Beyond Bean Counting
( from Maine Townsman, January 1993)
Though the following article may be somewhat dated, it is still believed to include information that may be useful to the reader.
In the best of [all] possible worlds, budget committees should be skilled in asking the right questions regarding the budgets they are reviewing. They need to go beyond merely understanding the numbers presented to them. They need to go beyond merely reducing them when they appear to be out of line. They need to ask probing questions leading to innovative solutions.
The warrant committee in Bar Harbor is a good example of such probing and innovation. Last year, faced with escalating solid waste costs, it asked the towns largest generator of waste - Jackson Laboratory, a world famous cancer research center with 1,400 tons of wood shavings from mouse cages to dispose of [each] year - to one of its meetings to explore disposal alternatives.
Working together, they arrived at a solution that saved the town about $30,000. By switching from incinerating the material at PERC to composting it at Hawk Ridge, it was able to reduce costs from $50 a ton to $14.74 a ton. Not only did they save money; they found a more environmentally acceptable alternative.
Encouraging this kind of role in the budget planning process is the focus of The Finance Committee Primer, a publication of the Association of Town Finance Committees in Massachusetts.
In addition to spelling out the basics of the budget process in local government, the Primer is chock full of the types of probing questions budget committee members might wish to consider asking, if they haven't been in the practice of doing so already, as they make their annual review. Each question in the Primer is followed by a brief explanation of the context and importance of the question.
There are two types of questions in the Primer:
- basic questions which are designed to provide a complete picture of each departments activities, personnel, operating and capital needs; and
- questions beyond the basic budget that deal with other aspects of financial management, such as debt issuance, tax collections, cash management, insurance, accounting, investments and assessing.
A few examples of those questions follow:
- Are any positions or other expenditures partially grant-funded or directly reimbursed by other agencies?
Does the local share of these expenditures increase in the proposed budget?
- What statistics or measures are used to assess the demand for the department's services?
What trends or other events should be considered in projecting future year requirements?
- What costs in the budget do not fluctuate according to the level of service provided?
What costs are variable? Are there opportunities to reduce fixed costs which have not been examined (e.g. energy, part-time personnel, etc.)?
- How do proposed capital outlays compare with previous years budgets?
Have lease purchase options been considered (especially for costly operating equipment) to help level off capital expenditures over several years?
- Has the department explored opportunities for consolidating certain functions with other agencies?
- Have shared staff or shared space been considered to deal with new requirements?
Has joint or central purchasing of supplies been examined?
- Does the town maintain current and complete records on all motor vehicles?
What procedures are used to schedule regular and preventive maintenance and emergency repairs? What systems are used to control and record fuel dispensing?
- What activities could be performed by civilians in the police department?
What are the major assumptions underlying the budget and financial plan for the next fiscal year?
How certain are the revenues? What are the major expenditure problems, uncertainties and policy issues?
- Does the town have a long-term capital improvement program? Is it followed?
What is the impact of proposed capital projects on the annual operating budget?
- What has been the annual current (tax) collection rate in each of the last five years?
- Do the town's accounting system and practices meet the basic objectives of recording all financial transactions and providing timely and accurate reports on municipal expenditure and revenues?