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How Rio Rancho Applies PBB to "Every Aspect of the Budgeting Process"

October 29, 2018

"Priority Based Budgeting is now a tool the City of Rio Rancho is using to meet its goal of being the “best city in the southwest.” - Santina Reichow, ResourceX

 

The City of Rio Rancho, New Mexico first launched priority based budgeting (PBB) in November 2017. PBB was used in the FY18 budget and now the city has transitioned from "implementing PBB" to "applying PBB data" for actionable decision-making.

 

 

With the publication of the city's FY19 budget, PBB data was applied to  "allocate the City’s limited resources in the most efficient and strategic way possible." PBB figured prominently in both the City Manager's Budget Message and the budget itself.  

 

The City Manager's Budget Message states, "As noted in previous fiscal years, the City’s revenue growth has not been sufficient to meet the City’s funding demands. The FY 2019 Final Budget reflects a reduction of $1.1 million in revenue due to the phasing out of the hold harmless distribution (compensation to make up for the lack of gross receipts tax applied to the sale of food and some medical services) from the State, now in its fourth year of a 15-year phase-out plan. Cumulatively the phase-out of the hold harmless distribution will have taken more than $2.6 million from the City’s General Fund through the end of FY 2019. As a result, departmental needs continue to exceed what can be addressed with current resources. This has required allocating the City’s limited resources in the most efficient and strategic way possible. City employees continue to look for ways to limit expenditures and to achieve operational efficiencies where possible."


"In order to accomplish operational efficiencies, the City has adopted the priority based budget
approach. As part of this effort, the City has inventoried all of the services provided to the
community and internally, allocated costs associated with providing those services, and ranked
all services based on the 2017 Strategic Plan. By doing so, the City's scarce resources can be
budgeted based on service priorities and their contribution toward accomplishing the strategic
planning goals and strategies. The priority based budget approach ensures greater transparency
and informed funding decisions
." 

 

 

FY2019 Rio Rancho Budget

 

Within the City's actual budget, there is a 20-page section devoted to outlining how Rio Rancho applies PBB data. Below is a short excerpt and follow this link for the full PBB section plus a complete program inventory ranked by quartile. 

 

"The traditional approach to budgeting has always been incremental, with last year's budget serving as the basis for the budget of the following year. This has typically been done in concert with a zero-based approach, where accounts for certain line items essentially start with zero and every planned purchase is detailed. Unfortunately, these budgeting methods do not adequately address priorities, and do not directly link to strategic goals or performance measurement. As part of the solution to this dilemma, our organization has partnered with ResourceX toward establishing a framework and providing a "new lens" through which the organization can clearly see where opportunities exist - therefore making more effective use of finite resources and continuing to serve in the most effective, efficient and fiscally responsible manner possible."


"The Priority Based Budgeting (PBB) model provides a comprehensive review of the entire
organization's operating budget, identifying and ranking services (programs) offered on the basis
of the community's priorities. The diagnostic process enables policy makers to link funding
decisions to priorities in the strategic plan. The PBB philosophy involves "Results", which are the
fundamental reason an organization exists, and what the organization is in business to provide.
Result definitions detail and expand on the factors influencing the results our organization aims to achieve - and for which all services/programs would then be gauged by and ranked on."

 

 

An Internal + External PBB Perspective

 

Santina Reichow is a Client Support Specialist with ResourceX. And one of many clients she partners with is the City of Rio Rancho. She is well versed in priority based budgeting, as her most recent position was as a Senior Budget Analyst (and PBB Data Super User) with the City of Rio Rancho, NM, leading their implementation and application of priority based budgeting.

 

Santina states, "The Budget Manager has had an incredible dedication to seeing Priority Based Budgeting not just implemented, but used in every aspect of the budgeting process. The first year of implementation was done mainly to create a starting point for future reference. The FY19 budget was the first year where the PBB phases were directly embedded into the annual budgeting process. Staff had to not only consider their annual line item budget requests, but also needed to think about how those budget requests would be allocated to their programs." 

 

"In addition, the concept of “Programs of Interest” was born. Originally created out of a need to fill a budget gap, the City organized and evaluated programs based on the policy questions, and a program’s alignment with results and definitions. With input from department directors and the City Manager, staff discussed options from cost recovery for programs that charged fees, to whether or not the City should continue providing services that are already duplicated in the private sector."

 

"With the FY20 budget development process underway, the budget discussions began first with programs, which is now a standard budgeting practice for the City. In addition, new budget requests above current budget levels, will need to be vetted through the PBB process.  Priority Based Budgeting is now a tool the City of Rio Rancho is using to meet its goal of being the “best city in the southwest.”

 

The 4 Levels of Budget Mastery

 

With Rio Rancho now entering Level 2 of (PBB) Budget Mastery, the city is now actively applying PBB data "to prioritize spending, free up and re-allocate resources from within." 

 

"Resource optimization depends on knowing what you do (programs), how much it costs you to do what you do (program costs), and the relevance of the programs you provide (program priorities). Prioritizing programs allows your organization to realize where resources can be reallocated to optimize the achievement of Results."

 

Excellent work City of Rio Rancho, NM! We look forward to your ongoing PBB success and, in particular, to see how you continue to apply PBB data "to prioritize spending, free up and re-allocate resources from within!" 

 www.ResourceX.net

 

 

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