Jan 12, 2018 in Business

Redesigning the Budget Process

The council cannot adopt ‘wait till next year’ posture in advancing budgetary change because this will create a serious disruption in work patterns of the council. Finkler, Ward & Baker (2007) says that adopting this strategy will inherently break the routine, preventing normal monthly tasks from being performed on a timely basis. The risk involved in adopting this strategy is that when budgets are prepared annually, they often are based on hazy recollections of the year past. The pervious months start to run together hence it will not capture the specific types of things and requirements of various departments of the council that occur every month much better (Finkler, Ward & Baker, 2007).

In order to achieve a balance between the two budget making processes, budget holders should be encouraged to spend half the time getting the detail of the next three months right. Parmenter (2012) says that the finance committee traditional practice should be encouraged to free up funds for new initiatives that they could not have anticipated at the time of the budget round. The balance between the two can be achieved by ensuring that the budget process is replaced with a new target setting process that comes out of a   quarterly rolling forecasts process (Finkler, Ward & Baker, 2007). This is a more flexible environment and it should be communicated clearly and frequently to the staff and the finance committee.

The most important approach of dealing with Roger Scally is to develop an integrated program planning and financial process to ensure that his contributions are incorporated in the council budgeting process (Novick, Morrow & Mays, 2008).  Owens should propose the use of performance information for accountability purposes. Mayor Johnson should be the general overseer of the entire process implying that he will be directly involved. The other members of the finance committee should be involved in the budget development from the initial stages and not as an afterthought (Novick, Morrow & Mays, 2008). The department heads will play a key role in the entire process and they will be placed in various positions while the council members will be proactive at department level in proposing the budget allocations. 

Because procedural elements other than financial management concerns seem to be the focus of council attention, Owens should not limit the scope of budget redesigning to simply streamlining procedures. Owens should instead begin at department level and work upwards centrally in order to obtain views of all the stakeholders (Novick, Morrow & Mays, 2008). Working upwards will be important in addressing a full range of budget related issues through each of the major departments within the council and obtain technical assistance from the finance staff.  Finkler, Ward & Baker (2007) indicated that the traditional finance committee approach is associated with poor time management and a major cause of work disruption. The approach presents a major challenge of accuracy. Staff-directed budget process involves negotiations hence the back and forth process may give rise to the development of supplemental materials to support the budget. Novick, Morrow & Mays (2008) argues that “during this period politicking becomes fierce due to the conversations and face to face meetings” (p. 213).

Yes. The mandate can be used to address the council tendencies to delay capital expenditures. This is because capital expenditures provide information on how the council pays up for projects. The council should not draw down operating reserves to cover operating expenses but it should cover the costs from a variety of sources such as property tax (Musell, 2009). To a large extend Owens should ensure that  income from property taxes is used well, subject solely to the limits inherent in the extent of the council powers and ensure operating reserves are well maintained. This further ensures that the council programs stay within their allocated spending limits and that the council collects the anticipated revenues (Musell, 2009).

Staff directed budget process is a rational budgeting system where performance measurement is fully integrated into the budget process, which is designed to reduce the micromanagement of inputs by elected officials. This according to Rhee (2009) keeps them focused instead on getting the best results for the public’s money. Rhee (2009) further says that changes in the budget process within the council will reconcile financial and operational accountability. These results into a comprehensive framework for informing budget allocations decisions based on council’s performance.

Yes. Owens can use this change process in the budget making process to encourage department heads to formulate policies. To achieve this Owens, should set up policy planning units in each department in the council. Policy planning units which will be headed by department heads Sapru (2004) says that these units in the council provide inputs for effective policy-making among the various program elements of the department. The policy unit of a department should be designed to encourage policy and operational evaluation. It will provide the department head with staff which can provide independent evaluations on a selective basis (Sapru, 2004). Policy planning units which will be headed by department heads and therefore they will be able to formulate policy and operational goals. 

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