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Getting ready to switch to Priority Based Budgeting

In a presentation to Riverside City Council next Tuesday, the city manager’s office will provide an update on how Priority Based Budgeting (PBB) is working for the city’s line items.

The tool was approved earlier in 2020 as the preferred method of organizing the city’s budgeted items each fiscal year. Donna Finch, the principal management analyst for the city manager’s office, said that PBB is not yet used for decision-making purposes. However, the city used raw data and recognized kinks they should fix before fully implementing it in the fiscal year 2022-2024 budget.

The methodology is a link between a city’s strategic plan and its budget. PBB not only identifies the cost of all city programs but categorizes and assigns them to a scale of financial priority. The main questions it answers are what the city does in terms of services and programs, the cost and whether or not they align with Riverside’s strategic priorities.

Finch said the city established the PBB system in a few steps. The first was to take inventory of the programs and services funded across every city department, totaling 606. The second was to determine the true cost of each program over the fiscal year. Third, each city department assigned scores to their programs based on alignment with the city council’s strategic priorities and the city’s Strategic Plan.

Once those departments rated their services on a one-to-four number scale in which “four” communicates, “most essential,” 15 peer-review teams assessed them and gave their own ratings. Each of the 15 teams was made up of three people from across all city departments, who were assigned to their team by the city manager’s office.

Finch said that if a department’s score is not aligned with the score given by the peer-review team, the latter takes precedence.

“There’s a lot of fear that an important program is going to lose funding because it doesn’t get a high score,” Finch said. “But it just allows us to see what we’re spending our money on through the lens of the Strategic Plan, it’s just a decision-making tool.”

Of the 606 programs, 93 of them were categorized as “most aligned” with the Strategic Plan, while 234 were labeled “more aligned,” 172 were labeled “less aligned” and 107 of them– “least aligned.”

“If we find ourselves in a budget deficit and needing to adjust our resources, this helps in the decision-making process,” Finch said. “But it’s not a blanket, ‘We’re going to shift everything.’”

Next month, the city will begin its second-year process to stabilize and finalize PBB, to be ready for Fiscal Year 2022-2024 decisions which begin in November.

Finch will deliver the office’s presentation to the city council during their 1 p.m. discussion session on June 22.