Financial Goal Setting

Within the formal budget process, there are budget politics. For most public managers the politics and strategy of making a budget are just as important, if not more important, than the formal budget process. Here we briefly discuss some of the most common budget-making strategies. Some of these strategies are more appropriate if the goals is to limit spending, while others are more appropriate if an department or agency wants to expand programs, or at the very least maintain status quo. They include:

• Cultivate a clientele. Effective public managers understand who "uses" and who "benefits" from their programs and services. They also understand that those users are the best advocates for a program. This is especially true for programs that benefit children, the disabled, and other vulnerable populations. A simple anecdote about a program from one of its clients can be exponentially more powerful than a well-done differential cost analysis.
• Make friends with legislators. Legislators are much more likely to support a program when they understand that program and who benefits from it. This is particularly true when that program benefits their constituents, and when they played a role in creating, expanding, or protecting it. Of course, this strategy comes with risks. Governors, mayors, and other executives often try to limit department heads and program managers' access to legislators to prevent staff relationships with legislators that might undermine their own budget priorities.
• "Round it Up". This is especially true on the spending side. Rounding up caseloads, spending estimates, interest expenses, and other costs will expand budget authority and, if actual spending falls short of budgeted spending, create an end of year "surplus". The risk is that persistent over-budgeting for spending can undermine a budget-maker's credibility.
• "We have a crisis". Some managers like to project that major revenue shortfalls or spending cuts are imminent, even if they aren't. Staff who believe they might face difficult budget cuts are more likely to manage their programs with careful attention to spending discipline and timely collection of revenues. Of course, this can also lead to staff burn-out and ruin a manager's credibility if said crisis never happens.

A few strategies are most effective when a manager is asked to trim their budget.

• "Across-the-Board". Some managers prefer to respond to budget cuts by cutting all their programs equally, or "across the board" (ATB). To staff, ATB cuts appear fair, transparent, and simple. Cutting all programs equally assumes those programs have identical cost structures, current staff openings, and capacity to generate revenues. That's rarely true. The result is that ATB often affects different programs and services in quite different ways, even though the intent is to bring about a uniform impact. Sometimes those differential effects can themselves be valuable to managers.
• "Do Nothing". An unchanged budget is, in effect, a budget cut. If a program is given no new resources it must find other ways to address cost inflation, growth in caseloads, staff cost of living adjustments, and other growth in spending. Sophisticated managers argue, often successfully, that a "steady state" budget (i.e. no new resources, but no cuts) is a fair way to take a budget cut.
• Lean on precedent. In a cutback environment, what happened in the past can be a powerful tool for managers. No manager wants to have to choose how to cut his or her program. But if they can say "I didn't really choose these cuts, we're just following past precedent" they're afforded some degree of political cover. Whether past precedent really dictated those cuts, or whether there even is a past precedent, are often debatable.
• "It's essential for public safety". Managers can try to position their program as vital to public health or safety. Sometimes these connections are obtuse, at best. For instance, during the Great Recession, many local libraries protested cuts to library hours by pointing out that libraries are a safe and supportive gathering place for teenagers. Unsupervised teenagers roaming the streets would create, they argued, a serious public safety concern.
• Propose a study. Public organizations can rarely predict, or so they say, exactly how a budget cut will affect their clients, staff, and overall mission. So in response to a cut, managers routinely propose to "study the issue". A study allows for more time to either identify potential cuts, or, for the political or economic environment to shift in ways that will obviate the need for a cut at all.
• "Cut the main artery". One way to respond to a requested cut is to cut the largest program that's most central to your mission (i.e. the "main artery"). Cutting that program is, in effect, threatening to cripple your program. Some policymakers will respond with a request for a smaller cut or to a cut to a program that's less mission-centric. The danger here is what happens if policymakers agree to allow a manager to cut the main artery.
• "Just take the whole thing". If a program was cut recently, managers can take the request for an additional cut as an opportunity to offer to end the program. They'll ask: "We've already been cut to the bone, so what's the point of staying open?" or something to that effect. Whether additional cuts would really harm the program is often incidental to the argument.
• "You pick". Instead of proposing cuts, offer policymakers a range of options and ask them to decide which option the program should pursue. Like with "lean on precedent," this allows managers to avoid direct responsibility for specific cuts to his or her staff and other resources. This strategy is prone to backfire when policymakers respond by saying "It's not my job to pick. You know your program better than anyone. You pick".
• "Washington Monument". In 1994 the federal government shut down after President Clinton and House Speaker Gingrich could not agree on a continuing resolution. President Clinton responded by ordering the National Park Service to close all of the key historic sites in Washington, DC. One of the first to close was the Washington Monument. As the shutdown dragged on, President Clinton was able to frame the closed Washington Monument as a symbol of Congressional intransigence. The essence of the Washington Monument strategy is to propose cuts to a small, but highly visible program.

And finally, managers often deploy a different set of strategies when attempting to expand their program's budget:

• "It pays for itself". Managers can sometimes argue that investing in a program will "pay for itself" through cost savings later. For instance, public health advocates have long argued that expanding childhood immunization programs pays for itself by reducing the incidence of communicable diseases like tuburculosis, measles, and rubuella that place enormous strain and expense on public hospitals.
• "Spend to save". Investments in technology, equipment, and infrastructure can save staff time, reduce paperwork, collect revenues faster, etc. Or, at least, that's how managers sell those investments in the budget process.
• "Foot in the Door". Many large, long-standing, popular public sector programs began small. An effective way to expand a program is to run a small pilot program, study, or demonstration project. Legislators and board members are generally willing to appropriate small amounts of money to try "innovative" approaches. With time, many of those small experiments morph into large-scale programs.
• "It's just temporary". Like "small innovations," legislators and board members are much more willing to provide temporary funding for a program or project than they are to provide permanent funding or budget authority. Crafty managers are able to convert temporary funding into either "ongoing temporary funding" or even permanent authority.
• "Finish what we started". This approach is especially popular with respect to capital projects. Many capital projects begin with an appropriation to analyze, plan, and design a capital project. With that planning in place, managers can make a compelling argument that it's necessary to appropriate more money to "finish what we started," often without regard for whether the plans are complete or whether the analysis suggests the project is even necessary.
• "Re-categorize". Sometimes shifting a program to a different part of the budget is a necessary step toward expansion. For example, public health advocates have successfully argued that many public health activities like smoking cessation or diabetes prevention are actually education or outreach programs. Within the education budget they have access to a much wider range of funding sources and constituent champions. We've seen a similar dynamic with homeland security. Many programs in areas like crime prevention and cybersecurity were once local public safety initiatives, but have since migrated to far more lucrative state and federal homeland security budgets.