Budget Process Enhancements

FY 2021-23 Proposed Policy Budget


PROCESS IMPROVEMENTS

This budget cycle, the City undertook five ambitious initiatives to improve its budget process. Several of these initiatives required the City, its departments, and their staff to entirely revamp how they develop their budgets. These initiatives were chosen in large part because they advanced the City's overall mission to increase transparency, equity, and efficiency. They were also undertaken during a time when the City's Finance Department was projecting severe deficits. The hope was that these new tools would transform the way the City develops and evaluates budget proposals by providing robust data and comprehensive analysis on fiscal and service impacts.


OpenGov Online Platform

In an effort to increase transparency, the City is utilizing the OpenGov platform to present its entire budget in an online interactive website. Most tables and graphs on the platform allow the reader to drill-down, pivot, and even extract budget data. Following the completion of the budget cycle, the next step in utilizing OpenGov will be to develop an interactive exploration of in-year revenue & expenditure data. The OpenGov platform will support the public monitoring of the City's finances, including analyzing its spending and revenue-generating trends. During the next biennial budget, the City will implement OpenGov solutions to allow for deeper exploration of the Capital Improvements Program.


Integrating Equity Into The Budget Process


The City made a commitment to advancing racial equity citywide when it created the Department of Race & Equity in 2016. The City defines equity as integrating the principle of "fair and just" in all the City does in order to achieve equitable opportunities for all people and communities. Due to the extensive racial disparities that exist for Oakland's Black, Indigenous, People of Color (BIPOC) communities, pursuing equity work also involves improving life outcomes for the City's BIPOC communities. The City's budget is where the City can make major strides to advance equity through the budget choices that are made. With this FY 2021-23 cycle the City began an intentional effort to reshape our budget approach to support this vision. It required the development of new tools, targeted capacity building for City staff and a steep learning curve for all.


The Budget Bureau partnered with the Department of Race & Equity to ensure that equity shaped the budget process from the beginning. Starting in November, the Budget Bureau teamed up with the Department of Race & Equity to design the City's first-ever budget equity analysis tool. The two departments convened a cross-sectional working group consisting of 12 members across 7 departments to design the budget equity analysis tool. In December, the Department of Race & Equity and Budget Bureau launched citywide trainings on how to use the equity analysis tool. There, department directors, department fiscal managers, and department staff were introduced and trained on the tool. In January, the Budget Bureau and Department of Race & Equity also hosted joint "drop-in" clinics where department staff could get additional assistance on drafting their answers to the equity analysis tool questions. Departments had autonomy in which staff they pulled into drafting their equity analysis response, and many departments formed equity tool working groups to complete this assignment.


Once the Budget Bureau received departments' budget proposals at the beginning of February, the City entered its second phase of incorporating equity into the budget process. The Department of Race & Equity trained the Budget Bureau's analysts in evaluating the equity analysis of departments. The Budget Bureau and Department of Race & Equity reviewed all departments' equity tool packages. The Department of Race & Equity then participated in the department budget hearings that the Mayor and City Administrator scheduled in late March. The Budget Bureau's analysts drafted equity impact statements of the significant budget changes for their departments, which the Department of Race & Equity then reviewed.



The third phase of integrating equity into the budget will begin when the City's Budget Book is published on May 1st. From this point forward, City Council will provide its input on the City's budget, including offering budget amendments, hosting public hearings, and ultimately voting on the final budget. In April, the Department of Race & Equity is working on an equity tool for Council that will be ready in early May for them to use in the budget deliberations. The Department of Race & Equity will offer trainings to City Council and their staff in May so that they are also equipped to incorporate equity into their budget amendments. The Budget Bureau and Department of Race & Equity will work closely with the Mayor and City Council to provide them with relevant data, when available, to further support them in using an equity lens in their budget decisions through this last phase of the budget process when the budget is adopted by June 30th.


Incorporating equity into the budget process was a huge undertaking for the entire City. The Department of Race & Equity along with the Budget Bureau is planning to do a debriefing of this first iteration with departments once the budget cycle is finished. As a part of this evaluation process, the two departments will document key learnings, important process improvements, and possible next steps for preparing the City to do deeper equity analysis in the next cycle. One area of growth already identified is equity data collection. The City does not yet have protocols in place for equity data collection or analysis, which will prove to be a vital part of future budget cycles and effectively evaluating budget proposals for their equity as well as fiscal impact.


Zero-Based Budgeting

Zero-Based Budgeting is a method of budgeting in which all expenses must be justified each new period in an organization's fiscal cycle. The process of zero-based budgeting starts with $0 as the "base," and every function within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether each budget is higher or lower than the previous one. The idea behind this method is that an organization's budget stays tailored to meet ongoing demands and that possible savings can be identified with each reset.


For the City, the zero-based budgeting approach was implemented for the first time across all departments for their Operations & Maintenance (O&M) budget lines. The Budget Bureau pulled three years of historical data on O&M usage and provided this to departments in December with a specific zero-based budgeting worksheet they were required to fill out. The Budget Bureau chose O&M as the place in departments' budgets to reset to $0 because this portion of departments' budgets is where departments can typically exercise the most discretion in setting up their own allocations.


Departments submitted their zero-based budgeting worksheets with their overall proposals in February. Their assigned analyst in the Budget Bureau reviewed their justifications for each of their O&M lines. Any savings identified were used as a part of balancing the City's budget.



Service Inventory

The Budget Bureau designed a service inventory process for this budget cycle to catalog all the work that departments do as a part of fulfilling their mission. Completing a service inventory is a business practice similar to completing a product inventory where it supports performance improvements and improves organizational capacity.


The Budget Bureau designed a detailed service inventory tool in November and provided it to departments in December to complete by January. Departments were instructed to categorize services by their functionality, including whether the service was externally oriented to the public or internally oriented to other departments. In this first iteration of service inventory, the Budget Bureau asked a series of questions about the resources each department utilized to fulfill this service, whether similar services were provided through other departments, and what City priorities this service met.


The Budget bureau condensed each department's service inventory to share on their individual page in OpenGov. This service inventory is the first step in systematically linking the services provided by the City to long term desired policy outcomes. The inventory will also help to facilitate additional data collection, including data around the equitable provision of services.



Police Department's Re-budgeting Process

The Reimagining Public Safety process that began in the summer of 2020 has prompted renewed interest in the City's budget and how it is spent on public safety. To that end, the Budget Bureau in partnership with the Oakland Police Department went through a several month long exercise to review the current OPD operating budget, analyze its service demands, and rebuild its entire budget from scratch. This is similar to the zero-based budgeting method applied to all departments' Operations & Maintenance budget but was more extensive because it involved data mining the Police Department's personnel costing, attrition rates, overtime uses, and cataloging all its services. Based on the Police Department's answers to all the new tools implemented in this cycle, the Budget Bureau then right-sized its operating personnel budget to capture the true costs of running the department to meet the services it provides , including accurately budgeting for the Police's overtime spending. This "re-budgeting" process required a thorough review of existing Police Department services, the resources the Police Department expends in terms of personnel.


Key results of this work includes:

  • A public data set that clearly identifies the unit and sub-unit of every sworn and professional staff member of the organization.
  • An overtime budget that aligns with historical spending and fully considers the need to backfill functions regardless of available staffing in functions like 911 Response / Patrol, 911 Communications Center Operations, and Police Records.
  • A staffing plan for sworn members that is consistent with the availability of actual police officers based upon budget police academies and attrition rates.