Why Does the Town Measure Performance Using Budget Numbers?

We keep talking about “budget to budget” comparisons, so what are they?

1. Budgets consist of arbitrary numbers. Comparing arbitrary numbers to arbitrary numbers will give you arbitrary results.  The Town Staff and Council have missed the salaries and wages by over $2,300,000 for the past four years (2014 to 2018) at a minimum.  Does that tell you something isn’t working about the way they budget?
2. Councilmember’s Rennie, Leonardis and Jensen want to tax you while they hold your money in cookie jar accounts earning 1% to 1.5%.
3. Using “budget to budget”, the town can manipulate the numbers to make their actions look better than they really are. The staff information is sometimes opaque and unfortunately, the council does not question staff on some of those critical issues.  You may never hear the true story.
4. The town does not measure themselves against ACTUAL results, but rather against how they budgeted the previous year!
5. The budgeted increase of the wages and salaries for ‘18/’19  over the ACTUAL amount spent in ’17-’18 will be 17% higher.    That’s 17%! In one year!
6. Ms Prevetti nor the Council want you to know that, so they tell you the increase went up from 1.2% to 6.95% using the “budget to budget” method .   You can see that here:
7. Ms Prevetti said they use “budget to budget” comparisons so as to make “apples to apples” comparisons. Why do thousands upon thousands of cities and corporations compare “apples to oranges”, otherwise known as Budget to ACTUAL.
8. What does Ms Prevetti and this Council know that the thousands of corporations and cities do not?
9. Why does the Council let this go on?
10. Did you know that the Government Financial Officers Association (GFOA) is a professional association of approximately 19,000 state, provincial, and local government finance officers in the United States and Canada. In their Recommended Budgeting Practices, the only financial management tool they recommend is the Budget to ACTUAL. In the Recommended Budgeting Practices, you will NOT find one reference to “budget to budget”, but you will find at least 13 references to “Budget to ACTUAL”. I have highlighted them for you.
11. If you go to the internet and Google “budget to budget” accounting, or, “budget to budget” as a management tool”, you get nothing. I challenge the Council to find one good reason to measure performance by comparing one budget to another.
12. Ask Councilmember’s Rennie, Leonardis and Jensen why they advocate “budget to budget” measurements. You can spend ACTUAL dollars, but can’t spend budget dollars. Ask them why the auditor only audits and reports on ACTUAL numbers and has nothing to do with the budgeted numbers.  Ask them why the Consolidated Annual Financial Statement (CAFR) is composed of all ACTUAL numbers.!

The point of accounting is to hold institutions accountable. For both the private sector and the public sector, the question is whether managers are creating value.

This staff creates misleading data by using “budget to budget” as a measurement tool.  Unfortunately, this Council doesn’t seem to care and it baffles the public who’ve never seen any thing like “budget to budget” before.

In the case of the town negotiating the salaries and benefits, the goal seemed to be to get the contracts finished regardless of the costs to the town!  Unfortunately, they accomplished that.

Now you know why Councilmember’s Rennie, Leonardis and Jensen  need a tax increase to cover these budgeted salary increases.