Yes, it’s Important to Know How to Create Your Government Budget
Working in the technology side of government operations has forced me to be creative in budget development. It is important to maintain a high-level of operational integrity while supporting organizational innovation. It’s about walking the line between operational funding and budgeting for innovation. These innovative projects are what allow the organization to be successful and efficient.
Always Do Zero-Based Budgeting (ZBB)
“Zero-based budgeting” is a method of budgeting in which all expenses must be justified for each new period. The process of zero-based budgeting starts from a “zero base.” This mean every function within an organization is analyzed for its needs and costs. This approach to budgeting has always allowed me to re-evaluate my spending.
This is helpful in two ways. First, it will allow you as a manager to be intimate with the line items in your budget. Many people manage large budgets where ZBB may be laborious or difficult. However, as a manager with a fiduciary responsibility you should take the time to review your budget line items. Secondly, ZBB provides you the opportunity to re-allocate funds to areas where they are needed most. In my opinion, the correct line iteming of your budget allows you to have candid discussion with your fiscal officer and gain their support for your work. It’s hard not to respect a manager who knows what money they have, why they are spending it and why there may be positive or negative variances.
Identify Operational vs. Project Budgets
Identifying what line items are operational vs. one-time money is a good thing. This will help you know what items you will see as re-occurring charges. While taking a zero-based approach will aid you in gaining this knowledge, itt is also important to communicate these differences to your budget and fiscal officers.
Communication with your fiscal officers will help them build a mental map of your budget. More specifically, it will allow them to understand what they will see year after year vs. money only allocated for a year or two. Most importantly, it allows you as the manager to start building an understanding of your operational vs. capital expenditures. For example, early in the innovation process you will see capital line items. As you operationalize these innovations, you will see the costs migrate into operational costs. Knowing and planning for the ongoing cost of ownership of the services is key in building accurate budgets.
Bringing it Together
Above are a couple of quick pieces of information that have allowed me to be successful in developing budgets. These methods have allowed me to develop accurate spending projections that are supported across the organization. Knowing what you’re buying, how you are buying it and what it will cost on an ongoing basis is important. Most importantly, however, creating your government budget it will help you win the support of your finance/budget officers, your executive management and your elected officials.
Garrett Dunwoody is part of the GovLoop Featured Contributor program, where we feature articles by government voices from all across the country (and world!). To see more Featured Contributor posts, click here.