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Running Head: BUDGET ORGANIZATION AND DESIGN
The Organization and Design
of
Budgeting Function, Budgeting System Components
and
Related Financial Management Techniques
for
Brevard County
Carlos F. Tobar
University of West Florida
Author Note
Email: cft3@students.uwf.edu
BUDGET ORGANIZATION AND DESIGN 1
Abstract
This paper begins with a short review of the Michel and the National Advisory Council
on State and Local Budgeting (NACSLB) recommended budget practices for a public
organization. Brevard County in Central Florida, home of NASA, cruise ship terminals and a
unique natural environment, was chosen for budget analysis because of the major financial
challenges it has faced in recent years. The paper will describe and analyze the county’s budget
and compare it to the recommended budget practices. Finally, exceptions to the budget
practices, and reasons for them, will be reviewed.
BUDGET ORGANIZATION AND DESIGN 2
Short Review of Budgeting Concepts and Models
Michel
Although Michel writes about the vital functions of the budget office for small and large
governments including states, this section will focus on the concepts for large agencies and
budgets like Brevard County’s. A budget office has increasing levels of responsibility ranging
from the most basic function of coordinating the budget process to policy guidance and finally to
supervising the actual implementation of the adopted budget (Michel, 2002, p. 11). A budget
office prepares and controls the operating budget. Michel (2002) states that a budget office that
is the focus of the organization and relates to all departments within it has the following budget
office activities: (a) Program Evaluation, Performance Measurement, and Management Analysis;
(b) Intergovernmental Relations; (c) Grant Management; (d) Financial Management Information
Systems; (e) Capital Budget Preparation and Control; (f) Financial Policy Development; (g) Data
Analysis; (h) Long-Term Financial Planning; (i) Revenue Forecasting and Analysis; (j)
Employee Position Control (p. 12).
The naming of the budget office, its place in the organization and its assigned activities
will vary based on the size of the organization (Michel, 2002). At the larger organizations,
typically, the budget office will reside in either the Chief Executive Officer or a separate
department that reports to a subordinate of the Chief Executive Officer.
National Advisory Council on State and Local Budgeting (NACSLB)
The NACLSB developed a framework for state and local governmental agencies
consisting of 4 principles and 12 elements to improve budgeting practices (NACSLB, 1999).
The first principle is to establish the goals that will steer the legislature. The first principle’s first
element requires assessment of the community’s needs, priorities and unique challenges. The
BUDGET ORGANIZATION AND DESIGN 3
second element calls for government to assess its programs, services, assets and management
systems. The third element requires development and dissemination of the goals to the
stakeholders.
The second principle requires the agency to implement policies, practices and procedures
to help achieve its goals. The fourth element requires development of financial policies to ensure
financial obligations are met. The policies must include instructions to stabilize revenues, fee
adoption, debt management, emergency management, recurring and one-time revenue sources.
The fifth element requires operational and capital policies and plans. The sixth element consists
of policies and plans to deliver programs and services, capital acquisition, maintenance,
replacement and disposal. The seventh element calls for management strategies to ensure
operational and financial goals are attained.
The third principle requires the budget to align with goals. The eighth element consists
of implementing a budget process that adopts a budget calendar, guidelines, instructions and
policies for budget submissions, budget coordination and budget review, budget feedback and
budget modifications. The ninth element requires development of short- and long-range
operating and financial plans that consider revenue forecasts and options to fund proposed
capital projects. Because most governments are financially constrained, the tenth element
involves presenting a budget that aligns with the legislature’s vision and adopted goals.
The fourth principle requires evaluation of the organization’s performance, and
mechanisms to be in place to make the required adjustments for the present and future. The
eleventh element requires the agency to measure, monitor, and evaluate the budget on a regular
basis. The twelfth element requires adjusting, if necessary, the adopted budget, adopted policies,
programs or services, strategies and goals (NACLSB, 1999, pp. iii-iv).
BUDGET ORGANIZATION AND DESIGN 4
Description, Analysis and Comparison of Brevard County Budget
Budget Process
During the information age governments have an unprecedented amount of tools
available to them to gather input from citizens. However, the government and its politicians
must be willing to allow that information flow. It is of no value to a citizen to have internet
access, but not have a picture, physical address, email address or phone numbers to communicate
with government staff and politicians, or minutes to meetings. Some public organizations’
websites are instructive. For example, the Jacksonville Transportation Authority has photos of
the board members but no information on how to contact them. The CEO, Michael Blaylock, is
listed, but, again, not his contact information. There is no organizational chart. There is no
department head or employee listing, no agendas, no minutes from recent meetings and no
archives of past agendas or minutes (JTA, n.d.). Brevard County, on the other hand, lists each
commissioner, his or her photo, phone number, fax number, email address and physical address.
Additionally, the county displays prominently on its website the County Commissioners tab, the
organizational chart, the department heads and their phone numbers. The county budget has its
own separate tab on the home page of the website. The county’s website also has archived
agendas and minutes from 2010 forward. The commissioners, as some stated in the March 18,
2010 budget workshop, communicated with thousands of residents during their campaigns.
These commissioners and government employees can be approached anywhere they go, at their
offices, board workshops and board meetings in addition to electronic means which encourages
stakeholder input (Brevard County, 2010). It is not surprising that in 2012 Brevard County’s
website won the Sunshine Award for exceeding transparency standards (Brevard County, 2012).
BUDGET ORGANIZATION AND DESIGN 5
For Brevard County, the communication from the public was a key factor in establishing
broad goals to guide its decision-making. Brevard County, located in Central Florida, has had to
face difficult challenges since 2008 when the homestead exemption was approved by voters, and
later when the housing downturn caused both property values and property tax revenues to
decline. That led to the 7% decline in property tax values in FY 2008 followed by reductions of
12%, 13% and 12%, respectively, for fiscal years 2009, 2010 and 2011. Further reductions of
17%, 10% and 7% are projected for fiscal years 2012, 2013 and 2014, respectively (Brevard
County, 2011). The national economic downturn has caused a trickledown effect from the
national government to states and local governments and from the states to local governments
thereby handing local governments unfunded mandates and increased responsibilities. Increased
unemployment has created more demand for social services including an increase in Medicaid
spending. Brevard County, faced with the same challenges as every other community in the
country, has had to endure also the shutting of NASA’s Space Shuttle program which is based at
the Kennedy Space Center in Cape Canaveral. Furthermore, the unique natural environment in
Brevard County poses restrictions on its capacity to address fiscal challenges. Brevard County
has the highest concentration of salt marsh mosquitoes on the eastern seaboard. Addressing the
threat of mosquito-borne diseases is a yearly battle. Brevard County is also required to fund
mandated constitutional officers which restrict fiscal flexibility even further. The last point to
make about Brevard County’s fiscal challenges is the Board of County Commissioners’
reluctance to raise taxes which has made it incredibly challenging to balance the budget of a
billion dollar organization (Brevard County, 2010).
One theme that will emerge from Brevard County’s budget analysis is that two processes
are proceeding simultaneously: (a) the development of the current year budget, (b) development
BUDGET ORGANIZATION AND DESIGN 6
of strategic and long-term plan. The purpose for the two-pronged approach came as a result of
its property tax valuation projections through FY 2015 (Brevard County, 2011). When the
property appraiser sounded the alarm of drastically reducing property tax revenues in early 2010,
the commissioners directed the County Manager, Howard Tipton, to maintain the aggregate
property tax rate, the millage, at its FY 2009-2010 level (Brevard County, 2010). This is the
backdrop for the development of the budgets for FY 2010-2011 and FY 2011-2012. This
principal directive helped guide the decisions, some of which were unprecedented and
controversial, in the subsequent two years.
On March 18, 2010, Howard Tipton brought in Arrington-Marlowe, LLC to encourage
the Board of County Commissioners to develop a strategic plan. Arrington-Marlowe had
experience dealing with the State of Florida’s financial crisis in the early 1990s and advised the
board of the importance of setting a course for the near future. The theme of his message was
that conditions would never return, especially property tax collections, to what they once were.
The board had to prepare for a new future that meant a new baseline for Brevard County—a new
baseline that included more people, more responsibility, increased costs, but decreased tax
revenues. Howard Tipton informed the board of his intent to hold numerous public meetings to
disseminate the information to employees and the public of the current financial crisis and the
recommended changes to the budget. The broad goals for the county were to maintain the same
level of taxation, provide mandated services, life and safety services and library services.
Howard Tipton and his staff immediately addressed the board’s directive to maintain the level of
taxation. Because the reduction of revenues was going to lead to budget cuts, and the likelihood
of bargaining unit employee layoffs was high, Howard Tipton informed the union that he
intended to come before the board to declare a fiscal hardship on July 22, 2010. The declaration
BUDGET ORGANIZATION AND DESIGN 7
was necessary, in advance of preparing the final budget and millages, because county
management needed time to negotiate the subject of furloughs, and possibly other concessions,
with the county’ labor union (Brevard County, 2010). Overall, the county has done an
outstanding job of meeting the goals of elements one and three of the NACSLB model (1999).
Brevard County set a high number of public and board meetings to disseminate the
message for the two fiscal years analyzed. In total the board in 2010 held 16 board workshops
and meetings addressing the budget including one e-town hall meeting. At the e-town hall
meeting Florida TODAY’s Government Editor, Don Walker, asked questions from residents who
submitted to the newspaper their questions over a two-week period. All of the commissioners,
Howard Tipton, his two assistants and the county budget director were in attendance. The board
subsequently adopted the final budget and set the millage rate in September 2010 (Brevard
County, 2010).
During the FY 2011-2012 budget process, the county set meeting dates for another e-
town hall meeting and another meeting in the City of West Melbourne on August 16, 2011 in
addition to the board workshops, meetings and public hearings. On February 10, 2011, which
was the beginning of the FY 2011-2012 budget process, Brevard County introduced its strategic
plan and adjusted its broad goals, which satisfies NACSLB standard for level 12.3-adjusting the
broad goals (Brevard County, 2011; NACSLB, 1999). Its strategic objectives were to (a) fulfill
mission requirements, (b) increase customer satisfaction, (c) expand community outreach, (d)
improve effectiveness, (e) improve efficiency, (f) improve employee engagement, (g) increase
workforce development, (h) meet financial and budgetary requirements (Brevard County, 2011).
Of the fifteen stated sustaining initiatives to meet their strategic objectives, several of them were
in conflict, at least temporarily, to their objectives of increasing customer satisfaction and
BUDGET ORGANIZATION AND DESIGN 8
improving employee engagement. The first initiative was to reduce the size of government, the
third initative was not to create new positions and the fourth was not to introduce new programs
and services. As was seen beginning in FY 2010-2011, this led to increased wait times for
building permit approvals, increased wait times on phone calls and increased response time to
animal bites and other decreased levels of service, and was a concern for many residents at
budget workshops in 2010 (Brevard County, 2010-2011). The second initiative was to maintain
current salaries and not provide cost-of-living increases. Further complicating matters was the
state’s decision to require a 3% retirement match from all employees participating in the Florida
Retirement System (FRS) in FY 2011-2012 (State of Florida, 2011). Although this did not affect
the county’s budget, the county had to be concerned about the effect on its employees’ declining
wealth. In FY 2010-2011, in addition to the salary/wage freezes, employees contributed $10
million towards its health care costs which was to be an ongoing requirement, 6 furlough days
for regular employees, or 12 furlough days for the management class. The county’s FY 2011-
2012 adopted budget, seven months after the initial board workshop, did include a one-time
2.5% increase in wages and salaries. Another initiative that was discussed briefly at the
meetings was revenue enhancement. The initial discussions pertained mostly to the feasibility of
increasing user fees (Brevard County, 2010).
One of Brevard County’s complexities is that it really operates several “businesses”
which have the same revenue source, ad valorem or property taxes, but have their own millages
or property tax rates and restrictions. Brevard County has two options to affect revenues for a
department: (a) increase or decrease General Fund transfers, (b) increase or decrease millages.
Although transfers to and from the general fund are permitted, transfers between the special
funds are not. Brevard County has 21 operating tax districts or “businesses” and 6 long-term
BUDGET ORGANIZATION AND DESIGN 9
debts which are all funded by the property taxes. Included in the 21 operating tax districts are
the General Fund, Library District, Mosquito Control District, Fire Control, several recreation
districts, the airport, environmentally endangered lands, and all five Road and Bridge districts,
which have the same boundaries as the commissioner districts. Each operating tax district
millage must be approved separately by the board at the time the budget is adopted (Brevard
County, 2010).
Once Brevard County’s management staff received its directive to maintain the millages
at current levels and after it received its projected revenue, county management staff went about
the task of balancing the budget, a state requirement, by ensuring expenditures met revenue
projections. As we will see in the financial policy section, Brevard County had to reduce its
projected property tax revenue, statutorily, by 5% to meet State of Florida requirements. In FY
2010-2011 some departments and constitutional officers saw virtually no change in their budgets
compared to the prior year; however, departments that have minor capital projects in their
operating budgets specifically Public Works and Parks and Recreation, bore the brunt of the
budget cuts. Of special note, Parks and Recreation increased their FTEs by 6 employees, but
they reduced FTEs by 50 in FY 2009-2010. In FY 2011-2012 Housing and Human Services saw
a reorganization and a drastic reduction in the Housing program because of expiring grant
funding, but the rest of the budget cuts, just like in FY 2010-2011 were due largely to
maintenance and minor capital deferrals, and reductions in capital investments. Parks and
Recreation deserves a special note in FY 2011-2012. Their budget was reduced by a whopping
$121,000,000 or 59% of their final FY 2010-2011 budget. This amount represents nearly half of
all the cuts in FY 2011-2012 compared to the final adopted budget for FY 2010-2011. Of that
amount, $81 million was a reduction in debt payments. They also eliminated 15.75 positions. In
BUDGET ORGANIZATION AND DESIGN 10
FY 2011-2012 the Planning Department’s budget reduction was mostly in grants to others
(Brevard County, 2011).
The Capital Improvement Plan (CIP) is a five-year plan that is adjusted yearly. The bulk
of the revenue, roughly a quarter of the county’s annual budget, is generated from ad valorem
taxes that were approved as part of referendums by the voters. The revenues for CIP projects are
allocated mostly to Facilities, Natural Resources, Parks and Recreation, Solid Waste and Public
Works Departments. The aggregate amount of the CIP projects for each department is included
in each individual department summary of the budget. The summary of revenues and
expenditures include operating and capital costs. Each CIP budget for each department is listed
separately in its own section of the County Budget website tab. The details of each of those
projects are found there (Brevard County, 2010).
Brevard County meets the NACSLB standards for level 8: (a) staff developed a budget
calendar; (b) the board gave guidelines to staff; (c) department heads provided individual budget
requests to the budget office; (d) staff developed the mechanisms--board workshops, board
meetings, e-town hall meetings, public hearings--to coordinate budget preparation and review;
(e) staff identified opportunities for stakeholder input. All stakeholders were invited to
participate at all these meetings and the minutes from these minutes reveal the high level of
interest in the proceedings. The level 9 standards are almost met: (a) long-range financial
planning was accomplished in FY 2011-2012 by developing the strategic plan; (b) capital
revenue projections were provided through 2015; (c) property tax valuations were analyzed
through 2015; (d) declining revenues and reluctance to increase the aggregate millage meant
base-level services would be affected either through elimination, or decreased levels of service;
(e) increased user fees were considered; (f) consensus was reached on the projected revenues; (g)
BUDGET ORGANIZATION AND DESIGN 11
revenue sources were identified easily in the budget; (h) expenditures were projected; (i)
department heads and senior level county administrators reviewed expenditure options; revenue
options, other than user fees, were not discussed since the board had already stated their
reluctance to increase taxes; (j) a CIP was developed (Brevard County. 2011; NACSLB, 1999)
Budget Document
The Brevard County budget document, as to be expected with numerous “businesses”
within the business, is a consolidation of individual budgets. Each department and constitutional
office has its own budget. The Brevard County budget office prepares the document and
provides a color-coordinated pie chart with the various revenue sources in one pie chart and the
various expenditure categories in the second pie chart. The budget summaries all contain the
same categories. For operating revenues, the following consolidated line items are shown: (a)
taxes; (b) permits, fees, special assessments; (c) intergovernmental; (d) charges for services; (e)
fines and forfeitures; (f) miscellaneous; (g) statutory reduction. For non-operating revenues, the
following line items are displayed: (a) balance forward, (b) transfers from general revenue, (c)
transfer from others, (d) other finance sources. For operating expenditures the following line
items appear: (a) compensation and benefits, (b) operating expenses, (c) capital outlay, (d) grants
and aid (to others). The non-operating expenditure categories are: (a) CIP, (b) debt service, (c)
Reserves-operating, (d) Reserves-capital, (e) Reserves-restricted, (f) transfers to others. Each
department and constitutional office provides in the summary the following: (a) mission
statement, (b) programs and services, (c) trends and issues, (d) major service level impacts, (e)
budget analysis, (f) program changes, (g) goals, (h) major accomplishments for the preceding
fiscal year, (i) initiatives for the coming fiscal year, (j) performance measures which align with
the board’s strategic plan. The Adopted Budget Message document cites major trends and
BUDGET ORGANIZATION AND DESIGN 12
challenges and a short-term, but not a long-term financial plan. The Budget and Financial
Policies document contains all the financial policies that guide budget development. The Budget
Philosophy and Strategic Framework document contains the method of accounting the county
utilizes: modified accrual and accrual basis of accounting. Recommended budget summaries,
prior to budget adoption, are uploaded to the website for public review. The summaries for FY
2012-2013 are already on the website. They provide neither revenue and expenditure line items
for operating and non-operating categories, nor the pie charts, but the total budgets for all
departments and the CIP are listed. For fiscal years 2010-2011 and 2011-2012, both budgets
were adopted on-time. Since Brevard County is not introducing new programs, its focus has
been on reviewing existing services. Brevard County meets all the NACSLB standards for levels
6, 7.3 and 10 with the exception of providing a long-term operating financial plan (Brevard
County, 2011).
Financial Policies
Florida Statutes. Under the County Budget heading on the website’s home page,
Brevard County lists its financial policies. The first policy is Florida Statute, Chapter 129 which
guides budget development and policies. The statute requires (a) the fiscal year begin October 1,
(b) a balanced budget, (c) reserves for various accounts, (d) the budget exclude 5% of projected
revenues from operating revenues, (e) balances be recognized and carried forward, (f)
commissioners to appoint a budget officer, (g) the budget officer to submit a tentative budget
within 15 days of receiving certification of property values, (h) the budget to regulate
expenditures, (i) the budget document to state whether modified accrual or accrual basis of
accounting is utilized, (j) the budget to be amended, if necessary, within certain parameters
(Brevard County, 2011).
BUDGET ORGANIZATION AND DESIGN 13
Florida Statute, Chapter 200 guides property tax revenue generation policies. Brevard
County is responsible for assessing and collecting property taxes not just for itself, but also for
municipalities and special districts. Additionally, voters in the past may have elected to tax
themselves further and those rates, millages, are included in the total tax calculation. Once the
county’s property appraiser has certified property values, agencies have 35 days to submit their
proposed tax rate which cannot exceed 10% unless approved by a referendum. Within 55 days
after the values are certified or within 10 days of tax roll approval, the property appraiser will
issue the proposed tax rate. Each taxing authority only has 65 days after values are certified to
hold a public hearing of their proposed budgets and millage rates. Each taxing authority is then
required to publish an advertisement for one final public hearing to review the final budget and
millage rate (Brevard County, 2011).
Board of County Commissioner Policies. Brevard County has had long-standing
budget and financial policies. The current policies were approved on February 7, 2006 and have
been reviewed annually. For FY 2011-2012 a few minor changes were made to policies on April
19, 2011 but nothing substantial to affect the review of the county’s budget and financial policies
(Brevard County, 2011). Because the policies encompass both the budget and financial policies,
NACSLB levels 4, 11, 7.2, 12.1 and 12.2 are satisfied. The board’s stated objectives for its
budget and financial policies are as follows: (a) provide clear direction to staff in managing
finances and development of the operating budget and CIP, (b) provide “careful planning and
long-term financial management”, (c) raise credit rating to highest possible level, (d) develop the
budget and provide financial management that complies with Government Finance Officer’s
Association standards (Brevard County, 2011, p. 1). The board’s directives introduce separation
of duties. It calls for the budget office to develop the CIP and for the County Manager to provide
BUDGET ORGANIZATION AND DESIGN 14
direction for the development of the budget. The capital portion of the budget is required to be
included in the annual operating budget as well. The board also lists among other requirements
that (a) a financial impact statement for all proposed capital projects, (b) staff will consider
privatization, (b) mandated programs will have priority over non-mandated programs, (c) budget
and financial policies are to be reviewed annually, (d) a flexible budget will be adopted that can
be amended during the fiscal year. The accounting and reporting is designated to the Clerk
Finance Department and that department is required to be in compliance with the Uniform
Accounting System of the State of Florida and Generally Accepted Accounting Principles
(Brevard County, 2011, p. 5). The board requires the Budget Office to submit quarterly budget
and financial reports that include department summaries and any budget variances. These
reports are to be compiled from the information generated by the Clerk Finance Department.
When projected changes can jeopardize the county’s financial position, as happened in FY 2009-
2010 when projected property values declined, the County Manager is required to recommend
the proper actions. The Budget Office is required also to provide an annual report to the board
after the auditor completes the Comprehensive Annual Financial Report. Additional
requirements include that all department directors who expend bond funds comply with federal
regulations pertaining to any findings so that they can be included in the annual disclosure. The
board also has developed a debt management policy that requires the County Manager to develop
long-range financing plans and appropriate analysis and reports. Similar requirements pertain to
private activity debt financing that is used to lure businesses to Brevard County. In fiscal years
2010 and 2011, Brevard County has been able to defease loans either through paying them off, or
new debt with lower interest rate bonds or loans (Brevard County, 2011).
BUDGET ORGANIZATION AND DESIGN 15
The board’s revenue policy requires diversification of revenues and appropriate levels of
user fees that reflect direct and indirect costs; however this is easier said than done at Brevard
County. There is a reluctance to raise taxes and increase user fees substantially. Also, the board
still reserves the right to waive fees. To amend the budget, the board requires that budget
amendments, transfer of funds over $100,000 and changes to reserve funds be reviewed and
approved in the following order: (a) department head, (b) Budget office, (c) County Manager, (d)
Board. Although the board has an adopted policy to manage contingency accounts, the Budget
Director told the Board of Commissioners that they do not exist. The contingency is in actuality
the reserve balances in separate accounts. The board requires 10% of operating funds to be held
in reserve which assists with cash flow issues that may arise. It is important to note that this
reserve balance requirement is in addition to the statutory reduction of 5% of projected ad
valorem revenues for the year. Based on the review of minutes, supporting budget documents
and the budgets, Brevard County’s budget and financial policies are in congruence, and adhered
to by the staff and board (Brevard County, 2011).
Management Strategies
The NACSLB level 7.1, development of management strategies, requires special
attention. Six of the sustaining strategies presented on February 10, 2011 are the following: (a)
partnerships, (b) outsourcing, (c) service level identification and review, (d) cost containment
and review, (e) investment and enhancement, (f) role change and innovation. Arrington-
Marlowe, LLC and Howard Tipton stressed to the board that current employees, in the wake of
all the layoffs and hiring freezes, have to carry a larger load and perform additional tasks that
may require additional training. Since 2006 Brevard County has shed 417 jobs, or 15% of its
workforce which stood at a high of 2,740 positions in 2006, to 2,323 in 2011. The Human
BUDGET ORGANIZATION AND DESIGN 16
Resource budget shows 800 hours of training for FY 2011-2012 in employee development. It
will also require the departments to seek opportunities for outsourcing, reengineering services
and seeking ways that volunteers could provide some of those services. The Library Department
utilizes the equivalent of 43 FTEs, and the Human Resources Department processed 70
volunteers in FY 2010-2011. Employing volunteers will need to be expanded as will
automation. Arrington-Marlow LLC also stressed to the board the importance of investing in
information technology in an attempt to automate as many processes as possible. Despite the
economic turmoil, Brevard County will be adding employers to the region and will continue to
prioritize economic development. The low taxes in the region generally and the state specifically
appeal to employers looking to relocate (Brevard County, 2011; NACSLB, 1999).
Budget Office
The Brevard County “Budget Office” is a freestanding department within the
Management and Community Services Group which is overseen by the Assistant County
Manager. The Budget Director reports to the Assistant County Manager who in turn reports to
the County Manager. This is to be expected for a large county. Brevard County’s population is
greater than 500,000 and the budget is nearly $1 billion (Michel, 2002). There is no separate
Finance Department or office. The Budget Office has a functional organizational chart. The
organizational chart flows down from the citizens, commissioners to the county management.
From there the budget office’s programs and services are divided into two separate functions:
(a) Financial, Revenue and Budget Program, (b) Performance Analysis and Capital Programming
Program. The Financial, Revenue and Budget Program is divided into (a) Budget Development,
Monitoring and Oversight, (b) Financial and Revenue Management. The Budget Development,
Monitoring and Oversight are responsible for (a) Budget Coordination, Processing and
BUDGET ORGANIZATION AND DESIGN 17
Oversight; (b) Position Control; (c) Citizens’ Budget Development. Financial and Revenue
Management is responsible for (a) Costing of Service/Cost Allocation Plan; (b) Fee Analysis/Fee
Directory; (c) Fee Directory; (d) Revenue Forecasting, Analysis and Maximization; d) FEMA
Reimbursement and Oversight; e) Grant Management, Administration and Oversight; f) Long-
Range Financial Planning (Brevard County, n.d).
Performance Analysis and Capital Planning Program has two principle functions: (a)
Performance Management and Planning, (b) Capital Planning. Performance Management and
Planning has under its purview (a) Strategic Management and Planning, (b) Balanced Scorecard
and Performance Measures, (c) Business Process Improvement, (d) Financial Process and
Performance Audits, (e) Management Studies. Capital Planning’s area consists of (a) Capital
Planning, Analysis, Coordination and Oversight; (b) Debt Management Support; (c) Economic
Stimulus Reporting, Oversight and Monitoring. For all these functions the Brevard County
Budget Office has eight employees. The FY 2011-2012 Budget Office budget is $667,040. Of
that amount, approximately 86% comes from General Fund revenues, and approximately 14%
from transfers. Of the $667,040 budget, approximately 96% goes towards compensation and
benefits for the eight employees (Brevard County, 2011).
Brevard County Budget Conformance to Best Practices
Foregoing Maintenance
Brevard County as many other government agencies over the course of the last three
years has had to endure extremely difficult economic circumstances. Rapidly declining property
values have decreased resident wealth and county resources. It was not practical or possible for
Brevard County to adhere to all the principles of a good budget process (NACLSB, 1999, p. 4).
The decisions made by the County Administrator and later adopted by the Board of County
BUDGET ORGANIZATION AND DESIGN 18
Commissioners reflect more a short- rather than the long-term view prescribed by the NACLSB
(1999, p. 4). For example, the Public Works Department, beginning in FY 2010-2011, has had
to forego road resurfacing. By not performing routine maintenance on its network of roads,
long-term, this decision will cause greater costs because these roads will eventually be beyond
the scope of a routine maintenance program and will have to be reconstructed (Brevard County,
2010).
Declining Employee Wealth
FY 2010-2011 brought Cost-of-Living-Adjustment freezes and increased employee
contributions to the health care plan for both board departments and constitutional officers.
Also, the management class and employees in the board departments lost 12 and 6 days,
respectively, to furloughs (Brevard County, 2010). FY 2011-2012 saw a different reduction to
their income. Each employee now contributes 3% of their income to the Florida Retirement
System which was dictated not by Brevard County, but by the State of Florida (State of Florida,
2011). The workforce has been reduced by 15% over the last six years. It is difficult to imagine
that these decisions motivate employees, but it is the reality of the difficult economic times the
nation faces today. Besides the decreased employee wealth and increased workload, Brevard
County continues to make decisions that align with stated goals and continues to engage the
public and operate in a transparent manner (Brevard County, 2011).
Budget Office Organizational Chart and Staffing
The Brevard County Budget Office, as a freestanding office reporting to an Assistant
County Manager, is typical for an organization as large as Brevard County. Forty percent of
organizations with a population over 500,000 have a freestanding budget office (Michel, 2002, p.
28). The organizational chart is functional and not hierarchical. The budget office is divided
BUDGET ORGANIZATION AND DESIGN 19
into eighteen specialized functions; however, as stated, the office only has eight employees. It is
impossible to know from the functional chart how many supervisors are responsible for which
functions and how many employees are responsible for the eighteen specialized functions. This
is a departure from what Michel (2002) shows in the budget office structure.
The Brevard County Budget Office has taken on additional responsibilities at a time that
major budget cuts are being undertaken for numerous departments (Brevard County, n.d.). The
budget office did not lose employees from FY 2010-2011, but according to Michel (2002) the
Brevard County Budget Office has the minimum number of employees, eight, for a budget of its
size. With a budget of $931,931,814 for FY 2011-2012, the budget office’s expenditures, as a
percent of total government expenditures, is 0.07% which is at the low end of the range for
governments of its size (Brevard County, 2011, Michel, 2002, p. 67). Brevard County’s budget
office has 0.22% of all county employees which according to Michel (2002) is in the middle of
the range for large governments and slightly above the 0.19% average (Brevard County, 2011).
Long-Term Planning
The final observation to make about Brevard County is its lack of conformity to long-
term operating and capital planning. Brevard County is in the unenviable position, as has been
stated, of operating in extremely difficult economic times. The board instructed staff early in
2010 not to invest in projects that were tied to future residential housing growth. That seems the
right approach in light of all the deferred maintenance and capital expenditures. However, the
deferral of some of the maintenance and capital items such as replacing roofs and aging air
conditioning systems, and road resurfacing could lead to higher operating costs in the short-term
and higher capital costs in the long-term. It is one thing to cut the grass at parks less frequently,
but something quite different when repairs and maintenance need to be done. On the surface it
BUDGET ORGANIZATION AND DESIGN 20
seems that the board’s decision not to address these critical items is short-sighted, but at the same
time quite understandable in the face of Brevard County residents’ economic suffering today and
the need to provide a basic level of service to them (Brevard County, 2010-2011).
Written in APA Style 6th
Edition
BUDGET ORGANIZATION AND DESIGN 21
References
Brevard County. (2012). Retrieved from http://www.brevardcounty.us/
Brevard County. (2011, April 19). Meeting minutes. Retrieved from
http://www.brevardcounty.us/docs/budget-documents/budget-and-financial-policies-fy-
2011-2012-budget.pdf?sfvrsn=4
Brevard County. (n.d.). Meeting minutes. Retrieved from
http://brevardcountyfl.iqm2.com/Citizens/Calendar.aspx?From=1/1/2011&To=12/31/201
1
Brevard County. (n.d.) Meeting minutes. Retrieved from
http://www.brevardcounty.us/CountyCommission/Commissioners/District1/Home
Brevard County. (n.d.) Retrieved from
http://www.brevardcounty.us/CountyCommission/GovernmentOrganizationalChart
Jacksonville Transportation Authority (JTA). n.d. Retrieved from
http://www.jtafla.com/AboutJTA/showPage.aspx?Sel=27
Jacksonville Transportation Authority (JTA). n.d. Retrieved from
http://www.jtafla.com/pdf/Board_Agendas/Agenda-071212-rev2.pdf
Michel, R. Gregory. (2002) Organization and Design of an Effective Budget Functiontion.
Chicago, IL: Government Finance Officer’s Association
National Advisory Council on State and Local Budgeting (NACSLB). (1999). Recommended
Budget Practices. A Framework for Improved State and Local Government Budgeting.
Chicago, IL: Government Finance Officer’s Association
State of Florida, 31 May 2011. Retrieved from
http://www.miamidade.gov/hr/library/FRS%20contribution%20rates%202011.pdf
BUDGET ORGANIZATION AND DESIGN 22
Appendix
1. Brief review of Michel and NACSLB literature.
2. Description, Analysis and Comparison:
a. Brevard County Budget Process-present in sequential order rather than presenting
by recommended budget practices
b. Budget Document
c. Financial Policies
i. State requirements
ii. Board requirements
d. Management Strategies
e. Budget Office
3. Conformity to Best Practices
a. Foregoing maintenance
b. Employee’s declining wealth
c. Budget office org chart and staffing
d. Lack of long-range financial planning

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UWF Public Budgeting Model Research Paper

  • 1. Running Head: BUDGET ORGANIZATION AND DESIGN The Organization and Design of Budgeting Function, Budgeting System Components and Related Financial Management Techniques for Brevard County Carlos F. Tobar University of West Florida Author Note Email: cft3@students.uwf.edu
  • 2. BUDGET ORGANIZATION AND DESIGN 1 Abstract This paper begins with a short review of the Michel and the National Advisory Council on State and Local Budgeting (NACSLB) recommended budget practices for a public organization. Brevard County in Central Florida, home of NASA, cruise ship terminals and a unique natural environment, was chosen for budget analysis because of the major financial challenges it has faced in recent years. The paper will describe and analyze the county’s budget and compare it to the recommended budget practices. Finally, exceptions to the budget practices, and reasons for them, will be reviewed.
  • 3. BUDGET ORGANIZATION AND DESIGN 2 Short Review of Budgeting Concepts and Models Michel Although Michel writes about the vital functions of the budget office for small and large governments including states, this section will focus on the concepts for large agencies and budgets like Brevard County’s. A budget office has increasing levels of responsibility ranging from the most basic function of coordinating the budget process to policy guidance and finally to supervising the actual implementation of the adopted budget (Michel, 2002, p. 11). A budget office prepares and controls the operating budget. Michel (2002) states that a budget office that is the focus of the organization and relates to all departments within it has the following budget office activities: (a) Program Evaluation, Performance Measurement, and Management Analysis; (b) Intergovernmental Relations; (c) Grant Management; (d) Financial Management Information Systems; (e) Capital Budget Preparation and Control; (f) Financial Policy Development; (g) Data Analysis; (h) Long-Term Financial Planning; (i) Revenue Forecasting and Analysis; (j) Employee Position Control (p. 12). The naming of the budget office, its place in the organization and its assigned activities will vary based on the size of the organization (Michel, 2002). At the larger organizations, typically, the budget office will reside in either the Chief Executive Officer or a separate department that reports to a subordinate of the Chief Executive Officer. National Advisory Council on State and Local Budgeting (NACSLB) The NACLSB developed a framework for state and local governmental agencies consisting of 4 principles and 12 elements to improve budgeting practices (NACSLB, 1999). The first principle is to establish the goals that will steer the legislature. The first principle’s first element requires assessment of the community’s needs, priorities and unique challenges. The
  • 4. BUDGET ORGANIZATION AND DESIGN 3 second element calls for government to assess its programs, services, assets and management systems. The third element requires development and dissemination of the goals to the stakeholders. The second principle requires the agency to implement policies, practices and procedures to help achieve its goals. The fourth element requires development of financial policies to ensure financial obligations are met. The policies must include instructions to stabilize revenues, fee adoption, debt management, emergency management, recurring and one-time revenue sources. The fifth element requires operational and capital policies and plans. The sixth element consists of policies and plans to deliver programs and services, capital acquisition, maintenance, replacement and disposal. The seventh element calls for management strategies to ensure operational and financial goals are attained. The third principle requires the budget to align with goals. The eighth element consists of implementing a budget process that adopts a budget calendar, guidelines, instructions and policies for budget submissions, budget coordination and budget review, budget feedback and budget modifications. The ninth element requires development of short- and long-range operating and financial plans that consider revenue forecasts and options to fund proposed capital projects. Because most governments are financially constrained, the tenth element involves presenting a budget that aligns with the legislature’s vision and adopted goals. The fourth principle requires evaluation of the organization’s performance, and mechanisms to be in place to make the required adjustments for the present and future. The eleventh element requires the agency to measure, monitor, and evaluate the budget on a regular basis. The twelfth element requires adjusting, if necessary, the adopted budget, adopted policies, programs or services, strategies and goals (NACLSB, 1999, pp. iii-iv).
  • 5. BUDGET ORGANIZATION AND DESIGN 4 Description, Analysis and Comparison of Brevard County Budget Budget Process During the information age governments have an unprecedented amount of tools available to them to gather input from citizens. However, the government and its politicians must be willing to allow that information flow. It is of no value to a citizen to have internet access, but not have a picture, physical address, email address or phone numbers to communicate with government staff and politicians, or minutes to meetings. Some public organizations’ websites are instructive. For example, the Jacksonville Transportation Authority has photos of the board members but no information on how to contact them. The CEO, Michael Blaylock, is listed, but, again, not his contact information. There is no organizational chart. There is no department head or employee listing, no agendas, no minutes from recent meetings and no archives of past agendas or minutes (JTA, n.d.). Brevard County, on the other hand, lists each commissioner, his or her photo, phone number, fax number, email address and physical address. Additionally, the county displays prominently on its website the County Commissioners tab, the organizational chart, the department heads and their phone numbers. The county budget has its own separate tab on the home page of the website. The county’s website also has archived agendas and minutes from 2010 forward. The commissioners, as some stated in the March 18, 2010 budget workshop, communicated with thousands of residents during their campaigns. These commissioners and government employees can be approached anywhere they go, at their offices, board workshops and board meetings in addition to electronic means which encourages stakeholder input (Brevard County, 2010). It is not surprising that in 2012 Brevard County’s website won the Sunshine Award for exceeding transparency standards (Brevard County, 2012).
  • 6. BUDGET ORGANIZATION AND DESIGN 5 For Brevard County, the communication from the public was a key factor in establishing broad goals to guide its decision-making. Brevard County, located in Central Florida, has had to face difficult challenges since 2008 when the homestead exemption was approved by voters, and later when the housing downturn caused both property values and property tax revenues to decline. That led to the 7% decline in property tax values in FY 2008 followed by reductions of 12%, 13% and 12%, respectively, for fiscal years 2009, 2010 and 2011. Further reductions of 17%, 10% and 7% are projected for fiscal years 2012, 2013 and 2014, respectively (Brevard County, 2011). The national economic downturn has caused a trickledown effect from the national government to states and local governments and from the states to local governments thereby handing local governments unfunded mandates and increased responsibilities. Increased unemployment has created more demand for social services including an increase in Medicaid spending. Brevard County, faced with the same challenges as every other community in the country, has had to endure also the shutting of NASA’s Space Shuttle program which is based at the Kennedy Space Center in Cape Canaveral. Furthermore, the unique natural environment in Brevard County poses restrictions on its capacity to address fiscal challenges. Brevard County has the highest concentration of salt marsh mosquitoes on the eastern seaboard. Addressing the threat of mosquito-borne diseases is a yearly battle. Brevard County is also required to fund mandated constitutional officers which restrict fiscal flexibility even further. The last point to make about Brevard County’s fiscal challenges is the Board of County Commissioners’ reluctance to raise taxes which has made it incredibly challenging to balance the budget of a billion dollar organization (Brevard County, 2010). One theme that will emerge from Brevard County’s budget analysis is that two processes are proceeding simultaneously: (a) the development of the current year budget, (b) development
  • 7. BUDGET ORGANIZATION AND DESIGN 6 of strategic and long-term plan. The purpose for the two-pronged approach came as a result of its property tax valuation projections through FY 2015 (Brevard County, 2011). When the property appraiser sounded the alarm of drastically reducing property tax revenues in early 2010, the commissioners directed the County Manager, Howard Tipton, to maintain the aggregate property tax rate, the millage, at its FY 2009-2010 level (Brevard County, 2010). This is the backdrop for the development of the budgets for FY 2010-2011 and FY 2011-2012. This principal directive helped guide the decisions, some of which were unprecedented and controversial, in the subsequent two years. On March 18, 2010, Howard Tipton brought in Arrington-Marlowe, LLC to encourage the Board of County Commissioners to develop a strategic plan. Arrington-Marlowe had experience dealing with the State of Florida’s financial crisis in the early 1990s and advised the board of the importance of setting a course for the near future. The theme of his message was that conditions would never return, especially property tax collections, to what they once were. The board had to prepare for a new future that meant a new baseline for Brevard County—a new baseline that included more people, more responsibility, increased costs, but decreased tax revenues. Howard Tipton informed the board of his intent to hold numerous public meetings to disseminate the information to employees and the public of the current financial crisis and the recommended changes to the budget. The broad goals for the county were to maintain the same level of taxation, provide mandated services, life and safety services and library services. Howard Tipton and his staff immediately addressed the board’s directive to maintain the level of taxation. Because the reduction of revenues was going to lead to budget cuts, and the likelihood of bargaining unit employee layoffs was high, Howard Tipton informed the union that he intended to come before the board to declare a fiscal hardship on July 22, 2010. The declaration
  • 8. BUDGET ORGANIZATION AND DESIGN 7 was necessary, in advance of preparing the final budget and millages, because county management needed time to negotiate the subject of furloughs, and possibly other concessions, with the county’ labor union (Brevard County, 2010). Overall, the county has done an outstanding job of meeting the goals of elements one and three of the NACSLB model (1999). Brevard County set a high number of public and board meetings to disseminate the message for the two fiscal years analyzed. In total the board in 2010 held 16 board workshops and meetings addressing the budget including one e-town hall meeting. At the e-town hall meeting Florida TODAY’s Government Editor, Don Walker, asked questions from residents who submitted to the newspaper their questions over a two-week period. All of the commissioners, Howard Tipton, his two assistants and the county budget director were in attendance. The board subsequently adopted the final budget and set the millage rate in September 2010 (Brevard County, 2010). During the FY 2011-2012 budget process, the county set meeting dates for another e- town hall meeting and another meeting in the City of West Melbourne on August 16, 2011 in addition to the board workshops, meetings and public hearings. On February 10, 2011, which was the beginning of the FY 2011-2012 budget process, Brevard County introduced its strategic plan and adjusted its broad goals, which satisfies NACSLB standard for level 12.3-adjusting the broad goals (Brevard County, 2011; NACSLB, 1999). Its strategic objectives were to (a) fulfill mission requirements, (b) increase customer satisfaction, (c) expand community outreach, (d) improve effectiveness, (e) improve efficiency, (f) improve employee engagement, (g) increase workforce development, (h) meet financial and budgetary requirements (Brevard County, 2011). Of the fifteen stated sustaining initiatives to meet their strategic objectives, several of them were in conflict, at least temporarily, to their objectives of increasing customer satisfaction and
  • 9. BUDGET ORGANIZATION AND DESIGN 8 improving employee engagement. The first initiative was to reduce the size of government, the third initative was not to create new positions and the fourth was not to introduce new programs and services. As was seen beginning in FY 2010-2011, this led to increased wait times for building permit approvals, increased wait times on phone calls and increased response time to animal bites and other decreased levels of service, and was a concern for many residents at budget workshops in 2010 (Brevard County, 2010-2011). The second initiative was to maintain current salaries and not provide cost-of-living increases. Further complicating matters was the state’s decision to require a 3% retirement match from all employees participating in the Florida Retirement System (FRS) in FY 2011-2012 (State of Florida, 2011). Although this did not affect the county’s budget, the county had to be concerned about the effect on its employees’ declining wealth. In FY 2010-2011, in addition to the salary/wage freezes, employees contributed $10 million towards its health care costs which was to be an ongoing requirement, 6 furlough days for regular employees, or 12 furlough days for the management class. The county’s FY 2011- 2012 adopted budget, seven months after the initial board workshop, did include a one-time 2.5% increase in wages and salaries. Another initiative that was discussed briefly at the meetings was revenue enhancement. The initial discussions pertained mostly to the feasibility of increasing user fees (Brevard County, 2010). One of Brevard County’s complexities is that it really operates several “businesses” which have the same revenue source, ad valorem or property taxes, but have their own millages or property tax rates and restrictions. Brevard County has two options to affect revenues for a department: (a) increase or decrease General Fund transfers, (b) increase or decrease millages. Although transfers to and from the general fund are permitted, transfers between the special funds are not. Brevard County has 21 operating tax districts or “businesses” and 6 long-term
  • 10. BUDGET ORGANIZATION AND DESIGN 9 debts which are all funded by the property taxes. Included in the 21 operating tax districts are the General Fund, Library District, Mosquito Control District, Fire Control, several recreation districts, the airport, environmentally endangered lands, and all five Road and Bridge districts, which have the same boundaries as the commissioner districts. Each operating tax district millage must be approved separately by the board at the time the budget is adopted (Brevard County, 2010). Once Brevard County’s management staff received its directive to maintain the millages at current levels and after it received its projected revenue, county management staff went about the task of balancing the budget, a state requirement, by ensuring expenditures met revenue projections. As we will see in the financial policy section, Brevard County had to reduce its projected property tax revenue, statutorily, by 5% to meet State of Florida requirements. In FY 2010-2011 some departments and constitutional officers saw virtually no change in their budgets compared to the prior year; however, departments that have minor capital projects in their operating budgets specifically Public Works and Parks and Recreation, bore the brunt of the budget cuts. Of special note, Parks and Recreation increased their FTEs by 6 employees, but they reduced FTEs by 50 in FY 2009-2010. In FY 2011-2012 Housing and Human Services saw a reorganization and a drastic reduction in the Housing program because of expiring grant funding, but the rest of the budget cuts, just like in FY 2010-2011 were due largely to maintenance and minor capital deferrals, and reductions in capital investments. Parks and Recreation deserves a special note in FY 2011-2012. Their budget was reduced by a whopping $121,000,000 or 59% of their final FY 2010-2011 budget. This amount represents nearly half of all the cuts in FY 2011-2012 compared to the final adopted budget for FY 2010-2011. Of that amount, $81 million was a reduction in debt payments. They also eliminated 15.75 positions. In
  • 11. BUDGET ORGANIZATION AND DESIGN 10 FY 2011-2012 the Planning Department’s budget reduction was mostly in grants to others (Brevard County, 2011). The Capital Improvement Plan (CIP) is a five-year plan that is adjusted yearly. The bulk of the revenue, roughly a quarter of the county’s annual budget, is generated from ad valorem taxes that were approved as part of referendums by the voters. The revenues for CIP projects are allocated mostly to Facilities, Natural Resources, Parks and Recreation, Solid Waste and Public Works Departments. The aggregate amount of the CIP projects for each department is included in each individual department summary of the budget. The summary of revenues and expenditures include operating and capital costs. Each CIP budget for each department is listed separately in its own section of the County Budget website tab. The details of each of those projects are found there (Brevard County, 2010). Brevard County meets the NACSLB standards for level 8: (a) staff developed a budget calendar; (b) the board gave guidelines to staff; (c) department heads provided individual budget requests to the budget office; (d) staff developed the mechanisms--board workshops, board meetings, e-town hall meetings, public hearings--to coordinate budget preparation and review; (e) staff identified opportunities for stakeholder input. All stakeholders were invited to participate at all these meetings and the minutes from these minutes reveal the high level of interest in the proceedings. The level 9 standards are almost met: (a) long-range financial planning was accomplished in FY 2011-2012 by developing the strategic plan; (b) capital revenue projections were provided through 2015; (c) property tax valuations were analyzed through 2015; (d) declining revenues and reluctance to increase the aggregate millage meant base-level services would be affected either through elimination, or decreased levels of service; (e) increased user fees were considered; (f) consensus was reached on the projected revenues; (g)
  • 12. BUDGET ORGANIZATION AND DESIGN 11 revenue sources were identified easily in the budget; (h) expenditures were projected; (i) department heads and senior level county administrators reviewed expenditure options; revenue options, other than user fees, were not discussed since the board had already stated their reluctance to increase taxes; (j) a CIP was developed (Brevard County. 2011; NACSLB, 1999) Budget Document The Brevard County budget document, as to be expected with numerous “businesses” within the business, is a consolidation of individual budgets. Each department and constitutional office has its own budget. The Brevard County budget office prepares the document and provides a color-coordinated pie chart with the various revenue sources in one pie chart and the various expenditure categories in the second pie chart. The budget summaries all contain the same categories. For operating revenues, the following consolidated line items are shown: (a) taxes; (b) permits, fees, special assessments; (c) intergovernmental; (d) charges for services; (e) fines and forfeitures; (f) miscellaneous; (g) statutory reduction. For non-operating revenues, the following line items are displayed: (a) balance forward, (b) transfers from general revenue, (c) transfer from others, (d) other finance sources. For operating expenditures the following line items appear: (a) compensation and benefits, (b) operating expenses, (c) capital outlay, (d) grants and aid (to others). The non-operating expenditure categories are: (a) CIP, (b) debt service, (c) Reserves-operating, (d) Reserves-capital, (e) Reserves-restricted, (f) transfers to others. Each department and constitutional office provides in the summary the following: (a) mission statement, (b) programs and services, (c) trends and issues, (d) major service level impacts, (e) budget analysis, (f) program changes, (g) goals, (h) major accomplishments for the preceding fiscal year, (i) initiatives for the coming fiscal year, (j) performance measures which align with the board’s strategic plan. The Adopted Budget Message document cites major trends and
  • 13. BUDGET ORGANIZATION AND DESIGN 12 challenges and a short-term, but not a long-term financial plan. The Budget and Financial Policies document contains all the financial policies that guide budget development. The Budget Philosophy and Strategic Framework document contains the method of accounting the county utilizes: modified accrual and accrual basis of accounting. Recommended budget summaries, prior to budget adoption, are uploaded to the website for public review. The summaries for FY 2012-2013 are already on the website. They provide neither revenue and expenditure line items for operating and non-operating categories, nor the pie charts, but the total budgets for all departments and the CIP are listed. For fiscal years 2010-2011 and 2011-2012, both budgets were adopted on-time. Since Brevard County is not introducing new programs, its focus has been on reviewing existing services. Brevard County meets all the NACSLB standards for levels 6, 7.3 and 10 with the exception of providing a long-term operating financial plan (Brevard County, 2011). Financial Policies Florida Statutes. Under the County Budget heading on the website’s home page, Brevard County lists its financial policies. The first policy is Florida Statute, Chapter 129 which guides budget development and policies. The statute requires (a) the fiscal year begin October 1, (b) a balanced budget, (c) reserves for various accounts, (d) the budget exclude 5% of projected revenues from operating revenues, (e) balances be recognized and carried forward, (f) commissioners to appoint a budget officer, (g) the budget officer to submit a tentative budget within 15 days of receiving certification of property values, (h) the budget to regulate expenditures, (i) the budget document to state whether modified accrual or accrual basis of accounting is utilized, (j) the budget to be amended, if necessary, within certain parameters (Brevard County, 2011).
  • 14. BUDGET ORGANIZATION AND DESIGN 13 Florida Statute, Chapter 200 guides property tax revenue generation policies. Brevard County is responsible for assessing and collecting property taxes not just for itself, but also for municipalities and special districts. Additionally, voters in the past may have elected to tax themselves further and those rates, millages, are included in the total tax calculation. Once the county’s property appraiser has certified property values, agencies have 35 days to submit their proposed tax rate which cannot exceed 10% unless approved by a referendum. Within 55 days after the values are certified or within 10 days of tax roll approval, the property appraiser will issue the proposed tax rate. Each taxing authority only has 65 days after values are certified to hold a public hearing of their proposed budgets and millage rates. Each taxing authority is then required to publish an advertisement for one final public hearing to review the final budget and millage rate (Brevard County, 2011). Board of County Commissioner Policies. Brevard County has had long-standing budget and financial policies. The current policies were approved on February 7, 2006 and have been reviewed annually. For FY 2011-2012 a few minor changes were made to policies on April 19, 2011 but nothing substantial to affect the review of the county’s budget and financial policies (Brevard County, 2011). Because the policies encompass both the budget and financial policies, NACSLB levels 4, 11, 7.2, 12.1 and 12.2 are satisfied. The board’s stated objectives for its budget and financial policies are as follows: (a) provide clear direction to staff in managing finances and development of the operating budget and CIP, (b) provide “careful planning and long-term financial management”, (c) raise credit rating to highest possible level, (d) develop the budget and provide financial management that complies with Government Finance Officer’s Association standards (Brevard County, 2011, p. 1). The board’s directives introduce separation of duties. It calls for the budget office to develop the CIP and for the County Manager to provide
  • 15. BUDGET ORGANIZATION AND DESIGN 14 direction for the development of the budget. The capital portion of the budget is required to be included in the annual operating budget as well. The board also lists among other requirements that (a) a financial impact statement for all proposed capital projects, (b) staff will consider privatization, (b) mandated programs will have priority over non-mandated programs, (c) budget and financial policies are to be reviewed annually, (d) a flexible budget will be adopted that can be amended during the fiscal year. The accounting and reporting is designated to the Clerk Finance Department and that department is required to be in compliance with the Uniform Accounting System of the State of Florida and Generally Accepted Accounting Principles (Brevard County, 2011, p. 5). The board requires the Budget Office to submit quarterly budget and financial reports that include department summaries and any budget variances. These reports are to be compiled from the information generated by the Clerk Finance Department. When projected changes can jeopardize the county’s financial position, as happened in FY 2009- 2010 when projected property values declined, the County Manager is required to recommend the proper actions. The Budget Office is required also to provide an annual report to the board after the auditor completes the Comprehensive Annual Financial Report. Additional requirements include that all department directors who expend bond funds comply with federal regulations pertaining to any findings so that they can be included in the annual disclosure. The board also has developed a debt management policy that requires the County Manager to develop long-range financing plans and appropriate analysis and reports. Similar requirements pertain to private activity debt financing that is used to lure businesses to Brevard County. In fiscal years 2010 and 2011, Brevard County has been able to defease loans either through paying them off, or new debt with lower interest rate bonds or loans (Brevard County, 2011).
  • 16. BUDGET ORGANIZATION AND DESIGN 15 The board’s revenue policy requires diversification of revenues and appropriate levels of user fees that reflect direct and indirect costs; however this is easier said than done at Brevard County. There is a reluctance to raise taxes and increase user fees substantially. Also, the board still reserves the right to waive fees. To amend the budget, the board requires that budget amendments, transfer of funds over $100,000 and changes to reserve funds be reviewed and approved in the following order: (a) department head, (b) Budget office, (c) County Manager, (d) Board. Although the board has an adopted policy to manage contingency accounts, the Budget Director told the Board of Commissioners that they do not exist. The contingency is in actuality the reserve balances in separate accounts. The board requires 10% of operating funds to be held in reserve which assists with cash flow issues that may arise. It is important to note that this reserve balance requirement is in addition to the statutory reduction of 5% of projected ad valorem revenues for the year. Based on the review of minutes, supporting budget documents and the budgets, Brevard County’s budget and financial policies are in congruence, and adhered to by the staff and board (Brevard County, 2011). Management Strategies The NACSLB level 7.1, development of management strategies, requires special attention. Six of the sustaining strategies presented on February 10, 2011 are the following: (a) partnerships, (b) outsourcing, (c) service level identification and review, (d) cost containment and review, (e) investment and enhancement, (f) role change and innovation. Arrington- Marlowe, LLC and Howard Tipton stressed to the board that current employees, in the wake of all the layoffs and hiring freezes, have to carry a larger load and perform additional tasks that may require additional training. Since 2006 Brevard County has shed 417 jobs, or 15% of its workforce which stood at a high of 2,740 positions in 2006, to 2,323 in 2011. The Human
  • 17. BUDGET ORGANIZATION AND DESIGN 16 Resource budget shows 800 hours of training for FY 2011-2012 in employee development. It will also require the departments to seek opportunities for outsourcing, reengineering services and seeking ways that volunteers could provide some of those services. The Library Department utilizes the equivalent of 43 FTEs, and the Human Resources Department processed 70 volunteers in FY 2010-2011. Employing volunteers will need to be expanded as will automation. Arrington-Marlow LLC also stressed to the board the importance of investing in information technology in an attempt to automate as many processes as possible. Despite the economic turmoil, Brevard County will be adding employers to the region and will continue to prioritize economic development. The low taxes in the region generally and the state specifically appeal to employers looking to relocate (Brevard County, 2011; NACSLB, 1999). Budget Office The Brevard County “Budget Office” is a freestanding department within the Management and Community Services Group which is overseen by the Assistant County Manager. The Budget Director reports to the Assistant County Manager who in turn reports to the County Manager. This is to be expected for a large county. Brevard County’s population is greater than 500,000 and the budget is nearly $1 billion (Michel, 2002). There is no separate Finance Department or office. The Budget Office has a functional organizational chart. The organizational chart flows down from the citizens, commissioners to the county management. From there the budget office’s programs and services are divided into two separate functions: (a) Financial, Revenue and Budget Program, (b) Performance Analysis and Capital Programming Program. The Financial, Revenue and Budget Program is divided into (a) Budget Development, Monitoring and Oversight, (b) Financial and Revenue Management. The Budget Development, Monitoring and Oversight are responsible for (a) Budget Coordination, Processing and
  • 18. BUDGET ORGANIZATION AND DESIGN 17 Oversight; (b) Position Control; (c) Citizens’ Budget Development. Financial and Revenue Management is responsible for (a) Costing of Service/Cost Allocation Plan; (b) Fee Analysis/Fee Directory; (c) Fee Directory; (d) Revenue Forecasting, Analysis and Maximization; d) FEMA Reimbursement and Oversight; e) Grant Management, Administration and Oversight; f) Long- Range Financial Planning (Brevard County, n.d). Performance Analysis and Capital Planning Program has two principle functions: (a) Performance Management and Planning, (b) Capital Planning. Performance Management and Planning has under its purview (a) Strategic Management and Planning, (b) Balanced Scorecard and Performance Measures, (c) Business Process Improvement, (d) Financial Process and Performance Audits, (e) Management Studies. Capital Planning’s area consists of (a) Capital Planning, Analysis, Coordination and Oversight; (b) Debt Management Support; (c) Economic Stimulus Reporting, Oversight and Monitoring. For all these functions the Brevard County Budget Office has eight employees. The FY 2011-2012 Budget Office budget is $667,040. Of that amount, approximately 86% comes from General Fund revenues, and approximately 14% from transfers. Of the $667,040 budget, approximately 96% goes towards compensation and benefits for the eight employees (Brevard County, 2011). Brevard County Budget Conformance to Best Practices Foregoing Maintenance Brevard County as many other government agencies over the course of the last three years has had to endure extremely difficult economic circumstances. Rapidly declining property values have decreased resident wealth and county resources. It was not practical or possible for Brevard County to adhere to all the principles of a good budget process (NACLSB, 1999, p. 4). The decisions made by the County Administrator and later adopted by the Board of County
  • 19. BUDGET ORGANIZATION AND DESIGN 18 Commissioners reflect more a short- rather than the long-term view prescribed by the NACLSB (1999, p. 4). For example, the Public Works Department, beginning in FY 2010-2011, has had to forego road resurfacing. By not performing routine maintenance on its network of roads, long-term, this decision will cause greater costs because these roads will eventually be beyond the scope of a routine maintenance program and will have to be reconstructed (Brevard County, 2010). Declining Employee Wealth FY 2010-2011 brought Cost-of-Living-Adjustment freezes and increased employee contributions to the health care plan for both board departments and constitutional officers. Also, the management class and employees in the board departments lost 12 and 6 days, respectively, to furloughs (Brevard County, 2010). FY 2011-2012 saw a different reduction to their income. Each employee now contributes 3% of their income to the Florida Retirement System which was dictated not by Brevard County, but by the State of Florida (State of Florida, 2011). The workforce has been reduced by 15% over the last six years. It is difficult to imagine that these decisions motivate employees, but it is the reality of the difficult economic times the nation faces today. Besides the decreased employee wealth and increased workload, Brevard County continues to make decisions that align with stated goals and continues to engage the public and operate in a transparent manner (Brevard County, 2011). Budget Office Organizational Chart and Staffing The Brevard County Budget Office, as a freestanding office reporting to an Assistant County Manager, is typical for an organization as large as Brevard County. Forty percent of organizations with a population over 500,000 have a freestanding budget office (Michel, 2002, p. 28). The organizational chart is functional and not hierarchical. The budget office is divided
  • 20. BUDGET ORGANIZATION AND DESIGN 19 into eighteen specialized functions; however, as stated, the office only has eight employees. It is impossible to know from the functional chart how many supervisors are responsible for which functions and how many employees are responsible for the eighteen specialized functions. This is a departure from what Michel (2002) shows in the budget office structure. The Brevard County Budget Office has taken on additional responsibilities at a time that major budget cuts are being undertaken for numerous departments (Brevard County, n.d.). The budget office did not lose employees from FY 2010-2011, but according to Michel (2002) the Brevard County Budget Office has the minimum number of employees, eight, for a budget of its size. With a budget of $931,931,814 for FY 2011-2012, the budget office’s expenditures, as a percent of total government expenditures, is 0.07% which is at the low end of the range for governments of its size (Brevard County, 2011, Michel, 2002, p. 67). Brevard County’s budget office has 0.22% of all county employees which according to Michel (2002) is in the middle of the range for large governments and slightly above the 0.19% average (Brevard County, 2011). Long-Term Planning The final observation to make about Brevard County is its lack of conformity to long- term operating and capital planning. Brevard County is in the unenviable position, as has been stated, of operating in extremely difficult economic times. The board instructed staff early in 2010 not to invest in projects that were tied to future residential housing growth. That seems the right approach in light of all the deferred maintenance and capital expenditures. However, the deferral of some of the maintenance and capital items such as replacing roofs and aging air conditioning systems, and road resurfacing could lead to higher operating costs in the short-term and higher capital costs in the long-term. It is one thing to cut the grass at parks less frequently, but something quite different when repairs and maintenance need to be done. On the surface it
  • 21. BUDGET ORGANIZATION AND DESIGN 20 seems that the board’s decision not to address these critical items is short-sighted, but at the same time quite understandable in the face of Brevard County residents’ economic suffering today and the need to provide a basic level of service to them (Brevard County, 2010-2011). Written in APA Style 6th Edition
  • 22. BUDGET ORGANIZATION AND DESIGN 21 References Brevard County. (2012). Retrieved from http://www.brevardcounty.us/ Brevard County. (2011, April 19). Meeting minutes. Retrieved from http://www.brevardcounty.us/docs/budget-documents/budget-and-financial-policies-fy- 2011-2012-budget.pdf?sfvrsn=4 Brevard County. (n.d.). Meeting minutes. Retrieved from http://brevardcountyfl.iqm2.com/Citizens/Calendar.aspx?From=1/1/2011&To=12/31/201 1 Brevard County. (n.d.) Meeting minutes. Retrieved from http://www.brevardcounty.us/CountyCommission/Commissioners/District1/Home Brevard County. (n.d.) Retrieved from http://www.brevardcounty.us/CountyCommission/GovernmentOrganizationalChart Jacksonville Transportation Authority (JTA). n.d. Retrieved from http://www.jtafla.com/AboutJTA/showPage.aspx?Sel=27 Jacksonville Transportation Authority (JTA). n.d. Retrieved from http://www.jtafla.com/pdf/Board_Agendas/Agenda-071212-rev2.pdf Michel, R. Gregory. (2002) Organization and Design of an Effective Budget Functiontion. Chicago, IL: Government Finance Officer’s Association National Advisory Council on State and Local Budgeting (NACSLB). (1999). Recommended Budget Practices. A Framework for Improved State and Local Government Budgeting. Chicago, IL: Government Finance Officer’s Association State of Florida, 31 May 2011. Retrieved from http://www.miamidade.gov/hr/library/FRS%20contribution%20rates%202011.pdf
  • 23. BUDGET ORGANIZATION AND DESIGN 22 Appendix 1. Brief review of Michel and NACSLB literature. 2. Description, Analysis and Comparison: a. Brevard County Budget Process-present in sequential order rather than presenting by recommended budget practices b. Budget Document c. Financial Policies i. State requirements ii. Board requirements d. Management Strategies e. Budget Office 3. Conformity to Best Practices a. Foregoing maintenance b. Employee’s declining wealth c. Budget office org chart and staffing d. Lack of long-range financial planning