The structure of the DC budget was changed in the Mayor’s proposed budget for fiscal year 2011 that was released April 1st. These changes ultimately should result in a budget with improved transparency ‘ by linking budget line items more closely with each agency’s administrative structure and adding greater spending detail for many agencies. But the changes also may create some confusion during the transition.
The new structure is referred to as “division-based budgeting” by the Mayor’s office but is also more commonly known as “program-based” or “organizational-based” budgeting. Until FY 2011, the District used a “performance-based” budget structure that resulted in many budget line items that are too large to provide meaningful understanding of how funds are being used and that fail to delineate how funds are actually spent on the real programs and services DC residents use.
Starting with the FY 2011 budget, a number of agencies will begin to follow a “division-based” budget structure which will change the way the budget looks in three key ways.
- Division-based budgets. In 2011, the budgets for approximately 30 agencies have been re- organized to match an agency’s division structure. The agencies that have new division-based budgets are largely the agencies that have also created new performance plans for each division. This will allow for a better match of funding with performance goals.
- Greater spending detail. In addition to the new division-based budget structure, some agencies expanded or restructured their budget line items to provide greater spending detail on services the agency provides. The majority of agencies will go through this process for the FY 2012 budget, but there will be some additional breakouts of activities in the FY 2011 budget.
- Removal of fixed costs from many agency budgets. Starting in the FY 2011, fixed costs, costs such as rent and utilities, were removed from many agency budgets. Some fixed costs were removed and put into a new “paper agency” ‘ an agency that only exists on paper to aggregate all of the city’s fixed cost ‘ named Municipal Facilities: Non-Capital. Other fixed costs have been moved out of agency budgets and placed into two existing agencies ‘ the Office of Contracting and Procurement and the Department of Human Resources. The removal of fixed costs may make it look like many agency budgets have been cut even if they have not.
This new structure should improve transparency because it will allow for programs and services to be displayed in greater detail and in a way that more closely matches how agencies spend dollars on actual programs and services. At the same time, the transition could create some confusion, and it will be important that the changes to agency budgets are explained fully throughout the transition.
This paper walks through DC’s previous budget structure and its problems, the changes in the FY 2011 budget, and information the Mayor’s office should provide to the public as it implements division-based budgeting.