City ‘budgeteers’ see promise in new approach

Presenter: With difficult budget decisions ahead, city staffers have been working hard all summer to adopt a new approach to budget-making. They’re creating an inventory of every city service, and linking those services to the city’s values and strategic plan. The Eugene City Council got its first look at that inventory Sept. 16. From Raftelis, a consulting firm serving local governments and utilities, Nancy Hetrick:

Nancy Hetrick (Raftelis): The meaty parts of the conversation begin with the service framework update. Over our last several meetings, you’ll recall developing a framework that included the core services sorting.

Presenter: The services are organized into four categories. Eugene City Manager Jenny Haruyama:

Jenny Haruyama (Eugene, city manager): Required services, essential, community, and strategic priority services:

• Required services are those that the city must provide because of law, regulation and the charter or court order.
• Essential services are those that are necessary to protect public health, safety, critical infrastructure and really the continuity of government.
• Community services are services that contribute to Eugene’s livability, identity and quality of life, services that residents reasonably expect their local government to provide.
• Strategic priority services are those that directly advance Council’s strategic focus areas, those that respond to emerging needs or opportunities. They foster innovation or they provide targeted community benefits.

And importantly, these are not rankings. They describe the nature and role of a service. The framework helps the organization understand what each service is intended to accomplish and provides a common language for evaluating services.

Presenter: With an example of how Finance Services were sorted, Eugene Chief Financial Officer Twylla Miller:

Twylla Miller (Eugene, CFO): We have three areas where we have a required service. The first is budget development. There are Oregon state statutes around the budget and Budget Committee.

And beyond that, there are additional components provided for budget management beyond the legal requirement that would fall into the essential service category as we think about that, service delivery for the organization.

For financial audit and reporting, there are state requirements around maintaining financial records, and for the city to prepare an annual audit to be evaluated by an external independent auditor, as well as some federal requirements.

There are a range of financial reporting activities to support the organization that are outside of these legal requirements and would fall into the essential category.

For payroll, the majority of our payroll services are required under state or federal requirements. But there are some elements in that program that would likely fall into the essential category.

All other service areas within finance do not have a legal requirement. They’re in the essential category, we’ve also indicated where a tie back to the strategic priority.

Presenter: The City Council had questions about who did the sorting and how. Councilor Mike Clark:

Councilor Mike Clark: The categorization initially seems to be, that seems subjective a little bit. And so my question is, who is doing the categorizing? Is that ultimately the manager, is it within each department? How does categorization take place for each of the individual service levels.

Presenter: Chief Financial Officer Twylla Miller:

Twylla Miller (Eugene, CFO): The strategic budget team did an initial sort just to start the conversation. We sent that out to departments. So the executive leadership and their leadership teams went through and made some adjustments. And then ultimately the city manager and the assistant city manager and myself had a final review on the final sort.

So it was actually throughout the organization with multiple layers of folks looking at this.

Councilor Mike Clark: And I’m assuming that we’re going to get to the metrics of prioritization at some point in this process.

Twylla Miller (Eugene, CFO): I would say that’s part of the budget process. So this is the first step. We’re going to use all of these frameworks to work with the city manager to develop her proposed budget. 

We’ll bring that back. So that will sort out through that process. And we’ll use the frameworks that the Council has developed to have those conversations with Council and community.

Presenter: Councilor Eliza Kashinsky:

Councilor Eliza Kashinsky: I had a couple of questions about it. First, when we have a situation where a service area sort of crosses these categories and maybe part of those service areas are required or essential, and part of them are more just the level of service the community expects, is that kind of handled as we’re looking more in depth using the budget lenses?

Twylla Miller (Eugene, CFO): Yes, that’s exactly right. So that wasn’t incorporated into this round.

Councilor Eliza Kashinsky: Yeah. Because I just noticed some of these categories are pretty broad and contain a lot of sort of sub projects of various kinds. So…

The second question I had was about how something being public health- or public safety-related was determined because there were a couple of things that I saw that were listed as community services that, at least from my understanding, have significant public health safety components to them.

For example, ‘Emergency Management’ seems like it’s a public safety and health issue, animal services, things like that, that it seems, how do we kind of get those questions answered about, like, ‘Why was this not seen as public health or safety related?’

There were some in the homeless services, which seems to have a public health and safety component. Animal services. And some with the sustainability, which seems to have more of a public health, particularly if you start getting into resiliency as part of that.

Presenter: Twylla Miller:

Twylla Miller (Eugene, CFO): We wanted to start somewhere to say primarily, where would we think this these services fit within the tiers, understanding that there’s a nuance with level of service that you could check multiple boxes, but as a starting point to really hone in on the service and the intent of the service to say, which tiers are they primarily in and understanding, we’re going to have another pass at this and have those more nuanced analysis and conversations.

Presenter: Councilor Alan Zelenka:

Councilor Alan Zelenka: And so what’s the next step on that part? We’re not going to talk about all that today.

Twylla Miller (Eugene, CFO): No. That will be part of budget development. We’re starting that process here this fall. And so there’ll be an opportunity and time for staff to actually have thoughtful analysis and conversations as they apply this new framework across the service system. So, that will be developed and become part of your proposed budget next spring.

Presenter: Councilor Lyndsie Leech:

Councilor Lyndsie Leech: My question is for Twylla. You’ve gone through many budgeting processes for the city of Eugene. How do you really see this changing your process as you build the budget? And do you think that at the end of this, the product that we have is going to be different or better? Or I just want your thoughts.

Twylla Miller (Eugene, CFO): Good question. Yes, I think that the outcome will be different and better. I say that because we’ve used a very traditional kind of incremental approach where everything rolls forward.

We haven’t had the connection to the focus areas and the strategic plan. We haven’t been able to articulate our services through a framework like this, where we can actually say what’s required and essential, what are those things we do that benefit the community, the vitality of the community.

So I do think that this is a very good direction to go in. The team is working really hard because this is a big change. And so the team is working hard on understanding, you know, not only these first steps that we’ve taken, but also thinking about how we budget and not roll forward, you know, with a service level budget and apply these frameworks and principles to that process. So, I think it will look different.

The other thing I think about is it gives us a common language and it helps us also maybe talk about trade-offs in a different way than we’ve been able to in the past.

So I think there’ll be more clarity about trade-offs and why things are being proposed, maybe, than we’ve been able to provide Council on the Budget Committee in the past. So for all of those reasons, yes, I think this is an excellent direction to head in.

Presenter: Councilor Randy Groves:

Councilor Randy Groves: Twylla, I’m curious, are the Budgeteers embracing this direction or do they have concerns that would help us to understand what those are?

Twylla Miller (Eugene, CFO): I would say the Budgeteers are excited about this and I actually do call them the Budgeteers, sometimes, our core group there. 

But I think doing something different than we’ve done for many, many years, so that we can achieve a different outcome and just having a different analysis of the services we provide and a way to talk about it. 

So generally, you know, yes, anything new, right? Anything new in any organization is always change. 

But I would say generally, not only from the Budgeteers, but even from when we’ve talked with the many of the division managers and others across the organization, there’s a desire to do something different than we’ve done the last few cycles.

And they can see the value.

Councilor Randy Groves: I agree with you. I think we’re beyond time of trying something different. We keep going at the budget the same way with the same outcomes. And we always start the next year thinking it’s going to be different and it’s not.

So I think that’s the only way we’re going to get to where we need to be is to try something. And if for some reason it doesn’t work, I think we need to try something else. But we’ve got to find a path forward.

Presenter: Councilor Matt Keating:

Councilor Matt Keating:  I’ll just reiterate my longing to find revenue solutions that are long-term, that might cost something in the short term in order to provide that long-term stability. 

I’ve made a baseball reference at this dias before, and I’ll do it again. I think that government all too often wants to swing for the fences and go for the big home run rather than do the small ball approaches to get ’em on and get ’em over and get ’em in.

And those small-ball approaches, those small revenue approaches, or doing a little, incremental bit, is what I suspect will win the day. We can’t just always swing for the fences. 

What, if any, feedback are we soliciting from our intergovernmental partners, or what we as a municipality get out of our relationships or partnerships with intergovernmental entities such as the League of Cities, the National League of Cities, the United Front Partnership, the Lane Regional Air Protection Agency, Human Services, LCOG, etc..

Are those partnerships—our relationships with our contracted partners—part of this overall deep dive service framework as well?

Presenter: City Manager Jenny Haruyama:

Jenny Haruyama (Eugene, city manager): Conversations with our intergovernmental partners has already occurred and is ongoing with respect to the framework that you’ve adopted and the work that you’ve done over the past three months.

It’s also happening with our business partners as well, beyond the TAG (Technical Advisory Group). So I’ve also had a toe in the water with neighborhood groups as well.

So anytime I get an opportunity to speak about the why in which we’re doing this and how we’re categorizing services and how that helps us understand our strategic focus, I’m taking that step, and that will continue to ramp up. You’ll see in late fall and then moving into the new year. But just know that those conversations are underway.

And I think like many of you have spoken today, it’s basically being received very well. And people are finding it very logical.

Councilor Matt Keating: Just a quick I guess, observation / clarification question. For an example, a hot potato issue in Eugene, whether it’s our Amazon pool or Echo Hollow or Sheldon, our aquatics program. 

If you just objectively look at how many people are utilizing said service, you might make a black-and-white decision that doesn’t necessarily recognize the health and thriving component of it, the subjective component. 

There might be partners in the community like the YMCA, who might be able to embrace the daily operations even better than our municipality does.

How do you envision doing that dance, that objective/subjective dance, and then ultimately finding how we preserve some of our beloved program services and institutions, but maybe even empower and embrace a partnership that elevates and betters said program service and delivery?

Presenter: City Manager Haruyama: 

Jenny Haruyama (Eugene, city manager): I really think that we’re going back to the budget lens conversation again because that work starts there. 

So you brought up the YMCA. I mean, if we’re going to look at contracting options, that’s clearly in ‘alternative service delivery.’

Can someone do it better? Should it be us providing that service? Those are questions that we should ask. I think part of the challenge is making sure that if we have things that pull at our personal heartstrings, we need to be aware of that, right? Because we have to be objective in looking at everything.

And I think that’s part of the executive team’s job and working with staff that no rock, you know, is left unturned. And then we have to look at all options. I think the trick is, and this is the art of it versus the science is understanding what those things are.

And I’m sure as part of the budget process, some of the things that we get right will come to the surface, as will some of the things that maybe we didn’t miss. And we are also human, so we might miss some of those.

Presenter: Councilor Lyndsie Leech:

Councilor Lyndsie Leech: It’s really refreshing. Sometimes I get a lot of question marks in my head because I’m from a nonprofit background. And the way that this is structured is how I’ve always operated in that there is a plan and there’s goals and there’s tactics, and then the expected results and metrics.

And not that we’ve not had those, but it’s not always as clearly outlined as this. And then tied to budget. And I just really, really appreciate seeing it like this. So thank you for this work. 

Presenter: Councilor Greg Evans:

Councilor Greg Evans: This is the area I really wanted to get to: How we are planning for our future? And what are we doing right now, to be able to point the ship in the right direction (for lack of a better metaphor)? And I think we are going in the right direction now.

One of the things in conversations that I’ve had with both Chief Caven and Chief Skinner is about the structural needs that our fire department and our police department are going to need.

When I had my conversation with Chief Caven, last month, we talked about the need for facilities specifically, a new fire station down here that would be right here in the same vicinity as City Hall.

A new or retrofitted station out in Ward 6 (in my ward), also, station needs in Ward 8, so we’re talking about three more fire stations and definitely an upgrade in facilities and technology. And all of that that’s going to come through a bonding process.

We’re going to have to borrow, you know, go to the voters, ask the voters to pass a bond so that we can be able to consistently fund the needs that we need to have over time. And some of the things that we need to play catch up with. 

When I was growing up in Ohio in the 70s and in the early 80s, municipalities were going bankrupt and facing insolvency because of not doing the long-range planning that needed to be done.

And I think that what we’re doing right now is critical to the future that we’re looking at down the line past 2039 into the 2040s and 50s and being able to understand that the facilities that we need to build and construct are for 50- and 100- year horizons.

We need to have a way that we can effectively communicate that with our constituencies so that we can get their support to move forward, particularly in a time now and in the future where people are saying to me, look, we can’t afford, you know, an increase in our taxes.

Gas prices, food prices, everything else is hitting us. And you’re going to have to explain to me in very clear detail how and why we need these things and tell us why we need to make these investments so that, you know, we don’t end up in an insolvent future.

Presenter: Councilor Mike Clark:

Councilor Mike Clark: Is there a method or is there a strategy you’re thinking of for how to come up with more creative out-of-the-box potential future long-term solutions?

In other words, the mechanism by which creativity about the long-term future can happen more effectively. I’m not sure what that is, but I just throw that out there and wonder the manager’s thoughts on that.

Jenny Haruyama (Eugene, city manager): Oh, I have so many. Appreciate that question. I think that that is a million-dollar question.

I also think that we’re in a place, and it’s a sobering statement for me to make, that we need to be also asking our community what they’re willing to live without, and what they’re willing to fund if they are not willing to live without that.

And I think that that is the candid conversation that we are building to. And that would be my recommendation, is to start those conversations so that we can enter this discussion, understanding what people are willing to do—and tolerate.

Presenter: Eugene takes a huge step towards zero-based budgeting, as city staffers share an inventory of all city services, classified as required, essential, community, or as a strategic priority.