4 Tips for Understanding and Creating Budgets

Establish Goals and Timeline

Creating and sticking to a budget is a skill everyone should learn. But creating and adhering to a budget in a public policy context is very different from managing personal income and expenses. Organizational budgets serve as financial roadmaps, communication tools, and instruments by which to measure progress and ensure accountability. Here are four helpful ideas for developing and following a policy budget.


Image via Flickr by StockMonkeys.com

An essential step in beginning the public policy budgeting process is establishing goals. These should include financial and values-based goals, and should be prioritized to provide a roadmap as you move forward. Keeping in mind that your budget will help others understand the purpose and role of your agency or organization, the goal-setting process is an excellent opportunity to make sure that your upcoming plans and projects are in keeping with your mission or other operational principles.

Also, be sure to establish a timeline, building in hard deadlines and allowing for incremental review, discussion, and approval. This will help avoid the kind of last-minute crunch that can result in unnecessary tension and conflict.

Create a Unified Approach

Once your goals and timeline are set, get consensus on how to proceed. Delegate roles and responsibilities, and ensure that everyone is clear on who’s doing what. Give everyone a shared starting point, making sure to include the current financial status of your organization, any significant changes from the previous year’s budget, and any rules or restrictions that affect how revenue can be allocated.

It’s also helpful to collectively note variables like deferred or one-time costs or revenues, depreciation or appreciation of assets, inflation or deflation, as well as things like projected population growth and other factors that may influence your budget over time.

Engage the Public


Image via Flickr by Mayor McGinn

This step is both one of the most critical and the most overlooked. A 2013 study shows that the more informed and engaged the public is about local agencies, the less likely they are to feel that taxes are too high. Establish a practice of participatory budgeting through the use of surveys, online forums, committees, and workshops that allow the public to have a voice in budget development.

Create a Measurement Plan

Even the most accurate and comprehensive public policy budget is incomplete without a measurement plan. Establish milestones and benchmarks throughout the term of your budget that will give you a picture of how the organization is performing against expectations. Use interim reports, whether monthly, quarterly, or semi-annually, to see how performance against these benchmarks changes over time. Plan to present an annual report that leads to takeaways that can be used in the next round of budget planning. These reports should, of course, also meet relevant requirements and follow best practices for accuracy and accountability.

A thoughtful and deliberate approach to the budgeting process paves the way for smooth operations well into the future. It may seem intimidating at first, but if you put a plan in place and take the time to work through each step, you and the community you serve will reap benefits that make the effort well worthwhile.

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