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GFOA's budget awards program: new directions planned for 1994.

The criteria for GFOA's Distinguished Budget Presentation Award have been revised to make them more clear and understandable and to improve their use as rating benchmarks. Because of their fundamental importance to good budgeting, some of the criteria are designated as mandatory for future awards.

Some significant changes are underway in GFOA's popular Distinguished Budget Presentation Awards Program (budget awards program). Two years in the making, these changes have been designed to strengthen the program's influence on budgeting and budget documents of governments and nonprofit organizations. Those who participated in the evaluations and discussions of revisions numbered in the hundreds: all individuals who had been serving as reviewers for the awards program, GFOA committee members and staff, and others were invited to assist in evaluating the program, to suggest improvements, and to review and comment on the proposed program changes. The changes will be effective for budgets for fiscal years beginning January 1, 1994, and thereafter.

The program changes include a complete revision and rewriting of the basic awards criteria to make them more clear and understandable and to improve their use as rating criteria. The new criteria include, for the first time, mandatory criteria. Modifications to the rating categories have been made to improve the accuracy and clarity of the ratings assigned by budget reviewers. Changes have been made in program administration to shorten the time between submission and communication of the results of the review. Other improvements have been completed, and more are planned to enhance accuracy and usefulness of the reviews. GFOA's Committee on Governmental Budgeting and Management believes that the changes do not represent tinkering, but rather solid improvements that will allow the program to continue to play a major role in improving the practice of budgeting.

The Need for Change

The budget awards program has proven to be successful. It is growing. It has been a solid tool in GFOA's efforts to enhance the profession. Recognizing that this was true, the GFOA applied the same commitment to the budget awards program as has been applied to other association programs: programs are periodically and systematically reviewed to identify ways to improve their effectiveness. The evaluation of the budget awards program was begun in 1990 and resulted in the significant changes discussed in this article.

The Distinguished Budget Presentation Awards Program was established in 1984 to encourage and acknowledge exemplary budgeting practices by governmental and nonprofit organizations. The program was developed as a key strategy by GFOA's standing Committee on Governmental Budgeting and Management to provide general criteria and guidelines by which distinguished budget presentations could be recognized. Similar to the Certificate of Achievement for Excellence in Financial Reporting, the budget awards program was structured to involve a significant number of budgeting and other finance and management professionals through the use of volunteer peer budget reviewers and by encouraging broad participation in the program. An important associated goal continues to be to provide an opportunity for finance professionals to develop their skills while contributing time, talents and energy back to the profession.

In establishing the program, GFOA committed to a dynamic and ongoing effort. The fundamental goal for the establishment of the program was to encourage improvement in each participating agency's budget and to enhance budgeting practices through peer review and recognition of excellence in budget documents.

The program was not designed to be an accreditation or certification program; it was developed to provide guidelines rather than standards. While some criteria were identified as key to effective budget documents and presentations, the committee chose to encourage rather than to require improvements in submitted budget documents.

The program was not focused on the style or type of budgeting process used by the participating agencies; it was made flexible to allow a variety of budget formats (program, performance, etc.) as long as they were consistent with the guidelines. The program also did not center upon the provision of extensive conceptual training in budgeting practices. The committee felt, rather, that it could have the greatest impact by encouraging improvements in budget documents and presentations as tangible evidence of the agency's budget practices and achievements.

When the budget awards program was established in 1984, the committee chose to center the award on four major functions of budgets: the budget as a policy tool, as a financial plan, as an operations guide and as a communications device. Although other functions were discussed, these four areas were considered fundamental to budgets across the spectrum of GFOA and a beginning that could be built upon in the future.

A Policy Tool. The budget document is a policy document reflecting policy making that comes to a focus in the budget process. The document addresses the needs of elected officials, the members of the public and other parties interested in the financial and programmatic policy of the entity.

A Financial Plan. The program encourages sound financial planning and effective documentation of the jurisdiction's financial plans, including consideration of multi-year effects of budget decisions and financial circumstances.

An Operations Guide. The budget provides an opportunity to provide direction for operating managers and to encourage forward-thinking and focus on effective results and outcomes.

A Communications Device. In the "information society," the budget provides an opportunity to communicate with the variety of interested players about the priorities, plans and directions for the future.

The budget awards program received 113 applications for the award in its first year and has experienced steady growth in each of the years since. In 1992, 630 entities submitted budgets for review under the program, and 80 percent of submitting entities achieved the budget award. Many entities have continued to submit their budgets year after year and receive confidential reviewer comments and suggestions for improvement as well as awards recognition.

The program was structured to use volunteers, supplemented by GFOA staff, to complete the reviews of budget submissions. Qualified reviewers apply to GFOA to participate in the program, volunteering their time. Reviewers are expected, over time, to become increasingly more capable in reviewing budgets and in communicating suggestions for improvements. Through their volunteer efforts, reviewers participate in the development of the profession and gain greater expertise in budgeting matters. The program is administered by GFOA staff.

To receive the award, a budget must be judged by two of the three volunteer reviewers as "proficient" overall and in each of the four primary evaluation categories. Provision is made for special recognition for budgets judged to be outstanding in one or more of the evaluation categories. Submitting entities that wish to appeal the decision of reviewers are provided an appeal process.

Program Evaluation

To assess the program's effectiveness in facilitating improvements in budgeting practices and in providing opportunities for professional development and service, a comprehensive evaluation of the program was begun in January 1991. The first step was a survey of all budget reviewers and all submitting governments to solicit comments and suggestions regarding the program's value and effectiveness and to identify opportunities for enhancements.

The response to the survey was overwhelming. Several hundred responses were received from budget reviewers and participating organizations. The majority of the respondents felt that the program was excellent, that it met an important need, and that it provided benefits to both submitting entities and to the reviewers. Many expressed a commitment to the concept and practice of the budget awards program and exhibited a sort of ownership in the program.

The survey reinforced the validity of the four major functional areas--policy, financial, operational and communication--and of most of the criteria. Strong support was exhibited for continuing the program and for strengthening it, and a significant number of survey respondents suggested changes that could be made to enhance the program's effectiveness. Suggestions for improvements frequently mentioned included

* clarification and improvement of certain criteria to reflect the learning and experience of the program to date,

* consideration of mandatory criteria to strengthen the program's impact on participating entities' budget practices,

* changes in the rating categories to enhance clarity and accuracy of ratings,

* improvement in timeliness and quality of reviews, and

* development of an improved reviewer's guide/handbook and other resources to enhance reviewer effectiveness and accuracy.

The standing committee reviewed the summarized surveys and concluded that the budget awards program continued to meet the need for which it was created and that the suggestions for improvement should be carefully studied and recommendations for change developed. It established the Subcommittee on the Budget Awards Program to develop the recommended improvements for the program. The subcommittee, comprising eight members of the standing committee, invited the participation of a number of interested advisors and consulting professionals.

The subcommittee drafted proposed changes to the program and in December 1991 circulated its recommendations for comment to all of the then-current budget reviewers in the program. The subcommittee recommendations included a list of completely revised criteria that retained most of the previous criteria subject areas but improved their clarity and specificity. Several criteria, which had been most frequently mentioned as in need of clarification and improvement, received a great deal of attention by the subcommittee.

They included criteria related to

* projected balances in governmental funds,

* the effect of approved capital projects on the operating budget,

* measurement of performance or results,

* the budget message and statement of priorities and policy changes, and

* cross indexing and cross classifying financial and operational data.

Changes: Mandated Criteria

The subcommittee recommended that some criteria be designated as mandatory because of their fundamental importance to good budgeting. This represented a new approach to the program. Rather than providing only general guidelines, the program's mandatory criteria in the future would represent an endorsement of key, required elements for budgets that would be recognized as distinguished.

The subcommittee wrote the new criteria supporting this approach. It recommended that the rating categories, which are used to evaluate the budget's achievement for each criteria, be changed to reflect four possible ratings: Proficient (the budget meets the criteria), Outstanding (excellence beyond the basic requirements of the criteria), Does Not Satisfy Criteria (the reviewer's conclusion that the budget does not meet the particular criteria) and Information Not Present (the reviewer did not find information related to the criteria).

In December 1991, the subcommittee mailed the proposed new criteria to all current reviewers: more than 110 reviewers responded to the subcommittee's recommended changes. Their responses consistently expressed general support for the proposed changes while providing specific "fine-tuning" suggestions and elaborations. The subcommittee reviewed all of the responses from reviewers and polished the proposed program revisions to incorporate the variety of insightful recommendations received.

After presenting the resulting draft of the revised program to the full standing committee, the subcommittee was directed to bring a final draft to the 1992 GFOA annual conference. There, in June 1992, the standing Committee on Governmental Budgeting and Management formally approved the revised program criteria, rating categories and associated program requirements. The committee directed that the criteria and rating categories be applied to budgets for fiscal years beginning January 1994 or later. The committee directed the staff to develop training and informational materials to communicate the new requirements to reviewers and participating agencies well before the implementation date.

Implementing the New Program

The adopted new criteria and rating categories will be communicated widely to prospective and current participating agencies and to reviewers. Listed in Exhibit 1 are the mandatory and non-mandatory criteria in the new Budget Review Rating Form. The GFOA staff are preparing a final draft of a new reviewer's guide. A training workshop will be held at GFOA's annual conference in May 1993 in Vancouver, and one-day seminars, "Effective Budget Presentations: Preparing Award-winning Budgets," will be held in several locations during 1993.

The GFOA staff also has implemented several new procedures to improve the timeliness of reviews. The time period for reviews has been shortened to two weeks. Reviewers are stepping up their efforts to meet deadlines, and the number of reviews outstanding and beyond deadlines has been reduced. The longer-term goal is to continue to reduce the interval between submission and communication of results of the review.

The subcommittee will continue to evaluate the effectiveness of the program and will identify opportunities for improvement. A number of suggested issues for future study and work remain: the participation of smaller jurisdictions, techniques for recognition of outstanding budgets, and ways to attract and retain new reviewers.

Reviewers: Key to Ongoing Success

The reviewers' numerous responses to surveys and drafts of the new program demonstrated their dedication to this volunteer activity and its significance as a professional development opportunity. The enthusiasm of committed reviewers has long been the strength and backbone of the program. Each reviewer who has conscientiously participated and who now participates is making a valuable contribution. As the program has flourished, however, the need for a greater number of reviewers also has grown.

The subcommittee recognizes the importance of attracting and retaining qualified reviewers as a key to the effectiveness of the program. The changes were designed in part to facilitate better training and to support more effective rating by reviewers. The subcommittee, the GFOA staff and the standing committee continue to discuss ways to enhance reviewer participation.

GFOA's budget awards program continues to need qualified reviewers to assist with the workload of the growing volume and to improve the quality of reviews. Professionals who feel they may be qualified and who are willing to devote the time and energy to studying and applying the program criteria and requirements and to complete reviews in a timely manner are encouraged to apply. Reviewer applications may be obtained from the budget awards program staff at the Government Finance Officers Association, 180 N. Michigan Avenue, Suite 800, Chicago, IL 60601 (312/977-9700), or they may be obtained at the annual conference in Vancouver. Special training and a reception for budget reviewers are planned for the annual conference, May 2-5, 1993. Reviewers and prospective reviewers may talk with a member of the subcommittee, GFOA staff or the standing committee about becoming a reviewer.

Serving as a budget reviewer is a tangible way that members can grow and contribute to the profession. In the words of one of the reviewers, "I can't believe you have trouble attracting and retaining reviewers. I find the program is an excellent way to improve my expertise and awareness of other's budgets and to give something back to the profession."

GFOA is committed to continue to support and improve the budget awards program as a dynamic and significant force for encouraging improvements in budgeting practices and documents. The budget awards program is an important tool in implementing GFOA's broad goals of improving the capacity and capability of member organizations and of public financial professionals in general.


Policy Document

1. The document should include a coherent statement of organization-wide financial and programmatic policies and goals that address long-term concerns and issues.

2. The document should describe the organization's short-term financial and operational policies that guide the development of the budget for the upcoming year.

3. The document should include a coherent statement of goals and objectives of organizational units (e.g., departments, division, offices or programs).

4. Mandatory: The document shall include a budget message that articulates priorities and issues for the budget for the new year. The message should describe significant changes in priorities from the current year and explain the factors that led to those changes. The message may take one of several forms (e.g., transmittal letter, budget summary section).

Financial Plan

1. The document should include and describe all funds that are subject to appropriation.

2. Mandatory: The document shall present a summary of major revenues and expenditures, as well as other financing sources and uses, to provide an overview of the total resources budgeted by the organization.

3. Mandatory: The document shall include summaries of revenues, and other resources, and of expenditures for prior year actual, current year budget and/or estimated current year actual, and proposed budget year.

4. Mandatory: The document shall describe major revenue sources, explain the underlying assumptions for the revenue estimates and discuss significant revenue trends.

5. Mandatory: The document shall include projected changes for governmental funds included in the budget presentation, including all balances potentially available for appropriation.

6. The document should include budgeted capital expenditures and a list of major capital projects for the budget year, whether authorized in the operating budget or in a separate capital budget.

7. The document should describe if and to what extent capital improvements or other major capital spending will impact the entity's current and future operating budget. The focus is on reasonably quantifiable additional costs and savings (direct or indirect) or other service impacts that result from capital spending.

8. Mandatory: The document shall include financial data on current debt obligations, describe the relationship between current debt levels and legal debt limits, and explain the effects of existing debt levels on current and future operations.

9. Mandatory: The document shall explain the basis of budgeting for all funds, whether GAAP, cash, modified accrual or some other statutory basis.

Operations Guide

1. Mandatory: The document shall describe activities, services or functions carried out by organizational units.

2. The document should provide objective methods (quantitative and/or qualitative) of measurement of results by unit or program. Information should be included for prior year actual, current year budget and/or estimate, and budget year.

3. Mandatory: The document shall include an organization chart(s) for the entire organization.

4. Mandatory: A schedule(s) or summary table(s) of personnel or position counts for prior, current and budgeted years shall be provided, including descriptions of significant changes in levels of staffing or reorganizations planned for the budget year.

Communication Device

1. The document should provide summary information, including an overview of significant budgetary issues, trends and resource choices. Summary information should be presented within the budget document either in a separate section (e.g., executive summary) or integrated within the transmittal letter or other overview sections.

2. The document should explain the effect, if any, of other planning processes (e.g., strategic plans, long-range financial plans, capital improvement plans) upon the budget and budget process.

3. Mandatory: The document shall describe the process for preparing, reviewing and adopting the budget for the coming fiscal year. It should also describe the procedures for amending the budget after adoption. If a separate capital budget process is used, a description of the process and its relationship to the operating budget should be provided.

4. Mandatory: Charts and graphs shall be used, where appropriate, to highlight financial and statistical information. Narrative interpretation should be provided when the messages conveyed by the graphs are not self-evident.

5. The document should provide narrative, tables, schedules, cross-walks or matrices to show the relationship between different revenue and expenditure classifications (e.g., funds, programs, organization units).

6. Mandatory: The document shall include a table of contents to make it easy to locate information in the document.

7. A glossary should be included for any terminology (including abbreviations and acronyms) that is not readily understood by a reasonably informed lay reader.

8. The document should include statistical and supplemental data that describe the organization and the community or population it serves, and provide other pertinent background information related to the services provided.

9. The document should be printed and formatted in such a way to enhance understanding and utility of the document to the lay reader. It should be attractive, consistent and oriented to the reader's needs.


Alec Andrus, Boise, Idaho, Budget Director, Chair

James Cavenaugh, Peer Consultant, Pennsylvania Department of Community Assistance

Sylvia Colbert, Director of Business Services, Marion Education Services District, Salem, Oregon

Mark Jinks, Director of Management and Finance, Arlington County, Virginia

Sylvan Leabman, Special Assistant to the Dean of College of Letters and Science, University of Wisconsin--Madison

Randolph (Randy) Moravec, Director of Finance, Addison, Texas

Nancy Zielke, Director of Finance, Kansas City, Kansas

Debra Forte, Director of Fiscal and Human Services, Euless, Texas, vice chair of the Committee on Governmental Budgeting and Management and liaison to the subcommittee.

Author ALEC ANDRUS, chair of the Subcommittee on the Budget Awards Program, has been a member of the GFOA's Committee on Governmental Budgeting and Management since 1986. He is budget manager for the City of Boise, Idaho, who says, "Idaho is what America was." He wishes to acknowledge the extensive contributions to the development of this program provided by GFOA staff: Dennis Strachota, director of the Educational Services Center (ESC); Juliet Powdar, ESC associate; and Bruce Engelbreckt, former ESC staff member.
COPYRIGHT 1993 Government Finance Officers Association
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Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Government Finance Officers Association
Author:Andrus, Alec
Publication:Government Finance Review
Date:Apr 1, 1993
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