Case Study

City of New Orleans, Louisiana
Post-Katrina Revenue Forecast Analysis

Budgeting for Outcomes in New Orleans

The legacy of Hurricane Katrina will impact New Orleans for years to come.  With less than two-third of pre-storm staff, the City government is working to rebuild public and private buildings and organizations – but City leaders are committed to creating an improved system and not simply replacing the structure in place before the storm.  In August 2007, PFM began a five-year contract to implement service improvements and to improve budgeting and financial management in the City of New Orleans.  The initial vehicle for refocusing the City on effective government and results was to implement Budgeting for Outcomes – a Government Finance Officers Association (GFOA) recommended best practice.

            In a team-effort with the Mayor, Chief Administrative Officer, and other leaders within the City government, PFM followed the seven-step process recommended by the GFOA:

1. Determine how much Money is Available – PFM provided expert assistance in projecting revenues.
   
   
2. Establish Prioritized Results – All programs implemented by the City should work to accomplish the desired result.  In New Orleans, after numerous community forums, the Mayor chose the following results:
   
   - Public Safety:  Make New Orleans a Safer City
   
   - Recovery & Livable Communities:  Rebuild, Redevelop,
   and Renew the City of New Orleans
   
   - Opportunities for Youth:  Focus Recreation and Development
   Programs to Provide Opportunities for the Youth of New Orleans
   
   - High Performing Government:  Restructure and Reform the
   New Orleans City Government to be more Efficient and Effective
   
   
3. Allocate Revenues to the Results – New Orleans settled on the following allocation:
   
   -      Public Safety:  45 percent
   
   -      Recovery & Livable Communities:  17 percent
   
   -      Opportunities for Youth:  2 percent
   
   -      High Performing Government:  36 percent
   
   
4. Conduct Analyses - The PFM team evaluated the 25 largest departments in less than one month, meeting with each to determine current functioning and strategic opportunities that would significantly improve the departments’ functioning in the future.
   
   
5. Rank Budget Programs - The PFM team worked with all City departments to prepare and rank budget programs in order of their ability to achieve one or more of the Results.
   
   
6. Identify Performance Measures – In 2007, the PFM team assisted with the development and improvement of outcome measures and their inclusion in the FY2008 budget.  In 2008, the team will work to ensure that all City departments have outcome measures that determine the departments’ progress toward achieving the Results.
   
   
7. Monitor Performance – The PFM team will work with the City to develop a mechanism to monitor results and to consistently evaluate departments’ progress.