Magazine article Government Finance Review

Revisions to GFOA's Budget Program Criteria

Magazine article Government Finance Review

Revisions to GFOA's Budget Program Criteria

Article excerpt

In 1998, GFOA approved a recommended practice endorsing the work of the National Advisory Council on State and Local Budgeting, encouraging state and local governments to look to the NACSLB recommended budget practice statements as a model for improving their own budget processes. The NACSLB recommended practices encompass the entire budget cycle, from establishing goals to monitoring and adjusting the adopted budget. Many governments are now using these practices to make systematic improvements to their financial planning and budgeting processes.

One of the 59 recommended budget practices specifically addresses the importance of budget presentation. The NACSLB calls the budget document "arguably the single most important document prepared by governments." As such, the NACSLB recommends that "budget documents and related materials made available to stakeholders should be presented in a clear and readily comprehensible format." This recommendation goes hand in glove with GFOA's Distinguished Budget Presentation Awards Program, which is designed to encourage governments to prepare budget documents of the highest quality to meet the needs of decision makers and citizens. This program has grown substantially over the years and has done much to improve the quality of budget presentation in the public sector.

GFOA recently revised the criteria for the budget awards program--the first such revision in 10 years. While the criteria themselves remain essentially unchanged, the accompanying explanations have changed substantially and, in many cases, incorporate specific new program requirements. The revisions are the product of a year-long effort to clarify the proper application of the program criteria. This article highlights some of the major changes to the program so that governments can prepare better entries and, more importantly, improve the quality of their budget documents.

Evaluation of budget documents is based on 27 criteria in the following four categories: (1) the budget as a policy document, (2) the budget as a financial plan, (3) the budget as an operations guide, and (4) the budget as a communications device. The major program modifications are discussed below by category.

THE BUDGET AS A POLICY DOCUMENT

Long-Range Financial Policies (PDI). Previous to the program's modifications, long-term financial and program policies were combined under the same criterion. Now, financial and program policies have been separated, with the presentation of financial policies becoming a mandatory criterion.

GFOA recommends that, at a minimum, financial planning, revenue, and expenditure policies be developed and formally adopted by a jurisdiction's governing board, as well as the governing boards of any component units under its jurisdiction. A major new focus is that governments include in the budget document their definition of a balanced budget and state whether their budget is balanced. Finally, the budget document should include a comprehensive listing of financial policies in one section of the document.

Budget Message (PD4). Major issues facing the governing body in developing the budget (e.g., policy issues, economic factors, regulatory and legislative challenges) should be included in the transmittal letter or executive summary. The message should also describe the actions to be taken to address these issues.

Unit or Department Goals and Objectives (PD5). The unit or department goals and objectives section has changed. Goals have now been defined as long-term in nature. Unit goals should be consistent with entity-wide goals. A matrix is a good way to show the linkage between these goals. Objectives are now considered more short-term in nature and should be quantifiable. Quantifying objectives allows for benchmarking with other similar organizations to gauge the effectiveness of selected programs.

THE BUDGET AS A FINANCIAL PLAN

Consolidated Financial Overview (FP2). …

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