By Rivenbark, William C.
Government Finance Review , Vol. 19, No. 5
Strategic planning is a structured and coordinated approach for developing long-term organizational goals and for developing strategies to accomplish them. It is typically used to facilitate communication, to accommodate divergent interests, and to foster decision making through leadership and consensus building. (1) In municipal government, one of the primary purposes of strategic planning is to set the stage for the annual budget process, providing a roadmap for annual resource allocation decisions. (2)
The Government Finance Officers Association promotes strategic planning by promulgating recommended practices on budgeting and financial management and by endorsing the work of the National Advisory Council on State and Local Budgeting, or NACSLB. (3) GFOA also encourages strategic planning with its Distinguished Budget Presentation Awards Program, recommending that budget documents include organization-wide goals. (4)
Exhibit 1 outlines the definition, mission, and key characteristics of the budget process as constructed by the NACSLB and endorsed by GFOA. The connection between strategic planning and the budget process is established in the second key characteristic, which states that the budget process "establishes linkages to broad organizational goals." The NACSLB maintains that the budget process is not simply an annual exercise in balancing revenues and expenditures. Rather, it is strategic in nature--a multiyear financial and operating plan that allocates resources to achieve specific organization-wide goals. (5)
Exhibit 1: NACSLB on the Budget Process Definition of the Budget Process: The budget process consists of activities that encompass the development, implementation, and evaluation of a plan for the provision of services and capital assets. Mission of the Budget Process: To help decision makers make informed choices about the provision of services and capital assets and to promote stakeholder participation in the process. Key Characteristics of the Budget Process: * Incorporates a long-term perspective * Establishes linkages to broad organizational goats * Focuses budget decisions on results and outcomes * Involves and promotes effective communication with stakeholders * Provides incentives to government management and employees Source: National Advisory Council on State and Local Budgeting, Recommended Budget Practices: A Framework for Improved State and Local Government Budgeting (Chicago: Government Finance Officers Association, 1998).
The recommendations of GFOA and the NACSLB clearly establish the importance of strategic planning as a means for improving budget policies and procedures. While strategic planning has always been a core function of management, professional organizations now promote it as a key to effective budgeting and financial management. (6) For example, a 2002 study revealed that approximately 45 percent of municipalities had initiated citywide strategic planning processes. (7) This finding provides evidence that strategic planning has made progress in becoming a professional norm. The only limitation is that this conclusion was based on a sample of municipalities with populations of 25,000 or more, omitting the 5,586 U.S. municipalities with populations between 2,500 and 24,999. (8) The reality is that strategic planning may be even more important to smaller municipalities because it provides administrators with limited resources and limited planning time a practical guide for serving their communities. (9)
This article discusses the status of strategic planning in municipal government based on a national survey of municipalities. The purpose is to determine the prevalence of strategic planning among municipalities with populations of 2,500 or more. The article identifies the stakeholders commonly involved in strategic planning and discusses how municipalities can use the recommended budget practices of the NACSLB to enhance the usefulness of their strategic plans during the annual budget process. …