BCWID
water rate.)

[Planning criteria on budget public hearing schedule after early-August so we will have
final numbers for effective tax rate, rollback rate and the BCWID water rate.]

August 23, 2017 Regular Council meeting: (1) Budget public

hearing; (2) Discussion of tax rate,
Schedule public hearing and take vote for record
on proposal to consider tax increase.
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[Planning criteria for tax public hearings, adoption of budget and passing ordinances
(1) schedule on regular City Council meeting dates as much as possible; (2) schedule
around all publication and time deadlines set in TIT, LCG and charter. First PH must be
at least 7 days after publication of notice, which cannot be until after the August 23
meeting.]

Sept. 6, 2017 Special called meeting: hold first public

hearing on tax increase (if necessary *).

Sept. 13, 2017 Regular council meeting: hold second

public hearing on tax increase (if
necessary *).

Sept. 20, 2017 Special called meeting: (1) approve budget

ordinance 1st reading; (2) approve tax ordinance
1st reading; (3) approve utility rate ordinance
1st reading; (4) approve miscellaneous fee
ordinance 1st reading.

Sept. 27, 2017 Regular Council meeting: Approve

ordinances on 2nd and 3rd readings.

* If tax public hearings are not necessary, we will adopt the budget and approve the tax,
utility and fee ordinances on 1st reading during the September 8 meeting. In that event,
no special called meetings will be necessary.