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Governor C.L. “Butch” Otter Zero-Base Budget Initiative

Governor C.L. “Butch” Otter Zero-Base Budget Initiative. David Hahn Division of Financial Management. Zero-Base Budget Initiative.

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Governor C.L. “Butch” Otter Zero-Base Budget Initiative

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  1. Governor C.L. “Butch” OtterZero-Base Budget Initiative David Hahn Division of Financial Management

  2. Zero-Base Budget Initiative “Citizens have a right to expect public officials to act responsibly, and a duty to hold public officials accountable. That’s especially true when it comes to how their money is spent – which is why I plan to implement Zero-Base Budgeting for all state agencies and institutions, beginning with fiscal 2010. We’ll start from scratch in reviewing and justifying each agency’s budget on a six-year rotating schedule. That means the first set of agency budgets will get a zero-base review as we develop proposals for you to consider next year. The first cycle will be complete in fiscal 2015. The idea is consistent with taxpayers’ wishes. And it will enable us to assert greater fiscal discipline while making the most of every taxpayer dollar.” - Governor C.L. “Butch” Otter 2008 State of the State

  3. Zero-Base Budgeting Defined • ZBB in its purest form is an operating planning and budgeting process which requires the manager to justify the entire budget request in detail, and shifts the burden of proof to each manager to justify why any money should be spent. This procedure requires that all activities and operations be identified in decision packages which will be evaluated and ranked in order of importance by systematic analysis.

  4. Direct Benefits of ZBB • Provides the agency with the opportunity to tell your agency’s complete budget story; • It highlights what’s in the base, thus lending credibility to your budget request; • Ranking and prioritizing of decision packages will focus your agency to think in terms of performance and your strategic plan. It will reveal where resources might be reallocated to better meet the mission, goals and objectives of the agency.

  5. Summary of Key Steps in the ZBB Process • Comparison of statutory requirements, federal mandates, and rules to actual activities. This will help establish a basis for “where we should be”. • Identification of cost centers; • Development of decision packages for each cost center; • Review and ranking of decision packages through cost/benefit analysis or subjective evaluation; • Allocation or reallocation of organizational resources; • Integration into the current Budget Development System, particularly where there are base reductions, base program transfers, or line-items related to the ZBB effort.

  6. Update on Where We’ve Been • Reviewed ZBB literature; • Looked at other states’ efforts, as well as lessons learned from previous Idaho initiatives; • Solicited input from fiscal officers of first year agencies; • Reduced number of first year agencies to a more manageable level for piloting purposes; • Developed initial scope that emphasizes a modified approach to zero-base budgeting; • Developed procedure manual and forms; • Held training for first year participants.

  7. Update on Where We Are • Piloting different modified approaches to ZBB with Agriculture, Water Resources, Idaho State Police and smaller agencies: • Agriculture – implementing the purest approach to ZBB, particularly as it relates to Personnel; • Water Resources – developed impact of 20% reduction/increase scenarios for each bureau, then built from this exercise a list of opportunities for change in business practices; • Idaho State Police – designated agency to model review of legal mandates in comparison with actual activities; • Smaller agencies – implementing a true modified approach to ZBB, wherein decision packages are developed at the base, 85% of base, and enhanced levels for ranking purposes. • Working closely with agencies throughout the implementation process.

  8. Update on Where We’re Going • Will modify approach based on first year’s results for second year participants; • Expect the ZBB process to continue to establish a road map for integration within the current budget, planning, and performance processes. • Will encourage second year agencies to start now, since sufficient time is critical to success; • Will continue to work closely with agencies to make ZBB a worthwhile effort.

  9. What it will take to work in Idaho • Consensus on need to look at things from a different angle • Collaborative process • Flexibility to allow for creativity • Committed leadership • Committed staff

  10. Questions?

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