Activity-based budgeting: creating a nexus between workload and costs.

At some point in their careers, executives will need to develop a budget. Indeed, this represents a primary responsibility. A budget is merely a plan described in financial terms. Knowing which budget plan to choose, however, depends on what a manager needs to convey. Many budget styles exist, each with a different purpose. For example, the most common government budget, the line-item style, is oriented toward control and economy and answers the question, What is to be bought? A program budget, directed at planning and effectiveness, responds to the inquiry, What is to be achieved? And, a performance budget, disposed toward management and efficiency, replies to the query, What is to be done? (1) Each has its place depending upon the goal. However, one style, activity-based budgeting, has gained popularity over the last few years because of its ability to link activities to expenses, giving executives a better understanding of the full costs of service and resource allocation.

[ILLUSTRATION OMITTED]

Activity-based budgeting is an outgrowth of activity-based costing, similar to zero-based budgeting. (2) This budget type accounts for how staff members allocate their efforts among activities. After calculating the full cost of each task, managers can establish mechanisms that link support functions to the primary obligations of the organization--in a law enforcement environment, the main activities are the direct costs of program delivery (e.g., patrol services, investigations, tactical operations, and traffic control). (3) By developing a comprehensive activity-based budget, executives can create a clear nexus between workload and costs. Once they develop this, executives and managers can exercise control in several ways by assigning personnel based upon a demonstrated need; expanding or contracting personnel proportionately as the need changes; uncovering waste and hidden costs; viewing which activities are most and least expensive; assessing the full efficiency of the organization; identifying places to cut spending; establishing a cost baseline that may be influenced through process or technology changes that reduce effort requirements for the activity; (4) and, perhaps most important, arguing from an informed, objective position in favor of the organization's budget. To illustrate activity-based budgeting, the author presents the activities of a hypothetical police department's patrol force to determine the number of officers required to handle the workload; the cost of salaries, materials, and equipment; and the distribution of time across three primary categories of patrol work: calls for service, administrative duties, and proactive functions.

[ILLUSTRATION OMITTED]

ACCOUNTABILITY AND POLITICS OF BUDGETING

Accountability

Being entrusted with public monies requires the utmost integrity and responsibility. In recent years, efforts have begun to make budgets more readable and understandable. Activity-based budgeting is transparent and eliminates hidden costs. This allows a manager to see at a glance the most expensive activities and where to exercise control.

One of the keys to accountability involves the person assigned to handle the budget having real control over the resources that take the form of decision-making authority, information, and skills. After all, managers "cannot be responsible for a budget in which they have no authority to approve expenditures." (5)

Politics of Budgeting

Appropriations battles are common. In fact, an executive charged with budget implementation and control should expect them from subordinates who look to that person to exercise leadership and to argue on their behalf for what they need to carry out their functions. In preparing for battle, an executive will find it useful to know that "budgets reflect choices about what government will and will not do; budgets reflect priorities--between police and flood control, day care, and road repair; budgets reflect the relative proportion of decisions made for local and constituency purpose and for efficiency and effectiveness and broader public goals. [Most important], public budgets are not merely technical managerial documents; they also are intrinsically and irreducibly political." (6) Because their budgets are politically driven, executives should understand elected leaders' platforms, often mutually beneficial when seeking funds. The police department must compete with the other elements of city government for limited funds, making it of paramount importance for its leader to prepare a sound budget justification.

SUCCESSFUL STRATEGIES AND JUSTIFICATION

Strategies

Strategies differ from justifications. A strategy is an approach, a careful plan or method, or the art of devising or employing plans toward a goal. A justification means to prove or show to be just, right, or reasonable or to show to have had a sufficient legal reason. (7) The chief executive's goal is to retain the agency's base budget and, if possible, to increase it above the current year's appropriations. Developing a logical strategy provides the means to that end.

In November 2002, the Police Executive Research Forum (PERF) posted the final draft of roundtable discussions with several police chiefs from around the country. Among the different budget strategies they considered, using crime and workload data was first on the list. (8) Earlier research revealed that "increased workload was the second greatest factor contributing to an increase in positions." (9) While not infallible, workload data is reasonable and objective. The other strategies discussed by PERF included "capitalize on sensational crime incidents (ideally, not occurring locally), carefully mobilize interest groups, plan strategically, participate fully in the federal grant process, maintain a close working relationship with the local chief executive and governing board members, and involve all levels of the police department." (10) In addition, aggregate population and population density; age, sex, race, and ethnic composition; education levels; and per capita and median household income can support a budget proposal.

Justification

Budget strategies and their attendant analysis are important, but justification remains the primary ingredient to the success of the agency's budget. A solid justification includes all of the relevant information for the legislative body, the budget office, and the city's chief executive. The department should justify the budget in three separate spending categories: mandatory, base, and discretionary.

Mandatory Expenditures

Federal, state, or local laws govern mandatory expenditures, such as social security, pensions, unemployment contributions, and contractually negotiated benefits. Salaries also may fall into this category, except for those considered discretionary. It is best to justify mandatory budget expenditures by citing the applicable federal, state, and local laws.

Base Expenditures

Essential for the agency's continued operation, base expenditures include utilities, equipment, supplies and materials, and other consumables. Justification in this category comes from analyzing previous budgets and projections for service delivery. The executive must be prepared to explain increases in operating expenditures, such as developing a special task force to address a spike in drug crime. Budget review members always welcome workload and performance-improvement data.

Discretionary Expenditures

Discretionary expenditures enhance an existing level of service. These costs do not affect the department's operations but contribute to improved service delivery or a particular program's efficiency. A valid example is hiring. By hiring more officers, the agency expects to improve response time and reduce fear of crime, but not having the extra officers does not adversely impact the organization's ability to provide basic service. In defending discretionary spending, the executive must convince the budget review members of the necessity or worthiness of the proposal. Once again, workload and performance data are at the top of the list for developing the rationale.

THE WORKLOAD ANALYSIS

Objectivity denotes a recurring theme in budget development. The department will find an objective budget, based on empirical data, the most reasonable and the easiest to justify. A question often raised in law enforcement circles is, How many officers do we need or should we have? Typical responses cover a range of options, including as many as we can afford, as many as the mayor and council want, or as many as the people of the city will pay for. While these statements have merit, "the only logical and defensible means of determining how many persons should be assigned to patrol duty is through a careful and systematic analysis of the duties performed by patrol officers." (11) This is true of any position within the police department; therefore, the first step toward a logical budget justification starts with a workload analysis.

Data Collection

A workload analysis is "the process of collecting and analyzing data on patrol activities for the purpose of more efficient scheduling and deployment of manpower." (12) In activity-based budgeting, the process begins by collecting data on calls for service, generally captured by a computer-aided dispatch system (CAD). If the department does not have a CAD system, it will have to capture the data manually. The agency must have at least 1 complete year of data to account for seasonal fluctuations or other anomalies that might occur. A better data set would encompass 2 years of information to clarify these same variables and also to illuminate personnel trends. For example, gaining or losing officers may adversely impact how the organization handles calls for service, including the amount of time required to do so. The data set must include the--

* type of call;

* average number of hours spent handling the call; (13)

* number of calls of that type for the year (or the period being examined);

* number of officers required to handle the call; and

* total employee hours per modality. (14)

Once the agency has captured the principal modalities, it should format them for a typical computer spreadsheet application. After arranging the columns, the department can easily calculate the total employee hours per modality. (15)

Figure 1 represents the principal modalities and the acuity. (16) The hours per unit show the average amount of time spent handling a single call for service of that type (e.g., one murder will require 3 hours). The units per year comprise the total number of calls for service for that type (e.g., 41 murders occurred for the year). The department can derive the total employee hours per modality by simply multiplying the hours per unit times the units per year times the number of officers required. For example, a call for a murder takes two officers 3 hours to handle. Over the course of 1 year, officers will handle 41 murders for a total of 246 employee hours. The agency repeats these calculations for each modality and then sums the units per year and the total employee hours per modality. The sums of these two categories provide the foundation for future calculations and for activity-based budgeting development. Units per year equal 60,115 while hours per employee modality total 122,927. The department can add the percentage allocation as a last column. This will provide an excellent visual representation of which activities consume the most, as well as the least, of the budget.

In addition, figure 1 shows that arrests consume 37.25 percent of the time, followed by traffic control duty with 10.69 percent. The department can order the percentages from highest to lowest, or vice versa, and contrast them against each other for comparison purposes, thereby revealing efficiency. In short, the executive sees where time is spent, thus influencing processes or technology changes that reduce effort requirements for the activity.

Distribution of Time

The next step involves one of the most important in the budget development process because what happens with the distribution of time directly affects the budget. After determining the baseline calculations, it becomes necessary to distribute the time across three primary categories: service demands (i.e., calls for service), administrative duties, and proactive functions.

The first category, service demands, proves critical because the other areas receive their allotted time based on how much time this one consumes. The sum of employee hours per modality (122,927) represents 100 percent of the workload. Obviously, police officers must perform other assignments besides respond to calls for service. These include administrative duties (e.g., submitting reports and attending meetings) and proactive functions (e.g., community policing and directed or self-initiated tasks). An agency cannot realistically formulate a budget around 100 percent of the total employee hours per modality without factoring in these other responsibilities. This reveals where prudent management decisions must be made regarding how much of the officers' time the department is willing to distribute across these three categories. In other words, the lower the percentage of time allocated for service demands, the more police officers the organization will need.

After determining the total hours, the agency calculates the effective strength of its patrol force, (17) which differs from the actual strength. Based on a work year of 2,086 hours, the effective strength is 98.23 full-time equivalent (FTEs) patrol officers. Because officers do not actually work 2,086 hours per year, one additional calculation becomes necessary, the relief factor. Figure 2 depicts the distribution of time across the three primary management categories and the effective patrol force strength.

Force Strength and the Relief Factor

Actual patrol force strength is the number of officers required to handle the workload. The relief factor, also known as nonproductive FTE, accounts for officers' time off for various reasons. Hours, the more basic and preferred work unit for these calculations, are more discreet and flexible, rather than days, which the author presents only for illustrative purposes. The relief factor is derived by a two-part subtraction and division equation. For example, figure 3 begins with a work year of 2,086 hours. By subtracting 552 hours of allotted time off (i.e., nonproductive FTE), the difference of 1,534 denotes personnel

availability. Dividing the work year (2,086) by personnel availability (1,534) results in the quotient of 1.36. This means that it takes 1.36 police officers for every position to provide an acceptable level of service 365 days per year, 24 hours per day.

The final step, actual patrol strength, is determined by multiplying the effective strength by the relief factor. The effective strength is 98.23; the actual strength is 134 (134 = 98.23 X 1.36). Thus, according to the distribution of time as depicted in figure 2, 134 officers are required to carry out 204,878 hours of patrol operations over a period of 1 year.

Management and Support Staff Positions

Because law enforcement agencies operate with command-rank personnel, supervisors, and support staff, they must account for these employees to develop an accurate budget. Depending upon contractual stipulations or other managerial prerogatives, a department may or may not justify these positions by ratio. If not by ratio, then the agency only needs a fixed number. Figure 4 outlines the staff necessary to complete a department's workforce, and figure 5 shows the total personnel complement. Now that the agency has projected its workload and staffing needs, it can use the results to develop an activity-based budget.

BUDGET DEVELOPMENT

Salary Calculations

Calculating salaries constitutes the first element of activity-based budgeting. In many instances, personnel account for more than 90 percent of total budget expenses. The goal at this point is to establish the rate per employee hour. Establishing this figure creates a baseline from which to work and also is necessary for monitoring purposes. If the department needs to reduce expenses, it may not be able to do so from salaries because these usually are contractual. Knowing how much it costs to perform the required work can benefit managers and supervisors as they monitor individual and collective performance. The equation of salary times benefits times FTE or total employee hours per modality can calculate the rate per employee hour. Figure 6 outlines the FTE salary calculations, including the benefits package, and shows the rate per employee hour as $128.86.

Materials and Equipment Costs

In lean fiscal times, agencies generally reduce training and equipment budgets. Figure 7 depicts the total and unit costs for materials and equipment.

Materials usually consist of consumable supplies, such as pens, paper, flares, and crime scene tape. A simple calculation based on a fixed amount per employee can determine the unit cost for materials. In the example, materials are appropriated at $700 per employee or $128,480 total. By dividing the total cost ($128,480) by the number of units per year (60,115), the department can derive the unit cost for materials as $2.14.

The larger category of equipment consists of various items necessary to adequately carry out the functions of the patrol officer. Equipment typically has a useful life of more than 3 years; however, this is not a rule. The agency can calculate equipment expenditures by spreading the cost of individual items across their useful life spans. Incurring the full expense of the equipment will not come until the department must replace the items. Therefore, the agency can predicate the cost upon the equipment's useful life. The equation of cost equals quantity times unit cost divided by useful life in years shows the total cost for equipment as $513,290. The department can derive the unit cost the same way it did for materials, which reveals a unit cost for equipment of $8.54.

Present Level of Service

The final step, calculating the costs for the present level of service, involves reconciling all of the previous calculations to form the activity-based budget. First, the agency replicates figure 8, which holds the principal modalities. These serve as the foundation upon which the remainder of the budget will rest. The department must conduct a few additional calculations to arrive at the total cost. These include salary per hour and per unit costs of salary, material, and equipment, along with the unit and total costs.

Salary Per Hour

By multiplying the rate per employee hour ($128.86) by the total number of officers required, the department can calculate the salary per hour cost. For example, the total number of officers required to handle a murder is two; multiplying this by the rate per employee hour results in a salary per hour of $257.72.

Per Unit Costs

"Unit costs compare the volume of work anticipated to the items needed to complete the work and the funds required to purchase the items. This method [is] used to justify the need for personnel or equipment...." (18) This reveals the most salient feature of activity-based budgeting because identifying the individual costs is what this budget plan seeks to accomplish. To determine the salary per unit cost, the department multiplies the hours per unit (3) by the salary per hour ($257.72), obtaining the salary per unit cost for the modality of murder of $773.16.

Unit Cost

The unit cost is the sum of salary per unit ($773.16), materials per unit ($2.14), and equipment per unit ($8.54) costs. The department's unit cost for murder totals $783.84.

Total Costs

Total costs, the final calculation in the budget, are derived by multiplying the units per year for each modality (41) by the unit cost ($783.84). The total cost for the murder modality is $32,173.31.

Figure 8 demonstrates the completed activity-based budget plan outlining the entire cost for salaries, materials, and equipment. It becomes readily apparent that the percentage of the budget allocated per modality in figure 8 approximates the percentage of time allocated per modality in figure 1.

Budget Summary

Once the department has prepared the activity-based budget, it will find it useful to create a small budget summary by category, which would include salaries, materials, and equipment. The budget summary will help to reconcile the individual pieces of the budget. The total cost presented in figure 8 is $16,482,149. When summing the categories (salaries, materials, and equipment) in the budget summary, the total must equal the activity-based budget total. A simple pie chart of the finished budget gives a valuable perspective of how the department will distribute its funds.

CONCLUSION

Activity-based budgeting, an objective way to link workload to costs, is easy to design. Each division of the police department can create one to examine its operational efficiency. Connecting all of the individual budgets provides the organization with a comprehensive picture of its operating posture. Supervisors can use it to make adjustments in processes or shift personnel. Administrators can employ it to create partnership programs with the police department. In this sense, it is useful to see the proportion of the activity-based budget allocated to each partner. The department also can use it to justify hiring and promoting personnel. By using accepted industry standards of span of control, an executive can argue in favor of hiring and promoting based upon the volume of work.

Beyond its internal uses, activity-based budgeting has other merits. Many grant programs require one so grantors can see where their money is being spent and how efficiently grantees can administer the programs. Activity-based budgeting easily can be turned into a performance-based budget by attaching performance standards. It also can be used together with benchmarking to identify best practices. (19) The basic steps in corporate benchmarking include deciding what process to benchmark, studying the process in their organization, identifying benchmarking partners, analyzing the processes of benchmarking partners to identify differences that account for superior performance, adapting and implementing best practices, and monitoring and revising. (20) In the police department example, effecting arrests consumes nearly 37 percent of the activity. Benchmarking them could determine if a more efficient way exists to process arrests, including new technology that reduces the effort.

"Activity-based budgeting (ABB) holds [some] promise as a ... solution to the faults and frustrations of traditional budgeting methods:

1. Traditional budgets don't identify waste. ABB exposes nonvalue costs.

2. Traditional budgets focus on workers. ABB focuses on workload.

3. Traditional budgets focus on division cost. ABB also focuses on process cost.

4. Traditional budgets focus on fixed versus variable costs. ABB also focuses on used versus unused capacity.

5. Traditional budgets measure 'effect.' ABB measures root 'cause.'" (21)

It also provides an alternative to traditional government budgets; the line item may be required by law, but nothing prevents an organization from adopting activity-based budgeting to solve internal problems. After all, "what is the bottom line when there is no 'bottom line'? Performance!" (22)

Figure 1: Principal Modalities (Major Activities)

                                                     Acuity
                                           Hours  Units   Total Employee
                                           Per    Per     Hours Per
Service Demands                            Unit   Year    Modality

Murder                                     3          41      246
Robbery                                    1.5     2,110    6,330
Burglary                                   1       1,877    3,754
Court Appearances                          1.5     1,234    9,255
Theft (shoplifting and all others)         0.58    6,522    7,566
Arson                                      1          51      102
Rape                                       1.5        88      264
Fraud                                      0.75      211      158
Prostitution                               0.33    1,003      662
Gambling Offense                           0.42      468      197
Vicious Animal                             0.33      214      141
Bomb Threat                                1          12       24
Fire (car, house, building)                1.5       123      369
DWI                                        1          44       88
Emotionally Disturbed Person               1         120      240
Traffic Control                            2       2,190   13,140
School Crossing                            2       1,080    6,480
MV Pursuit                                 0.75       81      243
Arrest (average for all types of arrests)  1.5    15,264   45,792
Warrant Service                            0.75       73      110
Code Enforcement Violations                0.33      315      104
Juvenile Condition (curfew, truancy, and   0.75      457      343
  all others)
Street Collapse                            1          14       28
Wires Down                                 1          58       58
Burglar Alarm (residential, commercial)    0.33    2,555    1,686
Suicide                                    1.5        22       66
Sick/Injured Person                        0.75      720      540
Train Accident                             8           1       48
Kidnapping                                 3          11       66
Carjacking                                 1          77      154
Drug Sales                                 0.3     5,041    3,025
Assault (shooting, stabbing, blunt force)  0.75    1,000    1,500
Stolen Vehicle Report                      0.75    2,645    1,984
Assist Officer (back up)                   0.25      152       76
Directed Patrol Activities                 0.33    5,475    3,614
Shots Fired                                0.33      730      482
Domestic Violence                          1.25    3,255    8,138
Motor Vehicle Accident (with or without    1       1,825    3,650
  injuries)
Disorderly Conduct (fight, loud music,     0.3     2,555    1,533
  noisy crowds)
Man with a Gun                             0.42      401      674
Total                                             60,115  122,927

                                                 Acuity
                                           Officers  Percentage
Service Demands                            Required  Allocation

Murder                                        2        0.20%
Robbery                                       2        5.15%
Burglary                                      2        3.05%
Court Appearances                             5        7.53%
Theft (shoplifting and all others)            2        6.15%
Arson                                         2        0.08%
Rape                                          2        0.21%
Fraud                                         1        0.13%
Prostitution                                  2        0.54%
Gambling Offense                              1        0.16%
Vicious Animal                                2        0.11%
Bomb Threat                                   2        0.02%
Fire (car, house, building)                   2        0.30%
DWI                                           2        0.07%
Emotionally Disturbed Person                  2        0.20%
Traffic Control                               3       10.69%
School Crossing                               3        5.27%
MV Pursuit                                    4        0.20%
Arrest (average for all types of arrests)     2       37.25%
Warrant Service                               2        0.09%
Code Enforcement Violations                   1        0.08%
Juvenile Condition (curfew, truancy, and      1        0.28%
  all others)
Street Collapse                               2        0.02%
Wires Down                                    1        0.05%
Burglar Alarm (residential, commercial)       2        1.37%
Suicide                                       2        0.05%
Sick/Injured Person                           1        0.44%
Train Accident                                6        0.04%
Kidnapping                                    2        0.05%
Carjacking                                    2        0.13%
Drug Sales                                    2        2.46%
Assault (shooting, stabbing, blunt force)     2        1.22%
Stolen Vehicle Report                         1        1.61%
Assist Officer (back up)                      2        0.06%
Directed Patrol Activities                    2        2.94%
Shots Fired                                   2        0.39%
Domestic Violence                             2        6.62%
Motor Vehicle Accident (with or without       2        2.97%
  injuries)
Disorderly Conduct (fight, loud music,        2        1.25%
  noisy crowds)
Man with a Gun                                4        0.55%
Total                                                100.00%

Figure 2: Distribution of Time

Activity             %     Time

Service Demands      60%  122,927
Administrative       10%   20,488
Proactive            30%   61,463
Total               100%  204,878
Availability                2,086
Effective Strength             98.23
Relief Factor                   1.360
Actual Strength               134

Activity            Daily/Minutes  Daily/Hours  Split Force  Force
                                                             Allocation

Service Demands         288            4.8          88          66%
Administrative           48            0.8           0           0%
Proactive               144            2.4          45          34%
Total                   480            8           134         100%
Availability        (40 hours per week, 52.14 weeks per year)
Effective Strength  FTE Patrol Officers
Relief Factor       FTE Patrol Officers
Actual Strength     FTE Patrol Officers

Figure 3: Nonproductive FTE (Relief Factor)

Time Off                Days     Hours

Vacation                 28        224
Compensatory              5         40
Sick Leave               15        120
Personal                  3         24
Training                  8         64
Bereavement              10         80
Total Time Off           69        552
Work Year               260.70   2,086
Personnel Availability  191.70   1,534
Relief Factor             1.360      1.360

Figure 4:

                  Supervisory and Investigative Staff
By ratio: 1 Sergeant               Sergeants     19.08 effective
            per 7                                  strength
            Officers
          1 Lieutenant             Lieutenants    3.82 effective
            per 5                                   strength
            Sergeants
          1 Detective              Detectives     8.82 effective
            per 20                                  strength
            Officers
                        Sub Total                31.71 FTE Support Staff

                        Management Staff
Not by
  ratio: 1 Captain per             Captain        1.000 effective
           command                                  strength
         1 Executive               Executive      1.000 effective
           Officer                   Lieutenant     strength
                        Sub Total                 2.000 FTE Command
                                                    Staff (managers)

                      Support Staff for Management
By ratio: 4 support                Civilian       8.000 effective
  staff members                      Aides           strength
  per manager
                        Sub Total                 8.000 FTE Civilian
                                                    Aides
                            Total                41.71

Figure 5: FTE Subtotal

Position        Complement  Work Hours  Relief?

Captain           1          9-5 MF     No       Actual Strength
Executive         1          9-5 MF     No       Actual Strength
  Lieutenant
Lieutenant        5         24/7        Yes      Actual Strength
Sergeant         26         24/7        Yes      Actual Strength
Detective         9          9-5 MF     No       Actual Strength
Patrol Officer  134         24/7        Yes      Actual Strength
Civilian Aides    8          9-5 MF     No       Actual Strength
Total FTEs      184                              Actual Strength

Figure 6: Salary Calculations (includes relief factor)

               Benefits    Salary
FTE  Salary    at 20%      Cost            Title

134   $71,214  $14,243     $11,451,211     Patrol Officers
  1  $108,109  $21,622        $129,731     Captain
  1   $92,016  $18,403        $110,419     Executive Lieutenant
 26   $84,789  $16,958      $2,645,417     Lieutenant
  5   $77,215  $15,443        $463,290     Sergeant
  9   $72,214  $14,443        $779,911     Detective
  8   $27,125   $5,425        $260,400     Support staff
184                        $15,840,379     Total Salary Cost
               divided by      122,927     total employee hours per
                                             modality
      Rate per employee           $128.86
        hour

Figure 7: Materials and Equipment

                     Materials

Paper, Pencils, Reports, Forms,
  Crime Scene Tape, Flares and all
  other Consumable Supplies (@ $700
  per employee)                      $128,480
Total                                $128,480
divided by units per year              60,115
Unit Cost                                  $2.14

                         Equipment

                  Quantity  Unit Cost  Useful Life/yrs  Cost

Computers          15        $1,700     5                 $5,100
Shotguns           25          $700    15                 $1,167
Typewriters        15          $300     5                   $900
Marked Police      36       $35,000     3               $420,000
  Cars
Prisoner Van        1       $40,000     6                 $6,667
First Aid Kit      80          $140     3                 $3,733
  and
  Replacements
Nontraditional      5       $19,000     7                $13,571
  Vehicles
Night Vision        5        $7,500     7                 $5,357
  Equipment
Walk-through        1        $5,500    10                   $550
  Metal Detector
Gas Masks         200          $320     7                 $9,143
Mesh Traffic       50           $30     5                   $300
  Vests
Tripod Scene        5        $1,000     7                   $714
  Lighting
Megaphones         10           $90     7                   $129
Prisoner           25           $43    10                   $108
  Legirons
Snow Blower         1        $2,600     5                   $520
Laser Printers     10        $1,400     5                 $2,800
Unmarked Police     6       $28,000     5                $33,600
  Cars
Traffic Cones     100           $35    10                   $350
Suites of           5        $7,500    10                 $3,750
  Furniture
Photocopier         1       $25,000     6                 $4,167
Fax                 4          $499     3                   $665

                                       Total            $513,290
                            divided by units per year     60,115
                            = equipment per unit              $8.54

Figure 8: The Activity-Based Budget: Present Level of Service

                       Units   Hours                        Salary
                       Per     Per    Officers  Total       Per
                       Year    unit   Required  Hours       hour

Murder                     41  3      2             246.00  $257.72
Robbery                 2,110  1.5    2           6,330.00  $257.72
Burglary                1,877  1      2           3,754.00  $257.72
Court Appearances       1,234  1.5    5           9,255.00  $644.30
Theft (all types)       6,522  0.58   2           7,565.52  $257.72
Arson                      51  1      2             102.00  $257.72
Rape                       88  1.5    2             264.00  $257.72
Fraud                     211  0.75   1             158.25  $128.86
Prostitution            1,003  0.33   2             661.98  $257.72
Gambling Offense          468  0.42   1             196.56  $128.86
Vicious Animal            214  0.33   2             141.24  $257.72
Bomb Threat                12  1      2              24.00  $257.72
Fire (all types)          123  1.5    2             369.00  $257.72
DWI                        44  1      2              88.00  $257.72
Emotionally Disturbed     120  1      2             240.00  $257.72
  Person
Traffic Control         2,190  2      3          13,140.00  $386.58
School Crossing         1,080  2      3           6,480.00  $386.58
MV Pursuit                 81  0.75   4             243.00  $515.44
Arrest (all types)     15,264  1.5    2          45,792.00  $257.72
Warrant Service            73  0.75   2             109.50  $257.72
Code Enforcement          315  0.33   1             103.95  $128.86
Juvenile Condition        457  0.75   1             342.75  $128.86
Street Collapse            14  1      2              28.00  $257.72
Wires Down                 58  1      1              58.00  $128.86
Burglar Alarm (all      2,555  0.33   2           1,686.30  $257.72
  types)
Suicide                    22  1.5    2              66.00  $257.72
Sick/Injured Person       720  0.75   1             540.00  $128.86
Train accident              1  8      6              48.00  $773.16
Kidnapping                 11  3      2              66.00  $257.72
Carjacking                 77  1      2             154.00  $257.72
Drug Sales              5,041  0.3    2           3,024.60  $257.72
Assault (all types)     1,000  0.75   2           1,500.00  $257.72
Stolen Vehicle          2,645  0.75   1           1,983.75  $128.86
Assist Officer            152  0.25   2              76.00  $257.72
Directed Patrol         5,475  0.33   2           3,613.50  $257.72
Shots Fired               730  0.33   2             481.80  $257.72
Domestic Violence       3,255  1.25   2           8,137.50  $257.72
Motor Vehicle           1,825  1      2           3,650.00  $257.72
  Accident
Disorderly Conduct      2,555  0.3    2           1,533.00  $257.72
Person Armed with a       401  0.42   4             673.68  $515.44
  Weapon
Total                  60,115                   122,927

                       Salary     Material  Equipment
                       Per        Per       Per        Unit
                       unit       unit      unit       Cost

Murder                   $773.16  $2.14     $8.54        $783.84
Robbery                  $386.58  $2.14     $8.54        $397.26
Burglary                 $257.72  $2.14     $8.54        $268.40
Court Appearances        $966.45  $2.14     $8.54        $977.13
Theft (all types)        $149.48  $2.14     $8.54        $160.15
Arson                    $257.72  $2.14     $8.54        $268.40
Rape                     $386.58  $2.14     $8.54        $397.26
Fraud                     $96.65  $2.14     $8.54        $107.32
Prostitution              $85.05  $2.14     $8.54         $95.72
Gambling Offense          $54.12  $2.14     $8.54         $64.80
Vicious Animal            $85.05  $2.14     $8.54         $95.72
Bomb Threat              $257.72  $2.14     $8.54        $268.40
Fire (all types)         $386.58  $2.14     $8.54        $397.26
DWI                      $257.72  $2.14     $8.54        $268.40
Emotionally Disturbed    $257.72  $2.14     $8.54        $268.40
  Person
Traffic Control          $773.16  $2.14     $8.54        $783.84
School Crossing          $773.16  $2.14     $8.54        $783.84
MV Pursuit               $386.58  $2.14     $8.54        $397.26
Arrest (all types)       $386.58  $2.14     $8.54        $397.26
Warrant Service          $193.29  $2.14     $8.54        $203.97
Code Enforcement          $42.52  $2.14     $8.54         $53.20
Juvenile Condition        $96.65  $2.14     $8.54        $107.32
Street Collapse          $257.72  $2.14     $8.54        $268.40
Wires Down               $128.86  $2.14     $8.54        $139.54
Burglar Alarm (all        $85.05  $2.14     $8.54         $95.72
  types)
Suicide                  $386.58  $2.14     $8.54        $397.26
Sick/Injured Person       $96.65  $2.14     $8.54        $107.32
Train accident         $6,185.29  $2.14     $8.54      $6,195.96
Kidnapping               $773.16  $2.14     $8.54        $783.84
Carjacking               $257.72  $2.14     $8.54        $268.40
Drug Sales                $77.32  $2.14     $8.54         $87.99
Assault (all types)      $193.29  $2.14     $8.54        $203.97
Stolen Vehicle            $96.65  $2.14     $8.54        $107.32
Assist Officer            $64.43  $2.14     $8.54         $75.11
Directed Patrol           $85.05  $2.14     $8.54         $95.72
Shots Fired               $85.05  $2.14     $8.54         $95.72
Domestic Violence        $322.15  $2.14     $8.54        $332.83
Motor Vehicle            $257.72  $2.14     $8.54        $268.40
  Accident
Disorderly Conduct        $77.32  $2.14     $8.54         $87.99
Person Armed with a      $216.49  $2.14     $8.54        $227.16
  Weapon
Total

                       Total           Percentage
                       Cost            Allocated

Murder                     $32,137.31    0.19%
Robbery                   $838,210.65    5.09%
Burglary                  $503,779.40    3.06%
Court Appearances       $1,205,774.74    7.32%
Theft (all types)       $1,044,521.19    6.34%
Arson                      $13,688.20    0.08%
Rape                       $34,958.55    0.21%
Fraud                      $22,644.70    0.14%
Prostitution               $96,010.59    0.58%
Gambling Offense           $30,324.99    0.18%
Vicious Animal             $20,484.81    0.12%
Bomb Threat                 $3,220.75    0.02%
Fire (all types)           $48,862.52    0.30%
DWI                        $11,809.43    0.07%
Emotionally Disturbed      $32,207.53    0.20%
  Person
Traffic Control         $1,716,602.49   10.41%
School Crossing           $846,543.69    5.14%
MV Pursuit                 $32,177.75    0.20%
Arrest (all types)      $6,063,719.11   36.79%
Warrant Service            $14,889.52    0.09%
Code Enforcement           $16,757.86    0.10%
Juvenile Condition         $49,045.62    0.30%
Street Collapse             $3,757.54    0.02%
Wires Down                  $8,093.08    0.05%
Burglar Alarm (all        $244,573.34    1.48%
  types)
Suicide                     $8,739.64    0.05%
Sick/Injured Person        $77,271.00    0.47%
Train accident              $6,195.96    0.04%
Kidnapping                  $8,622.20    0.05%
Carjacking                 $20,666.50    0.13%
Drug Sales                $443,566.72    2.69%
Assault (all types)       $203,965.97    1.24%
Stolen Vehicle            $283,863.62    1.72%
Assist Officer             $11,416.08    0.07%
Directed Patrol           $524,085.74    3.18%
Shots Fired                $69,878.10    0.42%
Domestic Violence       $1,083,349.10    6.57%
Motor Vehicle             $489,822.80    2.97%
  Accident
Disorderly Conduct        $224,819.08    1.36%
Person Armed with a        $91,091.48    0.55%
  Weapon
Total                  $16,482,149     100.00%

Budget Summary

Total from Figure 6. Salary    Salaries   $15,840,379   96.11%
  Calculations
Total from Figure 7 Materials  Materials     $128,480    0.78%
  and Equipment                Equipment     $513,290    3.11%
                               Total      $16,482,149  100.00%

The author thanks Dr. Gerald Miller, Rutgers Graduate School of Public Administration for inspiring this article.

Endnotes

(1) S.L. Riley and Peter W. Colby, Practical Government Budgeting: A Workbook for Public Managers (Albany, NY: State University of New York Press, 1991).

(2) A zero-based budget begins by preparing an operating plan or budget that starts with no authorized funds. For this type of budget, an organization must justify each activity every time it prepares a new budget.

(3) D. Maddox, Budgeting for Not-for-Profit Organizations (New York, NY: John Wiley and Sons, 1999).

(4) Ibid., 228.

(5) Ibid., 20.

(6) I.S. Rubin, The Politics of Public Budgeting: Getting and Spending, Borrowing and Balancing, 4th ed. (New York, NY: Chatham House, 2000).

(7) Both definitions retrieved on August 31, 2004, from http://m-w.com.

(8) Police Executive Research Forum, Police Department Budgeting: A Guide for Law Enforcement Chief Executives (Washington, DC, 2002).

(9) J. R. Greene, Tim S. Bynum, and Gary W. Cordner, "Planning and the Play of Power: Resource Acquisition Among Criminal Justice Agencies," Journal of Criminal Justice 14 (1986): 529-544.

(10) Supra note 8, 2; and Aaron Wildavsky, The Politics of the Budgetary Process, 3rd ed. (Boston, MA: Little Brown and Company, 1979), 63-126.

(11) C.D. Hale, Police Patrol: Operations and Management (New York, NY: John Wiley and Sons, 1981).

(12) Ibid., 163.

(13) Any portion of an hour is calculated as such. For example, 20 minutes is captured as .33 hours and 47 minutes as .783 hours.

(14) In budgeting, modalities are the attributes (i.e., major activities) being examined. In this case, they are the types of calls for service.

(15) In budgeting, acuity is the distinct detail, the calculations that comprise the budget.

(16) Due to rounding, some numbers may not add to totals shown in the figures or referred to in the text of this article.

(17) The effective strength of the patrol force is how many officers are on duty at a given time. Supra note 11, 167.

(18) Supra note 1, 54.

(19) In public sector application, the term benchmarking "features the identification of a point of reference for comparison or measurement purposes. With a benchmark, public officials can measure the performance gap between where they are and where they want to be and can track their progress in closing the gap." D.N. Ammons, "A Proper Mentality for Benchmarking" in Gerald J. Miller, W. Bartley Hildreth, and Jack Rabin, Performance-Based Budgeting (Boulder, CO: Westview Press, 2001), 419-429.

(20) Ibid., 423.

(21) T. Pryor, Integrated Cost Management Systems, Inc., What Happened to ABB? (2004); retrieved on December 23, 2004, from http://www.icms.net/news-18.htm.

(22) P.F. Drucker, Managing the Nonprofit Organization: Principles and Practices (New York, NY: Harper Perennial, 1990).

By JON M. SHANE, M.A.