4 Ways to Bolster Your Budget – Part 3

by | Jul 27, 2017

4 Ways to Bolster Your Budget – Part 3
Communicate often, spend wisely.

If you’re just diving into this blog series, we’ve been addressing the top budgeting challenges faced by municipalities today, in addition to four proven ways for communities to overcome those challenges and stabilize budgets.

In our last post, we discussed the importance of (1) gauging development trends and (2) being prepared for workload and staff fluctuations in order to better manage community funds. While we can’t ever predict the future with absolute certainty, it’s helpful to observe development trends locally, regionally, and nationally to better anticipate what is on the horizon for your community. And by leveraging the services of a third-party provider to fortify your workforce during busy seasons, you can keep up with development and stay on budget, all without increasing the headcount in your department.

Now, we’ll talk about the critical roles that communication and an effective spending model play in helping your community achieve its budget best.

3. Keep open lines of communication

As is the case with overcoming almost any challenge, communication is key. Ideally, communication among community leaders and stakeholders should start during the budget planning process. It’s important for all internal and third-party stakeholders across municipal departments to see how the community development budget plays into the larger municipal budget as a whole. When SAFEbuilt enters into a community partnership (even in the middle of a fiscal year), we take the time and effort to understand the overall municipal budget so we can create service delivery goals and plans accordingly.

But budget communication doesn’t end there. Gathering community input not only helps formulate the budget but also builds trust and transparency that leads to realistic expectations among community members and leaders alike. And of course, when changes to the budget do occur, keeping everyone aware of the changes helps to ease internal and external tension so the community can move forward as a unified force.

4. Choose the right spending model

Whether you choose to utilize the services of a third party on an ongoing basis or just as needed, it’s critical to choose a payment model that fits your community’s needs and will be sustainable as time goes on. Because we’ve worked with 500+ communities nationwide, we at SAFEbuilt realize that every community is different, and what works for some doesn’t always work for others. That’s why we tailor our services and pricing to each municipal partnership and work closely with individual communities to establish reasonable rates for the services we provide—whether it’s supplemental or full-service work.

For project-specific work (such as a single planning project or code update), an hourly payment schedule or fixed cost contract might be most appropriate. These contract types are also better for departments in which fees are not collected as the result of services provided (i.e., planning and code enforcement as opposed to building departments).

However, for instances when fees do come into play, and to assure the best cost and resource savings while delivering the highest level of service and customer satisfaction, we encourage the percent-of-fee or performance-based model.

How does it work? Instead of charging a flat hourly rate for our services, SAFEbuilt collects a percentage of the fee or fees collected. These percentages vary from contract to contract and are dependent on the services provided, the community’s fee schedule, and the level of investment needed to meet the service-level requirements.

So where does the “performance” aspect come in? Under a contract with a third-party firm like SAFEbuilt, your municipality can choose to increase the percentage paid to the partner firm if they meet or exceed certain goals. Likewise, you can decrease that percentage if goals go unmet. This type of arrangement infuses your dollars with the kind of motivational power that ensures excellent service.

Why percent-of-fee/performance-based spending?

There are plenty of pluses to the percent-of-fee or performance-based model. First of all, by paying a percentage of the fee or fees collected, your community can reduce fixed costs and ensure that department costs won’t exceed revenues. Also, this payment structure does a great job of anticipating and addressing changing workloads. Municipalities like yours don’t assume the same risk as with hourly charges or fixed costs, such as staff inequities or unmet budget projections.

And finally, with a percent-of-fee or performance-based model, you can have confidence in the level of effort and investment going back into your community. Under this model, service partners like SAFEbuilt are incentivized to make more investments in technology, customer service improvements, and other resources that enhance overall efficiency and productivity.

Parting thoughts

There’s a reason why so many municipalities across the nation deal with budget battles. Managing funds in the face of an uncertain future, competing demands, rising costs, staffing issues, and communication hurdles is tough…and near impossible without the four intentional actions we’ve outlined in this series.

By (1) gauging development trends, (2) preparing for workload and staffing changes, (3) keeping open lines of communication, and (4) choosing the best spending model for your needs, you can beat the challenges and bolster your budget.

As we close out this series, take a look at how these steps toward more stable budgets come full circle for municipalities—helping them grow and improve in ways that guarantee financial security both now and in the future.

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