ALLENTOWN, Pa. - A new tool to help Lehigh County prepare annual budgets was presented to county commissioners and administrators Monday evening inside the county government center in Allentown.
An analysis by the Colorado-based Center for Priority Based Budgeting – PBB -- has determined that 228 programs offered by the county, at an annual cost of $22.5 million, are the least relevant, based on several factors.
That's 228 out of a total of 1,226 programs, for which the county is paying a total of more than $340 million this year.
Specific low priority programs were not revealed during the priority-based budgeting presentation by Chris Fabian, co-founder of the consulting firm, but will be made available in "a day or so" to county commissioners, who soon will begin wrestling with the 2015 budget.
County executive Thomas Muller said the priority-based budgeting report presented by Fabian can be used by commissioners in determining 2015 funding priorities. He plans to release the proposed 2015 budget during a news conference at 2 p.m. Aug. 28.
Seven of the nine county commissioners attended the PBB presentation.
The consultant, which is being paid about $45,000 for the study, has given the county an independent and objective guide that can be used to help determine budget priorities.
"What we've brought to the party is essentially the state-of-the art method for diving into the budget and the determining the objectives we want to hit," said Muller.
A couple of commissioners expressed skepticism about the validity of some basic county objectives around which PBB determined priorities.
The consultant ranked all programs offered by the county into four different "quartiles."
Most of the county's budget is spent on programs that were ranked the highest, according to figures provided by Fabian:
• In the top ranking are 318 programs, which cost a total of $206.5 million.
• In the second quartile are 329 programs costing $57 million.
• In the third are 391 programs costing $54.6 million.
• And, in the lowest quartile are 228 programs costing $22.5 million.
Fabian said programs in that fourth quartile "are the least relevant to the results you want to achieve."
He added: "It's not to say these are irrelevant. They're just less relevant. It's a relative process. That's what this whole thing is about."
Muller said PBB was "quite impressed when they first shook out all the numbers as to how much fell into the top quartile and the second quartile and how little was down in the low quartiles."
Fabian said the majority of the county's resources should be in the top two priority areas, but also noted programs in the two lowest rankings should not just all be eliminated.
He explained municipalities that develop a pattern of annually decreasing "resource allocation to lower priority areas in favor of resource allocation to higher priority areas is the mark of progress in priority-based budgeting."
Muller said the analytical tool developed by PBB for the county "is not designed to numerically get you an answer. It's really a very strong starting point in the discussion. This is designed to encourage discussion and to focus discussion."
After the meeting, Lisa Scheller, chairwoman of the commissioners, said the PBB report "is going to be a great tool for us to use to really start digging into the programs -- to see what is important for the county to be doing, and seeing if there are areas we should be putting more focus on as well as areas we should be putting less focus on."
She said the PBB report "appears to be very thorough" and offers "plenty for us to work with right now. It's going to take a lot of hours of analysis. But it starts to provide a broad framework for what is important for the county to be doing and how our resources should be allocated."
Although the PBB study was not yet complete when county department heads submitted their 2015 budget needs to the administration, Muller said they were familiar with the PBB project and believes it helped them as they were preparing those budgets.
"I don't think it would be fair to say it was used to the optimum this year," said the executive, adding PBB's final report will have more value to administrators in developing the 2016 budget.
Fabian also said the information he provided will have value in shaping county budgets in future years. He explained if a county department wants to add a new program, it can be plugged into the model PBB created to determine its value.
County spends less to operate
The consultant said 92.5 percent of the county budget is spent on community-oriented programs offered directly to citizens.
Fabian said 7.5 percent of Lehigh County's budget is used for "governance," meaning the cost to operate the government. "Seven-and-a-half percent is one of the lowest numbers we've seen."
In other municipalities, he said, that number is closer to 20 percent. He indicated anything under 10 percent is considered very good.
Project underway for more than a year
"Muller called The PPB study "a fairly massive project" that has been going on for more than a year and a half.
"We had at least 40 of our senior managers and all our row officers very actively involved in the project from start to finish,' he said.
The PBB project was started in January 2013 by former county executive William Hansell.
Muller indicated it faltered for a few months after Hansell resigned in May 2013 because of ill health. He died a month later.
"It was Bill's dream to bring this to Lehigh County," said Fabian.
Scheller noted Commissioner Vic Mazziotti has long advocated using priority-based budgeting in developing county budgets.
Fabian said some commissioners and other county elected officials participated in a simple exercise to determine which results were valid.
Muller said all elected county elected officials were invited to participate in helping to develop priorities in the PBB report, although he noted a number of county commissioners chose not to participate.
He said county department heads and other senior staff did participate.
The consultant has developed similar priority-based budgeting tools in more than 70 municipalities of varying sizes across the United States.
Calling it a proven methodology, Fabian said early communities that implemented PBB's work have seen positive results.
He explained PBB focuses on the level of individual programs within each county department rather than comparing departments and deciding one department should have a higher priority than another.
Fabian said making across-the-board budget cuts, rather than implementing priority-based budgeting, "is somewhat arbitrary" and financial experts warn such cuts "are a weak way out" that can detrimentally impact municipal credit ratings and bond ratings.
Lehigh County's 2014 budget totaled $360 million, said Muller, which includes paying down debt.
Founding assumptions flawed?
Mazziotti was skeptical about some key conclusions tailored for Lehigh County in the PBB final report, such as one that says that county wants a quality transportation system and another that says it wants well-planned growth.
The commissioner indicated the county does not have lead responsibility for either of those issues adding, for example, there are no county roads in Lehigh County – although he acknowledged it does own bridges.
Commissioner Percy Dougherty said he's worried that the program "is based on what might be faulty assumptions."
Fabian indicated "foundation assumptions" can be refined if they are too broad. "If the entire process was based on these results being legitimate and they're not, you have to ask yourselves the question ‘how do we change this in the future?'"
During the meeting, Fabian explained the whole process begins with asking the question: "Why are we here?"
Elaborating, he said: "If Lehigh County as an organization went out of business completely tomorrow, and didn't offer a single service, would anyone notice that you are gone?"
During Fabian's presentation, Scheller noted the PPB results are based on what county employees think are the greatest program priorities, not what other county residents think.
Fabian later said elected officials in some municipalities have shared results with residents to get their opinions in helping to determine priorities.
"It's not our role to say these are your results," said Fabian. "Our role is to say it appears, from past documents that have been created, you've established these results. We're putting them back in front of this organization to test.
"Our objective in creating the process was not to spit out an answer that says these are the programs that you should get out of the business of doing right away. It's instead to pose the question that, based on these reasons, you should ask if you are sure you should remain in this business."
Muller said the results of the PBB study eventually will be made public on the county's website.
Fabian suggested priority-based budgeting will lead to more transparent government.
"Our approach was to take every line-item in the budget and translate it into a program cost," said Fabian.
He said line-item budgets produce "a 300-pound budget document that can be very difficult to read. It's as if we're speaking different languages."
Said Fabian after the meeting: "What I hope the community gets is we're really trying to get to a transparent understanding of what the county does, how much it costs, and whether a particular program is of a high priority or whether there are opportunities to move money to constantly focus on the best bang for the buck."
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