Top 7 Budgeting Challenges for Local Government Finance Directors
Not enough hours in the day, and not enough money in the budget! A finance director’s role in keeping their government running like a well-oiled machine cannot be understated, and these days the position may be more demanding than ever! This is especially true for smaller towns where the finance director may wear many hats and have limited staff to delegate to.
Let’s take a look at the top 7 challenges of local government finance directors during the budgeting process, and how ClearGov can help.
1. Shrinking Revenues
Most local governments were hit pretty hard as a result of the COVID-19 pandemic. Between shrinking tax revenues, record unemployment levels, and rising health care costs, cities have had to tighten their belts and come up with creative ways to get the most out of every dollar spent.
Despite the recent disbursement of American Rescue Act Act (ARPA) funds, expenditures in public programs, services, infrastructure, education, and capital projects still have to be closely monitored. Previously approved personnel budgets and capital improvement plans may need to be tweaked to reprioritize classifications and projects. At the same time, it’s more important than ever for local governments to retain valuable employees and fairly compensate them for the additional work they’ve taken on while still providing the same or better service to their community.
It’s a big job for finance directors, and the constant uncertainty makes it a challenge that they’re up against nearly every day.
The best solution is to build “what-if” scenarios – These multi-year, multi-plan scenarios allow you to optimize your budgets based on flexible criteria and strategies adopted by your organization. The challenge is that these plans are difficult to create in spreadsheets and word documents, and even more difficult to analyze and visualize — especially for non-financial folks that are decision makers. A cloud-based government budgeting software solution, like ClearGov, has the ability to automatically create multiple versions of your budget and multiple scenarios. The highly visual, organized, and easy-to-use modern software greatly increases efficiency and insights.
2. Limited Time & Resources
Another result of the pandemic and shrinking revenues is that many local governments have had to reduce staffing. This means fewer employees handling more tasks, and often a finance director that wears many hats.
In many cases, miscellaneous tasks that don’t fit into other departments are left to the finance director to handle. In smaller towns, the finance ‘department’ may in fact be a one-person show with no one to delegate to.
This makes the time a finance director does have, incredibly valuable. Manually consolidating spreadsheets, entering data in multiple places, and reconciling the budget to check for errors and broken formulas is a tedious and inefficient use of time.
The solution is to invest in a cloud-based budgeting solution. These tools deliver greater collaboration with department heads, eliminating time-consuming meetings and back-and-forth emails. It automates the process of collecting requests and creates an audit trail to eliminate the hours of manual reconciliation many governments are used to. It also lets you create unlimited versions of your budget to factor in those multi-year, multi-plan scenarios, and it automatically creates graphs and charts to help you visualize how different scenarios impact the overall budget.
3. Changing Technology
Change is hard. And technology has changed so rapidly in recent years that it can be difficult to keep up with — especially for finance directors that have spent their entire career in government and can recall building their budget pre-internet.
Those finance directors have had to move their budgets from paper, to spreadsheets, and now to modern cloud-based software solutions. With each evolution, they’ve recognized the shortcomings of legacy systems and have embraced the efficiencies of modern technology. For those who have not, they continue to perform time-consuming, error-prone, manual data entry, consolidation, and reconciliation. While it may technically get the job done, there are glaring inefficiencies in the process that are compounded with the challenge of shrinking resources and staff.
See #2 above! A modern cloud-based budgeting tool solves all of these challenges, and more. But beware, not all government budget software is created equally. ClearGov was designed specifically for small to medium governments to be easy to implement, easy to use, and easy to afford. Our goal is simple: to help you budget better and make your job more efficient.
4. Fiduciary Responsibility To Community
Today, governments are more committed to transparency than ever before when it comes to how they spend taxpayer dollars. Likewise, citizens are more involved in the budgeting process, and they expect clear communication that holds their government accountable to its fiduciary responsibility. This requires an extremely careful recordkeeping and reporting process to keep elected officials accountable and to keep citizens informed.
At the end of the day, local governments truly have their community’s best interests at heart and are committed to getting the most from every taxpayer dollar. The challenge comes with how to effectively communicate that transparency to your community and how to keep residents engaged throughout the budgeting process.
A transparency portal tells your financial story to your community. It turns fiscal data into a compelling infographic-based website that is easy to navigate and easy to understand for anyone. Many governments even go a step further and add an ‘open checkbook’ feature to their transparency page so that residents can keep tabs on day-to-day expenditures and how they align with the adopted annual budget. A transparency page is easily linked from your main website, and it is automatically updated as your budget data changes.
5. Fostering Civic Engagement
In line with the focus on a government’s fiduciary responsibility is how you foster civic engagement within your community. Without resident input, it’s impossible to know what programs, services, and capital projects matter most. It’s critical to have residents involved in the planning and budgeting process in order to prioritize projects. To that end, governments are tasked with increasing effective, efficient communication with citizens, including budget strategy, the budgeting process, the budget itself, and actuals.
But what’s the best way to communicate with them? Email, social media, town hall meetings? This is a serious challenge every finance director faces as they attempt to involve their communities in the decisions that matter most.
Every town and city will be different depending on your demographics, accessibility to technology, and resident preference. It takes polling through multiple channels to get a pulse on your community’s preferences. However, with a transparency portal, you can easily share the link on your website, on social media, in neighborhood groups, and anywhere else your residents are. A transparency page also allows you to add capital projects and update their status in real-time. Residents can subscribe to the projects that they’re interested in to receive updates, and if you choose, you can even open comments to get feedback and further engage residents.
6. Effective Internal Communication
Even 2+ years after the start of the pandemic, many cities still have staff working remotely. As every business has realized over the past few years, technology is critical to stay connected. As noted in #3 above, effectively adopting new technology can be a challenge, and some governments have struggled with keeping staff connected more than others. This has led to departments becoming ‘siloed’ and essentially operating with blinders on with regards to how they fit into the overall government organization.
When it comes to the budget, internal communication between departments is an absolute necessity, especially as revenue and resources are reduced across the board. Many governments are finding that pooling resources and combining contracts (i.e. using the same vendor for landscaping for parks and schools) can save them significant money. But unless departments are effectively communicating with one another, these efficiencies could be missed.
No surprise here! A cloud-based government budgeting solution, like ClearGov, enables effective real-time collaboration between the finance director and department heads. With an automated collection process for requests, a robust request form that allows department heads to attach supporting documentation and context, and an intuitive scoring system and dashboard, finance directors can easily see requests and recognize patterns that can help facilitate internal communication and realize efficiencies (i.e. maybe the parks and schools were already using the same landscaping company but had separate contracts — a single contract could save money).
7. Long-Range Planning For Capital & Personnel Budgeting
When it comes to capital and personnel planning, many governments need to forecast out as far as possible with multi-year, multi-plan scenarios. Expenditures in these departments are essential, but like everything else, governments have to prioritize requests and find the scenario that best optimizes spend.
Both budgets come with the additional challenge of uncertainty, with rising material costs, rising health care costs, and the added complexity of union negotiations and pensions. Therefore, it’s critical to be able to create multiple scenarios that account for these variables. If you’re using a spreadsheet for these budgets, you’re likely leveraging multiple tabs, countless formulas and links that connect the different scenarios. Checking and double checking every time you make a change is exhausting, and at the end of the day spreadsheets simply don’t have the visibility needed to really analyze and compare scenarios against each other.
The solution is ClearGov. A highly visual, organized, and easy-to-use modern software that not only increases efficiency and saves you time, it also automatically generates graphics and charts to help you visualize the data. These dashboards provide visualizations that are optimized for the type of budget you are planning. They provide valuable insights, which make the budgeting process more efficient and lead to better results. Furthermore, the charts and graphs deliver an easy-to-understand environment when presenting different scenarios to internal stakeholders.
ClearGov Helps Lighten The Load
ClearGov’s government budgeting software helps you budget better. It saves you time, money, and human resources — all invaluable assets in today’s current environment. The multi-year, multi-scenario budgeting process helps you identify the best use of funds to prioritize and maximize services and projects — also an invaluable feature when you’re trying to maximize every single tax dollar you spend!
Best of all, ClearGov is EASY to use. Even finance directors and department heads who have been resistant to changing technology quickly adopt the software, and they’re amazed at how easily the software automates the process to Collect, Create, and Communicate their budget.
Watch a demo now, or contact us to learn how ClearGov can help lighten your load!