Today’s Morning Buzz is by Katie Ludwig, Director of Resource Development for the Government Finance Officers Association (GFOA). Connect with Katie on LinkedIn.
What I’m Reading: Abundance by Ezra Klein and Derek Thompson and The Woman in Suite 11 by Ruth Ware (I love a good mystery/thriller!)
What I’m Watching: The Summer I Turned Pretty (I’m on Team Conrad!)
What I’m Listening To: The Ezra Klein Show (I always learn something listening to this podcast) and anything by Taylor Swift
My older son, who is about to start his second year of college, was recently surprised to learn that I majored in English and political science as an undergrad.
He couldn’t understand how I got a job working with budgets and numbers when my majors had nothing to do with those things. I explained that my English degree was about analyzing and understanding stories and that the best local government budgets tell a story.
I got the sense that he was a bit dubious of my explanation, but this is the same message I share when I teach budgeting courses for GFOA: it’s about the people, not just the numbers.
In 2019, GFOA released a book called “Financial Foundations for Thriving Communities,” written by my colleague Shayne Kavanagh and Vincent Reitano. In a nutshell, the book presents a model for how local governments can achieve financial sustainability while providing the programs and services their communities need to thrive.
You might expect the book to include step-by-step guidance on how to forecast revenue, estimate expenditures, and cut costs. If so, you’d be mistaken. Rather than focus on the technical aspects of developing and managing a financial sustainable organization, the book describes the kind of organizational culture a local government needs to have in place to help it build and support a thriving community that is financially sustainable.
The framework is organized around five pillars:
- Establish a long-term vision
- Build trust and open communication
- Use collective decision-making
- Create clear rules
- Treat everyone fairly
In nearly every local government budgeting class that I teach, we discuss these pillars. We talk about why they’re important and how you can strengthen each of them in your organization. For example, little things like having monthly check-ins between the finance/budget team and each of the operating departments can really help with building trust.
Similarly, developing a structurally balanced budget policy and presenting that to your governing body for discussion and approval can go a long way toward creating clear rules and getting everyone on the same page about why financial sustainability is necessary.
I think some people come to GFOA budget trainings looking for a magic tool or Excel model that will solve their financial woes, but what they learn as we talk through the pillars is that there’s no “easy button” for putting together a structurally balanced budget that meets the needs and wants of the community. It requires having messy, complicated, difficult conversations with internal and external stakeholders, and it often means everyone won’t get everything they want.
Working on these people issues makes the numbers a bit easier to tackle.
I’m hearing from more and more finance and budget directors these days that their elected officials have no interest in either cutting programs and services or in raising taxes to balance their budgets.
I’m not sure “do more with less” (or even “do the same with less”) will be enough to get local governments through the serious financial distress that they may be facing over the next 3-5 years. I’m not naïve enough to believe the Financial Foundations Framework alone can magically solve this problem, but I do think it can be a useful tool to get people thinking about how to approach budgeting differently. In fact, the pillars are what led GFOA to launch its Rethinking Budgeting initiative, which I’ll highlight in a future post.
In the meantime, I’m holding out hope that my explanation of how and why I got into local government budgeting will inspire my son to follow in my footsteps. A mom can dream, right?