Zero Based Budgeting and the Budget Process:
watching the Novembers issue of the Mayor’s Roundtable I am a
bit concerned about some of the discussion that was on there.
This was mostly about two issues:
zero-based budgeting and the budget process.
Wikipedia definition of zero-based budgeting. Wikipedia defines zero-based budgeting as the following ( from https://en.wikipedia.org/wiki/Zero-based_budgeting )
“Zero-based budgeting approach to planning and decision-making that reverses the working process of traditional budgeting. In traditional incremental budgeting, departmental managers justify only variances versus past years based on the assumption that the "baseline" is automatically approved. By contrast, in zero-based budgeting, every line item of the budget, rather than only the changes, must be approved. Zero-based budgeting requires that the budget request be re-evaluated thoroughly, starting from the zero-base; this involves preparation of a fresh budget every year without reference to the past. This process is independent of whether the total budget or specific line items are increasing or decreasing.”
In zero-based budgeting, every line item of the budget, rather than only the changes, must be approved. Contrasting this to traditional incremental budgeting, departmental managers justify only variances versus past years based on the assumption that the "baseline" is automatically approved.
During the Mayor’s Roundtable zero-based budgeting came up numerous times, however, each time they seemed to have missed the point.
Here are some quotes:
John Bussiculo : “... we go through because at the end of the day, we have to stick to our 2 percent or less so we know what our dollars are it's really just how it's going to get split.”
Mayor Woodruff: “and John are we 0 based?” John Bussiculo: “yes we're 0 based. We go off last year where we were, start from that we don't do anything above 2 percent is all we are allowed. At the end of the day Mike looks at it and says we've got x amount of dollars on that 2 percent and how we split it then just becomes the discussion.”
Mayor Woodruff: “To bring to bring to the council and say let's go over it line by line every item. It really is just a waste of their time”
Based on these quotes it appears that they are NOT talking about zero-based budgeting but rather traditional incremental budgeting.
Again zero-based budgeting requires that the budget request be re-evaluated thoroughly, starting from the zero-base; this involves preparation of a fresh budget every year without reference to the past.
What they are doing is merely going off of last year’s budget, adding 2% and then, per John’s words: “At the end of the day Mike looks at it and says we've got x amount of dollars on that 2 percent and how we split it then just becomes the discussion.” This is clearly NOT zero-based budgeting.
To make matters worse, they also have shortcut the budget process. It seems that the Council doesn’t closely look at the operating budget to go over it.
Per John Bussiculo: ““previously what we did is we spent 6 meetings sitting here going line by line and quite frankly it just doesn't pay us to do it that way. The council puts their time and effort really in at the capital part where the big dollars are now that's where we should put our time and effort because again the operations side you're restricting you know the dollars you can't spend anymore so it makes it much more efficient doing it that way. “
The Mayor backs by stating: “To bring to bring to the council and say let's go over it line by line every item. It really is just a waste of their time”
being admitted here is that our elected officials are not really
going over the Operating Budget.
Also this denies the public the right to witness the budget meetings and to have access to the information that was used to formulate the budget. What are the department heads asking for? What has the CFO done to change these requests?
It also seems to some extent that the Mayor, Council, Administrator, and CFO, leave much to the discretion of the department heads with little pushback. The Mayor Stated: “you've got to trust your departments. You've got to say look we trust you, we believe you know what you're doing come to us with an honest budget. and now you know they say look you know. I had $500 for this last year I spent 2 I don't need 5. “
John Bussiculo added: “one department needed a truck they had in for a truck. We had another department that had a failure and actually needed it, they knew what the problem was, willing to give up their truck for the year to give to the other guys.” So was this a need based? Or a want based request? If they needed the truck then how were they able to work without that truck?
It is clear that the town does not do zero-based budgeting. Per the Mayor’s Roundtable video it seems that both John Bussiculo and Mayor Woodruff were unsure what zero-based budgeting actually was and seemed to refer to traditional budgeting, calling it zero-based.
budget process is
shortcut in a way that reduces transparency and accountability. It reduces the power of our elected officials to go through and approve the operating budget as they are not provided, at least in public, any information to make an educated decision on the content of the budget. The residents are at a similar loss as we lose transparency by not seeing the requests from the departments, and the amount of pushback from the CFO, Administrator, Council or Mayor. To make matters worse is that they are setting the budget to the max ( last year + 2% ) and working to that.
Zero-based budgeting should be implemented in Berkeley Heights and the line by line public review and approval of the Operating Budget by the council should be reinstated.