By: Grant Davis, CPA, and David Roberts
Is your annual budget process a strategic roadmap or just a “last year + 5%” calculation?
Many local governments fall into the trap of traditional incremental budgeting because it feels safe. However, this “status quo” approach often masks systemic inefficiencies, outdated assumptions, and makes it nearly impossible to reallocate funds to emerging priorities, issues that often compound year after year. How can you break this cycle of cultural inertia and move toward a Value-Based Budgeting model?
Shift From Payroll to Performance
A core aspect of this process is the separation of “People” (Payroll) and “Non-People” (Operational) costs, and includes assessing assumptions that have been baked into the budget process for years to articulate measurable outcomes through the most advantageous methods available.
- The Goal: Apply Zero-Based Budgeting principles to operational costs.
The Result: By justifying every non-payroll expense from scratch, your organization can identify waste and ensure that taxpayer money is following current needs, not legacy assumptions. Typical organizations identify between 15%-20% of outdated spending that can either be saved or redirected towards current strategies.
Better Data = Better Budgets
If you have good data governance, you’re going to have better data quality, and that leads to better budgeting decisions.
Without a formal data governance policy, you are budgeting in the dark. A Data Governance Framework should be built on three essential pillars:
- Clear Ownership: Assigning accountability for data accuracy to specific department leaders.
- Stress Testing: Moving away from “one-size-fits-all” updates and instead focusing on the reliability of high-impact financial and non-financial data.
- Cross-Training: Bringing “fresh eyes” to data sets to catch anomalies that legacy systems often miss.
Transparency as a Competitive Advantage
Transparency isn’t just about compliance—it’s about building a narrative of success. Well-run governments don’t wait for an annual audit; they provide monthly budget-to-actual reports to internal and external stakeholders.
Start incorporating Key Performance Indicators (KPIs) into your public reporting. Instead of just showing a dollar amount, show the service volume and outcomes. When you share both your successes and your challenges, you build a level of public trust that makes future budget approvals much smoother.
Partner Perspective: The “Virtuous Cycle”
When you institutionalize data governance, you create a virtuous cycle. Reliable data leads to a transparent budget; a transparent budget leads to public trust; and public trust gives you the mandate to innovate.
Our team is ready to help you transition your legacy systems into a modern, data-driven engine.
How Can We Help?
Are you facing resistance to changing your legacy budget processes? Let’s schedule a strategy session to discuss:
- Implementing a Zero-Based Budgeting pilot.
Drafting your formal Data Governance Policy.
Building a non-financial data warehouse for your KPIs.
Reach out to your primary relationship partner today, or call 800-277-0080 to get started.
