by Gayle Olson
Community Development Field Specialist
Iowa State University Extension to Communities
With such an emphasis right now on cutting government spending and government programs, it Seems an appropriate time to talk about effective money management in government. Talking about the whole gamut of government finance can be very intimidating. One way to think about it is to contrast spending money versus investing it. Perhaps a comparison to managing family finances will help to simplify the concepts.
When a family manages its budget, they need to consider what their immediate needs are in order to stay aliveÑfood, clothing, shelterÑ and also what their long term goals are. Those long term goals include not just the needs of the majority of family members, but also take into consideration special needs of individual members. Will they need money for college? Do they want to travel? Do they have specific long term health care needs?
After purchasing items to cover basic necessities, the family decides how to save money in order to reach their goals. The best way to save money is usually to invest it. They may invest it in a bank account or stocks and bonds, invest it in preventive treatment to help avoid higher costs in the future, or invest it in a capital purchase such as a car that enables them to obtain a higher paying job a further distance from home. It all depends on what they want to achieve. If they spend all their income for survival needs and immediate wants, the family won't have any money left over for investing in long term goals.
The basic concepts of money management aren't much different for government, whether it be a town, a county, or a nation. Money can be spent on immediate needs and wants or invested to help reach long term goals.
The state of Oregon looked at its long term goals in relation to its spending habits using a process called benchmarking. Beginning in 1993, planners set core goals, or benchmarks, to promote stable families and capable people, to enhance quality of life and the environment, and to promote a strong and diverse economy. An important characteristic of the benchmarking process included outlining specific measurable indicators to help determine progress toward meeting the goals. By having specific, measurable objectives, Oregon residents can make better decisions about how to invest their money to reach those goals and are better able to account to the people of their state what was purchased with their money. In effect, they calculate the return on their investment.
A similar process is beginning in Iowa At the state level, it is coordinated by the Council on Human Investment. At the local level, the same key concepts can be applied. Any community, school district or organization can implement this type of a strategy. It can help a governmental unit prioritize needs, make budget decisions and increase the number of people understanding local issues. Obviously, there are some necessary basic expenditures that can't fall into this category. The greatest benefit is investing resources in long term solutions rather than spending them on immediate dilemmas.
What are the basic steps? 1. Identify issues citizens consider important for the long term success of their community or organization.
2. Prioritize which are the most important issues to be addressed.
3. Determine what is the current status of those issues and what it will take to get them to the desired level.
4. Develop written measurable objectives starting with what the current situation is and realistically building to what the ideal is.
5 Evaluate spending decisions based on what will help achieve the desired goals. What investments will lead to those payoffs in the future?
The more perspectives represented in the process, the more on target and complete the goals are likely to be. People and groups who have a voice in developing and prioritizing the goals are more inclined to search for ways to achieve desired results instead of trying to throw up roadblocks. Information and input can be gathered any number of ways. Town meetings, surveys, interview teams, and focus groups are some possibilities. The effort and time to involve a wide variety of people should also be viewed as an investment since it will make all the other efforts much more productive.
Contacts:
Terry L. Besser, ISU
Extension Sociology, (515) 294-6508
Del Marks, ISU Extension
Communication Systems, (515) 294-9807
