Public Participation in Budgeting: Putting Citizens at The Heart of Local Government Finance in California

ADVANCED POLICY ANALYSIS SPRING 2011
PUBLIC PARTICIPATION IN BUDGETING:

PUTTING CITIZENS AT THE HEART OF LOCAL GOVERNMENT FINANCE IN CALIFORNIA
A STUDY CONDUCTED FOR THE CENTER ON CIVILITY AND DEMOCRATIC ENGAGEMENT SARAH SWANBECK
The author conducted this study as part of the program of professional education at the Goldman School of Public Policy, University of California at Berkeley. This paper is submitted in partial fulfillment of the course requirements for the Master of Public Policy degree. The judgments and conclusions are solely those of the author, and are not necessarily endorsed by the Goldman School of Public Policy, by the University of California or by any other agency.
EXECUTIVE SUMMARY ............................................................................................... 3 INTRODUCTION............................................................................................................ 4 WHY CONSIDER PARTICIPATORY BUDGETING?..................................................... 6 WHAT IS PARTICIPATORY BUDGETING? ............................................................... 6 PREVIOUS CASES OF PARTICIPATORY BUDGETING........................................... 8 IMPLEMENTING PARTICIPATORY BUDGETING IN CALIFORNIA ........................ 10 EVALUATING BUDGET OUTCOMES UNDER PARTICIPATORY BUDGETING ....... 12 FISCAL METRICS.................................................................................................... 12 POLITICAL METRICS .............................................................................................. 12 INTERVIEW METHODOLOGY................................................................................. 13 EVALUATING CALIFORNIA CASE STUDIES ............................................................ 14 BREA ....................................................................................................................... 14 CLAREMONT ........................................................................................................... 16 LOS ANGELES: ....................................................................................................... 18 MONTEREY ............................................................................................................. 20 MOUNTAIN VIEW .................................................................................................... 22 PALO ALTO ............................................................................................................. 24 RECOMMENDATIONS FOR LOCAL GOVERNMENTS.............................................. 27 CONCLUSION ............................................................................................................. 29 AKNOWLEDGEMENTS .............................................................................................. 32
Center on Civility & Democratic Engagement Goldman School of Public Policy
EXECUTIVE SUMMARY
As they confront a new budgeting reality in the face of major structural economic changes and changing demographics, local governments are turning to the community to gather feedback on how to align revenue with the needs of their constituents. With participatory budgeting, local governments allow citizens to directly participate in the allocation of all, or a defined part, of the governments budget. By reaching citizens normally shut out of the budget process, participatory budgeting can create opportunities to educate citizens on the budget. To the extent that the most powerful stakeholders dominate the current budget process, participatory budgeting may also help level the playing field by giving voice to smaller, less powerful interests. Finally, by bringing the process into the open and allowing the public to participate, participatory budgeting may help to promote accountability and transparency in government This report evaluates the use of participatory budgeting by local governments in California. Through interviews with local officials, we determine what the participatory budgeting process looked like in each case, identify the key stakeholders involved in the process, and evaluate the ultimate budget outcomes. We determine strategies local governments can use to maximize the positive aspects of civic participation while minimizing the downsides to greater involvement by citizens. This report evaluates participatory budgeting across several California case studies and makes five key recommendations for government officials looking to use civic engagement in the budget process. First, government officials need to be clear about what they hope to achieve from the participatory budgeting process. Second, local government officials who commit to using civic engagement in budgeting need to make the process a priority. Third, city officials need to set up the process in a manner that is transparent and fair. Fourth, once the participatory budgeting process is over, local officials should clearly communicate how the process affected specific outcomes in the budget. And finally, local governments that want to maximize the civic learning that occurs from year-to-year should institutionalize the participatory budgeting process to better facilitate this learning.
INTRODUCTION
The use of participatory budgeting by local governments is on the rise in the United States. Economic and political factors have contributed to a difficult budgeting environment in which resources are scarce and the priorities of special interests often overshadow the needs of the greater community. The recent downturn in the economy has left local governments in the difficult position of falling revenue and rising costs. In 2010, state and local revenues fell by 2 percent, with federal aid only partially compensating for the decline.1 Local governments will have to confront a new budgeting reality in the face of major structural economic changes and rapidly changing demographics. As local governments make difficult cuts to city services, they have increasingly turned to the community to gather feedback on how to align the existing revenue with the needs of their constituents. In addition to economic developments that have altered local government budgeting, political trends nationally and at the local level have skewed the allocation of government revenue toward stakeholders with the most power and the most money. Legal changes at the national level, including a recent Supreme Court decision allowing unlimited campaign contributions by corporations, have continued to push democracy in a direction that elevates money to power and equates money with political voice.2 With corporations playing a more powerful role in electing our political leaders, the decisions these officials make, once in office, are more likely to reflect the interests of powerful stakeholders at the expense of the community. This is of particular concern as these officials make important decisions about how to allocate revenue. Local governments, seeking to minimize the extent to which powerful stakeholders can influence budget priorities, may consider participatory budgeting as a means to counteract the effect of money in politics. Giving citizens some power in budgeting through participatory budgeting moves the process away from politicians and these special interests. While current economic and political trends have resulted in spending cuts and misallocation of revenue, recent technological advances have helped set the stage for using greater civic participation in budgeting as part of the solution. Technology is changing the way that governments and citizens interact. When used effectively, it can increase transparency and give citizens greater access to what used to be a closed off political process. If technology makes information more readily available, then citizens, or at least the most engaged citizens, can proactively seek out information from their representatives. At the same time, governments are increasingly using technology as a tool to communicate with citizens on a personal level. Technology moves government closer to the people by allowing governments to more directly communicate with citizens. With greater use of technology by governments also comes added risk, however. Technology makes the transmittal of all information, including misinformation, that much easier. This report sets out to evaluate the use of participatory budgeting by local governments in California. We interviewed local officials to determine what the participatory budgeting process looked like in each case, to identify the key stakeholders involved in the process, and to
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U.S. Census Bureau, 2011 In Citizens United v. Federal Election Commission (2010), the Supreme Court ruled that corporate funding in candidate elections cannot be limited because of the First Amendment. Center on Civility & Democratic Engagement Goldman School of Public Policy
evaluate the ultimate budget outcomes. The first section of this report describes the theory behind participatory budgeting and the motivation for looking at participatory budgeting in California, the types of participatory budgeting that local governments have used, and several case studies outside of California where participatory budgeting has worked previously. The second section outlines the fiscal and political metrics along which we evaluate the budget process and outcomes under participatory budgeting. The third section evaluates cases of participatory budgeting in California along these metrics. The final section makes recommendations for other local governments in California who wish to implement a participatory budgeting process.
WHY CONSIDER PARTICIPATORY BUDGETING?

Participatory budgeting allows citizens to directly participate in the allocation of all, or a defined part, of the governments budget. Through outreach to citizens normally shut out of the budget process, participatory budgeting can create opportunities to educate citizens on the budget. While civic engagement in budgeting can increase the understanding of individuals on the complexities of balancing a citys budget, the process may also help inform governments and give them a more accurate picture of the needs of their communities. Outreach on the budget can be a cost-effective and timely way to receive important information about the communitys priorities, directly from the source. The process may also help to generate new ideas about items in the budget that otherwise would not have been considered. To the extent that learning occurs for both citizens and governments, participatory budgeting may strengthen government-citizen relations. Citizens who participate in the budget process may be less likely to question the ultimate budget outcome, even if they are unhappy with it. At the same time, governments run the risk of angering constituents if the budget outcome does not align with views these individuals expressed during the process. Involving more citizens in prioritizing budget decisions ideally incorporates a greater array of voices in the discussion and helps promote equity in the allocation of public resources. If outreach is done thoroughly across the community, participants in the budget discussion may more likely include disenfranchised populations such as youth, the poor, and minorities. To the extent that the most powerful stakeholders dominate the current budgeting process, participatory budgeting may help level the playing field by giving voice to smaller, less powerful interests. Governments should be cautious, however, that participatory budgeting does not serve to amplify the already overrepresented opinions of these powerful stakeholders by giving them a formal, legitimized means to dominate the discussion around the budget. Participatory budgeting may help to promote accountability in government by bringing the process into the open and allowing the public to better understand how budgets are passed. The traditional process for constructing a budget at the local level generally involves the Mayor or the City Manager consulting behind closed doors with a few select advisors and then issuing a proposed budget directly to the city council. With greater transparency in the process, politicians know that the public can hold them accountable for how they choose to allocate revenue and they therefore may be more likely to keep the interests of their constituents in mind.
WHAT IS PARTICIPATORY BUDGETING?

How local governments use participatory budgeting varies. Given wide variation in the use of civic engagement in budgeting, how the process functions will determine how participatory budgeting affects the outcomes. Local governments have classified participatory budgeting as anything from additional educational outreach surrounding the budget, to formal citizen budget committees comprised of citizens who serve as a liaison between the community and the city. We can broadly categorize participatory budgeting into the following three distinct groups. Cities do not need to implement each of these approaches independently, but rather should consider how to combine these strategies.
Budget education implies that cities make an effort to present information about the budget in
a digestible manner, such that an individual with no budget expertise can understand the primary outcomes of the budget process. The city targets specific communities to ensure that citizens, regardless of education level, English proficiency, or income, have access to information about the citys finances. Additional information can help citizens better understand how public budgeting occurs. It may also give citizens the tools with which to engage with other citizens in an informed way about the budget process, as well as with stakeholders and city officials. Finally, it may help citizens to understand the political and legal constraints that local governments face for instance, when state and federal policies override local decisions. In order for budget education to be effective, the material used to educate citizens must be free from jargon, easy to digest, and non-partisan. Citizens need to receive enough information to be fully informed, but not so much information that they are overwhelmed. While budget education can go a long way toward involving citizens in budgeting, it is still a one-way effort to engage citizens in the process. To be effective, participatory budgeting processes should be dynamic, allowing citizens to voice opinions based on the budget information they receive and allowing governments to solicit useful information in order to better structure the budget around the needs of the community.
Citizen surveys are a way for governments to solicit feedback on specific budget issues.
Surveys have relatively low execution costs compared to in-person public engagement efforts and can be a quick way to gauge public opinion on budget priorities. Surveys of citizens help local governments to prioritize spending decisions and make difficult decisions about program cuts (see inset on next page). To be effective, the survey needs to reach a relatively representative sample of the community, which may be difficult given the technical limitations of survey methodology. Survey questions should also allow for flexibility in the options it gives individuals to weigh budget alternatives in order to leave room for creativity in addressing the citys budget issues. The survey approach is limited, however, by survey methodology. How the survey is conducted (whether by mail, by phone or online) may affect how representative the survey results are of the population. As with the budget education approach, citizen surveys are also potentially a one-way flow of information, in this case from citizens to government. Local governments can improve on this limitation by following up with survey respondents once results have been tabulated. Finally, surveys provide little opportunity to educate citizens, which may result in relatively uninformed citizens making arbitrary choices about the budget.
SAN JOSE, CA
For its FY 2010-2011 budget, San Jose was forced to close an unprecedented $118 million deficit by cutting services across the board. Putting this deficit in perspective, the total was more than the city pays for parks, libraries, community centers, gang prevention programs and senior services put together (Guerra, 2011). The current mayor, Chuck Reed, contracted with a private polling company in order to survey a representative sample of the community. The survey was conducted by phone, online, and through the mail. City officials specifically wanted to know what neighborhood services, like library hours and community center hours, residents prioritized. They also wanted to know whether residents would be willing to reduce spending on public safety or delay opening new city facilities in order to maintain funding for these neighborhood services. San Jose used the results from the poll as part of its community-based budgeting effort for the year. Because the survey was done by a professional polling company and in a statistically rigorous manner, city officials could point to the results as scientifically valid. This fact was immensely helpful for city officials in defending their spending decisions in the final budget. At the same time, retaining a professional polling company was costly, and not a realistic option for many local governments.
Advisory Committees are generally a small group of individuals from the local community
who provide recommendations on budget issues. If the advisory committee has a good relationship with the greater community, it can also help to convey budget information to the public. The relative success of the advisory committee approach will depend on how representative the people sitting on the committee are. To that end, it is important to standardize the appointment process and take it out of the political process. If members of the committee are those most interested in local budget issues and those most involved in the community, they may be a more well-informed group to advise the government on the needs of the community. The committee approach allows the members of the committee to become intimately familiar with the citys unique budget circumstances, beyond the level at which it would be possible to educate every member of the community. The small number of citizens involved in the process limits the committee approach. It may not be as effective at educating the average citizen, unless members of the committee are particularly zealous in reaching out to the community to achieve that goal. At the same time, the committee approach may be ineffective if the committee is too large and unable to reach consensus on what the community budget priorities should be (see inset on next page).
PREVIOUS CASES OF PARTICIPATORY BUDGETING

Participatory budgeting has been used with varying degrees of success in Brazil, Europe, and Canada. The concept of participatory budgeting originated in Porto Alegre Brazil in 1989. At the time, the city administration sought greater political support from residents by allowing them to participate in open assemblies on the budget, to deliberate over budget priorities, and to make concrete budget demands.3 While the city had relatively high levels of service delivery to begin with, the use of participatory budgeting significantly increased delivery of services across
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Baiocchi and Lerner, 2007
MENLO PARK, CA
Looking into the future and seeing that predicted spending increases would outpace revenue increase, officials in Menlo Park, California realized that they would need to make substantial cuts, but they were unsure of the communitys priorities. During the FY 2005-2006 budget process, therefore, the city contracted with a private consultant to conduct a community-wide survey of the citys priorities. Yet the process was time consuming and resource consuming and Menlo Park has not conducted a similar survey since. While the private consultant helped to alleviate some of the workload, the city was wary of the public relations-type nature of most consultants that try to get individuals to buy into a particular vision. Menlo Park was not interested in conveying a message to the community, but rather in learning what the communitys values were. On top of the community-wide survey, Menlo Park established a Budget Advisory Committee. Because the city did not want to turn away any interested applicants, the committee had 17 members and was somewhat unfocused, given its size. The goal of the commission was to assist in communicating with the public. Yet because the individuals who selected into the group tended to be from financial backgrounds and have more of an interest in the budget end of things, they were less interested in effectively relaying information to the public. On the other hand, because of the committee members financial expertise, they were helpful in explaining the technical parts of the budget (Augustine, 2011)
Brazil. For example, water and sewage services increased to 100 percent in the first ten years of using the participatory budgeting process.4 Civic involvement has also permeated other institutions in Brazil, with the country experiencing an increase in the number of neighborhood associations as well as the number of civic groups in the wake of its initial participatory budgeting exercise. Cases of participatory budgeting have also been seen in parts of Canada, but in realms outside of the city budget in particular, a public housing authority and a civil society organization. In Toronto, the Toronto Community Housing tenants have held community planning meetings since 2002. At the meetings, tenants identify key issues and choose their capital investment priorities for the coming year. Tenants present their top five capital priorities to their Community Housing Unit council who then rank the priorities from all of the buildings across the unit and decide how capital funds should best be allocated to meet these priorities. In total, 20% of capital improvement funds for the housing authority are allocated for tenant decisionmaking.5 Building and Community Housing Unit plans are posted in each building listing projects that have been allocated funding, and the dates for completion. This ensures that tenants can monitor the implementation of these projects. A second Canadian case, in Guelph, Ontario, highlights the use of a civil society organization to carry out participatory budgeting. Since 1999, Guelphs Neighborhood Support Coalition (NSC), a civil society organization made up of neighborhood groups, has implemented a participatory budgeting process to allocate city funds.6 The NSC discusses citywide priorities while residents meet in smaller neighborhood groups to prepare a needs budget and a
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Baiocchi and Lerner, 2007 Toronto Housing Authority, 2011 6 Pinnington, Lerner, and Schugurensky, 2009 Center on Civility & Democratic Engagement Goldman School of Public Policy
wants budget for the coming year. Neighborhood delegates meet to discuss their budget proposals, after which the delegates report back to their neighborhoods and re-evaluate their needs based on the information from other neighborhood groups. The NSCs Finance Committee meets again to decide on final budget allocations based on all input from neighborhood groups. Neighborhood groups implement and monitor their projects throughout the year. Unlike the participatory budgeting process used in Brazil, citizen groups in Guelph are the ones spending the funds as opposed to monitoring the spending of funds by public officials.7 In the United States, the most prominent and successful case of participatory budgeting occurred in the 49th Ward of Chicago. Alderman Joe Moore initiated the process to seek the input of residents on how best to allocate the Wards $1.3 million capital budget for 2010. Over a period of six months, residents in the 49th Ward were charged with identifying community needs, researching projects, and preparing full spending proposals. All residents over age 16 were then asked to vote on their favorite projects, up to eight projects. In total, 1,652 residents cast a vote in the election. Up to the budget ceiling of $1.3 million, Alderman Moore agreed to submit the top vote getting projects. He could not, however, guarantee that the projects would be funded because Chicago government agencies are charged with granting final approval for every project request.8
IMPLEMENTING PARTICIPATORY BUDGETING IN CALIFORNIA

California does not face the traditional barriers that exist in cities in developing nations that have successfully developed participatory budgeting processes.9 California cities have relatively low service level needs comparatively, and historically have had the staff and funding to carry out these services. Californians also have a long history of participation in government, from town halls at the city level, to various forms of direct democracy at the state level. At the same time, California is an interesting example of how too much involvement of citizens in government, or the involvement of citizens in the wrong parts of the political process, can result in inefficiency. The initiative system allows voters in California to put their own measures on the ballot, creating an effective citizen legislature.10 Likewise, California allows citizens to fire elected officials through recalls and repeal some acts of the legislature through referenda. As a result, Californians have passed measures, which have both limited the states tax revenue as well as mandated spending. Greater involvement of citizens in government was originally intended to prevent powerful stakeholders from dominating the political process. Yet by opening these processes up to the average citizen, Californians have actually created a platform for lobbyists to manipulate a system that has evolved to be too complex for the average citizen to understand.11 This is not to say that civic engagement in political processes in California cannot be effective. Indeed, as the case studies above outline, direct democracy in the form of participatory
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Pinnington, Lerner, and Schugurensky, 2009 49th Ward Participatory Budgeting Initiative, 2010 9 Baiocchi and Lerner, 2007 10 The Economist, 2011 11 The Economist, 2011 Center on Civility & Democratic Engagement Goldman School of Public Policy
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budgeting, when combined with traditional forms of governance, can be an effective component of an overall strategy to improve the way we pass budgets. The question, then, is not whether more participation by citizens in the budgeting process is a good thing or a bad thing. The question is rather, how can governments implement participatory budgeting in an effective way so as to take maximize the benefits of civic participation and minimize the downsides to greater involvement by citizens?
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EVALUATING BUDGET OUTCOMES UNDER PARTICIPATORY BUDGETING

From a policy perspective, we care about involving citizens in the budget process to the extent that greater civic involvement results in a better budget outcome. Yet how do we define a good budget? Whether or not government revenue is correctly allocated is a highly subjective question. Furthermore, evaluating the performance of a civic participation process is problematic. It is difficult to do a comparative evaluation of participatory budgeting across different programs and different approaches, since each city varies by many factors.12 Analysis of participatory budgeting has focused on evaluating the process itself, without also comparing outcomes under participatory budgeting versus status quo budgeting to see whether a more socially efficient outcome is reached.
FISCAL METRICS
Ideally we would like to evaluate budgets passed using participatory budgeting along a set of key fiscal metrics. We would want to measure how stable resources are from one year to the next, whether the budget process is sufficiently flexible to allow for changing priorities, and whether the allocation of government revenue adequately aligns with local public service needs. Yet because many participatory budgeting exercises commenced during the economic downturn in 2008, it is difficult to parse out the impact on local government budget outcomes that are due to the downturn and those that are due to greater civic involvement in the process. Because it is impossible to separate the causal impact of participatory budgeting from the impact of the recession, this report does not evaluate participatory budgeting according to financial metrics.
POLITICAL METRICS
While it may be difficult to compare budget outcomes along fiscal metrics, we may be able to qualify the value of participatory budgeting by evaluating the process along political metrics. We should consider the overall effectiveness of the participatory budgeting process in engaging otherwise indifferent constituents, in informing otherwise uneducated citizens, and in minimizing the dominance of otherwise overpowering stakeholders:
Education: The budget process should provide a fundamental level of budget education for
interested stakeholders who traditionally have a voice in the process, but who may not be fully informed about the complexities of the citys budget. It should also provide sufficient education for the average citizen who wants to be able to understand changes to service levels from yearto-year. To that end, the budget process should be intelligible and accessible to the average citizen. In addition to measuring overall civic understanding on the budget, we also look at the relative success of cities in passing revenue measures as a measurement for the success of the citys outreach on the budget.
Engagement: The budget process should give individuals buy-in to the ultimate budget
outcomes. Citizens who feel involved in the budget process and feel as though they were
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Rayner, 2003
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consulted on difficult revenue allocation decisions are more likely to be satisfied with the final budget, regardless of the level of funding for particular programs.
Equality of Participation: The final budget outcome should reflect the diverse needs of a
citys entire population. Local governments can only achieve such an outcome if they are not only aware of these needs but also able to enact a budget that reflects these needs. The budget process should therefore minimize the influence of powerful stakeholders. The process should prevent the undue influence of these stakeholders over the allocation of revenue in order to accurately reflect the communitys needs.
INTERVIEW METHODOLOGY
Through a series of interviews conducted with local governments during April 2011 and May 2011, this report attempts to gauge the degree to which the participatory budgeting process meets the above political metrics. The individuals interviewed came from a range of city departments, from city finance departments to city communications departments to the city managers office. We asked questions about how these cities came to use a participatory budgeting process, what the citys goals for the process were, how the citys financial health did or did not change following the process, whether or not the process influenced the citys longterm financial and capital planning, whether the process changed the communitys discussion around the budget, and whether the process increased the diversity of stakeholders involved. The following case studies highlight where participatory budgeting has been most effective and how local governments can improve on civic engagement in budgeting.
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EVALUATING CALIFORNIA CASE STUDIES

BREA Fiscal Background:
As with many local governments, during the latest recession, the small Orange County community of Brea has had to deal with a substantial budget deficit due primarily to falling sales tax revenue. Because of these financial constraints, in the spring of 2009 the city was faced with eliminating staff, programs and services. While other cities in similar situations faced a steep learning curve when incorporating civic engagement into a government process, Brea had a history of drawing from public input to make community-wide decisions.
Process:
Brea did not make a conscious decision to increase the level of civic participation in its budgeting process. The city has had in place engagement processes to involve staff and citizens in other areas of policy-making for about a decade. They consider the process a collaborative leadership model which teaches individuals how to deal with constant change it is a problem-solving process, not a budget process.13 The city makes the key assumption that given all of the relevant information, a group will come to a better decision than an individual. Further, it assumes that given the complexity of 21st century problems, the solutions to the citys budget problems cannot come from solutions in any one particular department creativity in problem solving depends on collaboration across departments. Finally, the city assumes that before it is possible to do effective civic engagement, there must first be effective internal engagement among city employees. The first iteration of this type of engagement process in budgeting occurred in 2001-2002, though participation at the meeting remained internal to city staff and was limited to a group of executives that included heads of different city departments. Despite the limited level of participation, this first meeting was an improvement over the traditional method of constructing a budget, which generally included the city manager and an advisor or two constructing the entire budget behind closed doors. For FY 2011, Brea used a more involved internal and external engagement process around its budget. First, all city employees were invited to attend a simple process discussion in order to articulate big picture budget issues. The meeting began with an educational piece to establish the framework for future meetings, namely that in order for the meetings to run productively, employees could not view one another through the guise of positional authority. The initial meeting also involved a values identification process, where city employees were asked to identify community values. Finally, participants were asked to identify the main budget issues to address in the coming budget cycle. The structure of the meetings involved both large group and small group formats. The group was presented with a specific budget challenge, for example, the rising cost of cell phones.
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ODonnell, 2011
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Small groups then broke out to quickly discuss potential ideas to the problem and report out the ideas to the larger group. Finally, participants identified potential solutions to investigate further and conducted more in depth analysis on the costs and benefits of the solution. When all analysis of the potential solutions was complete (sometimes during the same meeting and sometimes a week or two later) the larger group made the ultimate decision. The entire meeting process was very time intensive, with staff meeting twice a week for three hours at a time for 8 or 9 months leading up to the budget proposal. Twice during this internal budget development process, the city held two community workshops. The first workshop had the purpose of validating the community values, which the staff had proposed internally. There were approximately 25 participants from the local community.14 The second meeting, which occurred later on in the process and attracted closer to 50 participants, was held in order to take the values discussion to a lower level and ask the community more specific questions about service level priorities. Based on the internal meetings and these two community dialogues, the staff developed a set of budget recommendations.
Evaluation of Outcomes
Using this civic engagement process over the course of two years, the staff in Brea was able to achieve a $6.5 million reduction on a budget of $52 million. Additionally, the city was able to reorganize its structure based on internal recommendations, cutting the number of city departments from nine to six.15 Education: Brea has structured its civic engagement around the budget so as to get input on the communitys values and the direction it would like to see policy move toward. It has avoided, at a community level, however, asking individuals to prioritize spending decisions. The city has concluded that because individuals just do not have the budget expertise to make informed decisions about spending, and because presumably the cost of increasing this education is too high, the conversation should focus on overall community values. Engagement: By conducting a community survey every two years, Brea can test the communitys prioritization of all the programs that it offers. The city relies on this as a primary means of engaging the average resident. City officials know that the informal feedback that they receive on a day-to-day basis is a small subset of the population who are either very content with the citys level of service provision, or very unhappy with the citys level of service provision. Brea uses the community survey to engage the average citizen. Most recently, the city found that citizen satisfaction did not change from pre-recession satisfaction levels.16 Because satisfaction levels did not change, even in the wake of cuts to city staff and city programs, officials saw this as a sign that the civic participation process had successfully engaged residents. Equality of Participation: The city did considerable outreach about its two community workshops. Despite this effort, the city was only able to get a small percentage of people to give
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Institute for Local Government, 2010 ODonnell, 2011 16 ODonnell, 2011 Center on Civility & Democratic Engagement Goldman School of Public Policy
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up time to come to a meeting. City officials noted that this turnout level was typical, relative to similar community meetings held previously.
CLAREMONT Fiscal Background

For Claremont, California, the recent economic downturn has resulted in severe reductions to the citys General Fund in the last two years. For both FY 2008-2009 and FY 2009-2010, the city was able to avoid service cuts by reducing operating costs, making unpopular employee salary and benefit concessions, and cutting staff across city departments. The prolonged recession, however, left Claremont in a fiscally unsound position and the city was faced with making unpopular cuts heading into the two-year budget cycle for FY 2010-2012.17
Process
Claremont has an existing civic engagement infrastructure from which to draw. Citizens have a history of being involved in local government, with seven citywide commissions. In total, there are close to 100 citizens who volunteer as members of these commissions.18 Because most government decisions go through a public process, however, projects take quite a bit longer to get off the ground than in other communities. For the last several years, Claremont has used these public engagement processes to gather the communitys input on the kinds of programs that it values. Historically, because the city had more revenue to work with and therefore a bit more flexibility in where city revenues were allocated, the community outreach component of the process played a larger role. As a result, in past years the budget outcome more clearly reflected the priorities expressed by members of the community.19 During the last few budget cycles, the city increased the civic engagement and educational outreach components of its budget process. Because of the drastic cuts that the City Council had to make, however, the discussion turned from how to prioritize spending to how to inform the public which programs the city was eliminating and why. The outreach process around the budget involved a series of five different workshops over the course of six months. The workshops were designed to solicit feedback about city services from community members. The City Council hoped to identify what the agency was doing well and should keep doing, what the agency was not doing well and should change, and areas where the city was not involved and should be.20 The workshops were targeted at diverse audiences, with some meetings held for community members at-large, and others targeted internally at agency staff or commission members. Each workshop began with an educational component to give participants an overview of where the city had traditionally allocated revenue and from which sources the city receives its primary funding. Officials made an effort to explain what proportion of the citys revenue is
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Claremont: Report to Council, 2011 Tudor, 2011 19 Tudor, 2011 20 Institute for Local Government, 2010 Center on Civility & Democratic Engagement Goldman School of Public Policy
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composed of sales, property and other taxes. Following the introduction, participants worked in small groups to evaluate the citys public services and generate clear, identifiable goals for how to best allocate revenue to meet peoples needs. Citizens were encouraged to think in terms of aggregate dollars, as opposed to specific funding levels for specific programs. While city staff facilitated the meetings and took notes, the discussion was primarily driven by citizens who were encouraged to generate their own ideas, rather than work from an existing list of programs generated by the staff. Many meetings also incorporated a live vote system, where participants in the room could vote on proposed ideas and see instantaneously what the consensus in the room was. Finally, city officials put the same survey questions online and solicited feedback through an online form. In total, the city took in an additional 200 responses online (though this demographic trended younger).
Evaluating the Outcomes

In the most recent iteration of Claremonts participatory budgeting cycle, the city received conflicting feedback about what people would be willing to eliminate from the budget. Essentially, citizens did not want to give up any programs. Because of the conflicting information, it has been difficult for the city to draw conclusions about how best to cut spending.21 Education: Claremont has been unable to use the participatory budgeting process to build social capital among its constituents. City officials report that although the city has previously been able to enact new revenue-generating measures, it has not been able to pass a measure recently. Officials note that there is simply no political appetite to ask the community questions about revenue measures.22 Engagement: Holding a civic engagement process to get feedback on the budget, but then not being able to incorporate citizen suggestions into the budget threatens to undermine the process and leave people wondering why they wasted their time. For Claremont, officials were able to mitigate citizen anger that may otherwise have been associated with such steep cuts through a discussion that focused less on the final budget outcomes and more about how to help individuals through the cuts. Because Claremont was invested in the process of involving the public, they were able to avoid feelings of disenfranchisement by the public.23 Equality of Participation: Theres always been at least some level of public involvement and some level of communication in Claremont. Because of the timing of the economic downturn, the discussion around the budget has shifted almost entirely to the cuts the city has had to make. For that reason, the stakeholders involved in the budget discussion have changed more due to the economics than the participatory process. While the ultimate decisions made on the budget by city officials may not have been able to take into account the diverse range of opinions on what should be cut, the conversations were still productive.
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Tudor, 2011 Tudor, 2011 23 Tudor, 2011

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LOS ANGELES: Fiscal Background With rising health care and pension costs and a slow economic recovery, the city of Los Angeles faces a $457 million budget deficit going into FY 2011-2012.24 In order to prioritize the citys spending cuts, the Mayor surveyed residents and asked how they would meet $300 million of the total $350 million General Fund budget shortfall. 25 Process
The most populous city in California, Los Angeles enacted a system of neighborhood councils in 1999 under its new City Charter. In theory, this structural reorganization allows individual citizens to take an active role in local policy. The reorganization gives stakeholders a more direct line to city government and in theory makes city government more accountable and responsive to concerns of the community. Stakeholders from the local communities head up a total of 93 neighborhood councils. The councils receive funding from the city and are a formal part of local government.26 The existing structure at the neighborhood level has helped the city to better facilitate outreach surrounding its budget. Section 909 of the new City Charter specifies that the annual budget process should be an opportunity for local communities to affect policy decisions. The same section gives neighborhood councils the task of presenting to the Mayor and the City Council a list of priorities for the coming year. Every fall, the city councils convene for a day of discussion with the Mayor about the citys fiscal situation. Neighborhood councils also play a crucial role in helping to educate the general population. They have helped develop the budget survey that Los Angeles distributes to local residents. Neighborhood councils also review the survey results and appoint a local representative to meet with the Mayor on behalf of the region. Historically, the budget education and outreach process centered around distributing a hard copy survey to neighborhood councils. With the new Mayor, Antonio Villaraigosa, taking office in 2005, the city staff overhauled the budget outreach process. With the goal of making the survey more relevant to the citys current fiscal realities, officials in 2005 moved beyond asking questions just about spending priorities.27 Instead they included questions about specific revenue-generating measures. Also, because citizens felt that in the past survey questions were too leading, city staff reached out to members of the neighborhood councils in order to help adjust questions for future years. The city teamed with Next10 in order to create an online, interactive tool that would address the same spending priorities and revenue measure questions as the previous surveys.
Education: The budget outreach process to neighborhood councils has been a dynamic one. What began as purely educational outreach, the process has evolved as the neighborhood
24 25
Mayors Budget FY 2011-2012, 2011 Los Angeles Budget Challenge, 2011 26 Institute for Local Government, 2010 27 Ceja, 2011 Center on Civility & Democratic Engagement Goldman School of Public Policy
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councils have been integrated into the citys fabric. City officials find that participants in the annual neighborhood budget days are better informed on the budget issues. Furthermore, while at the start of the participatory budgeting process Los Angeles had to push neighborhood councils for more information, the roles have now reversed; neighborhood councils are the ones reaching out to the City for more information about the budget.28 While participatory budgeting has had this impact for the most engaged neighborhood councils, however, the less selfmotivated neighborhood councils are still relatively unengaged and uninvolved in the annual budget process.29 In terms of the Citys ability to pass a revenue-generating measure, the city has passed both a half-cent sales tax increase to generate revenue for transportation-related projects (Measure R), as well as a garbage fee increase, since the onset of the participatory budgeting process. While the neighborhood councils have proven to be an effective institution for disseminating information about these types of revenue measures to a larger group of citizens, at the end of the day, the neighborhood councils cannot speak for the city as a whole. The outreach needed to educate Los Angeles diverse population about a ballot measure to raise revenue goes beyond the councils to the larger voting population. Engagement: During the last four years, the participatory budgeting process has evolved. The survey questions have changed and the priority of the survey in the larger budget process has changed. The changing priority of participatory budgeting reflects the prerogatives of two mayoral administrations, which has sent a mixed signal of how the city values civic participation in the process. Additionally, the current mayor received some negative press after the FY 2010-2011 online budget survey when it was revealed that the budget gap could be closed only by selecting the option to privatize public metered parking, garage parking, or both.30 The revelation that the process may be stacked in favor of a particular political end goal undermined the participatory budgeting process and limited the degree to which participants bought into the final outcome. Also, because of the bottom-up organization of the neighborhood council system, the budgeting process tends to not represent the broader community, an ironic byproduct of system that was founded with that intent. The city has favored self-determination allowing neighborhood councils to define their own roles over standardization, meaning that some neighborhood councils are much more active than others. This leads once again to the problem of powerful stakeholders dominating the budget discussion. Equality of Participation: The level of interest in the budgeting process varies considerably across neighborhood councils, with some neighborhood councils failing to take up the issue of citizen engagement on the budget altogether. Critics of the process in Los Angeles note that the budgeting process, in its latest iteration, focuses too much on elite members of society by only involving the neighborhood council board members, as opposed to the wider group of stakeholders.31
28
Ceja, 2011 Desobe, 2011 30 Newton, 2010 31 University of Southern California, School of Policy, Planning and Development, 2011
29
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MONTEREY Fiscal Background

Since 2008, Monterey has cut $7 million from its budget and has been forced to make difficult decisions about which programs to reduce and services to cut.32 Forced to work with fewer resources, city employees have had to take on heavier workloads for less pay. Traditionally, the budget process in Monterey has involved the City Manager matching city programs with value-drivers and proposing a departmental line item budget. The opportunity for citizen input occurred primarily at budget hearings, after the initial budget had already been proposed.33 Facing a $5 million budget deficit in 2010, Monterey implemented a priority-based budgeting process in order to move away from departmental budgeting to programmatic budgeting. To do so, Monterey sought input from citizens on how best to meet the gap. The city brought in experts from the Center on Priority Based Budgeting (CPBB) to help them identify community values and produce a budget that best reflected those values.
Process
Monterey is currently in the middle of its first priority-based budgeting exercise. In late September 2010, the public was invited to participate in study sessions with CPBB in order to learn about priority-based budgeting. Additional meetings were held throughout October 2010 to expand the discussion to citizens and staff and better define Montereys values. Following these discussions, staff from the CPBB helped the City Council to refine its mission, vision, and values by mapping out key priorities for the community. As a second step, in November 2010 the City Council convened a series of four public meetings. The meetings lasted three hours each and started with an educational piece to ensure that all participants had at least a cursory level of information about the budget process. The meetings also included a $500 exercise which asked citizens to focus spending priorities by allocating $500 of hypothetical tax dollars. Given a list of some of the citys 170 programs, participants were told to allocate the $500 dollars toward the programs that they most valued.34 To ensure adequate representation of citizens during this exercise, Monterey officials took the process into the community. Officials asked individuals to complete the $500 exercise at the local sports center, the library, the farmers market, and the local high school. Additionally, the local visitors bureau posted the exercise to its website and collected submissions online. In total, the city received 611 responses to the $500 exercise. To increase transparency during the process, videos of presentations about the process, as well as the public meetings, were posted to the city website and broadcast on public access television. Using the expanded values definitions established by CPBB, city programs were scored based on how aligned they were with these priorities. Next, data from the $500 dollar exercise were used to weight these same programs. The results showed that citizens cared the most about programs addressing health, education and well-being, with participants in the $500 exercise
32 33
Monterey: Preliminary $5 million General Fund Budget Reduction Plan, 2011 Monterey: Priority-based Budgeting Process Presentation, 2011 34 Nguyen, 2010 Center on Civility & Democratic Engagement Goldman School of Public Policy
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allocating almost $80 thousand to these services. The next largest priority for the community was safety, with participants allocating just over $50 thousand to these services.35 When weighing the citys budget priorities for the coming year, city officials also considered several other important factors. First, the Council considered whether there was Federal, State or County legislation, or whether there was a City Charter, ordinance or resolution. Council members also considered whether the City was the sole service provider and whether demand for that service was increasing or decreasing. Finally, council members considered the cost recovery potential of each program and whether it could meet its expenses through user fees and/or grants and donations.36
Evaluating the Outcomes

Using these priorities, the city worked to develop a budget for FY 2011-2012 that accurately reflected these priorities. The initial budget reduction plan, released on April 19, 2011, proposed a combination of budget reductions ($4.5 million), employee concessions ($.38 million), and additional approved recreation revenues ($.17 million) to meet the $5 million budget shortfall. The proposed spending cuts attempted to prioritize both well-being and safety, issues that were of primary importance to citizens during the outreach phase. For instance, while library and recreation services make up 18% of the budget, these services only make up 12% of the cuts. Likewise, while police and fire make up 43% of the citys budget, these services only make up 32% of the overall spending cuts. While the process is still underway, the latest step involves reporting back to the community the final outcomes of the budget at city council meetings. There will be two public meetings in May and June of 2011 to report back about the process. Education: City officials note that allowing residents to see the trade-offs involved in balancing the city budget using the $500 budget exercise was very effective.37 An often-heard comment was that people had not realized the wide scope of services provided by the city. City officials report that the process has resulted in a higher level of understanding about what the city does among residents. They are optimistic that this more knowledgeable citizenry will be engaged in volunteering and partnering with the city to address issues in the future. Engagement: While there has always been a certain amount of public participation on the budget, this year, through sustained outreach and contact with the community, Monterey ensured that citizens were involved throughout the process, not just once the final budget was released. Officials also made an effort to keep residents positively engaged in the process by asking people to prioritize services, not particular programs. They did not ask what citizens wanted to cut from the budget, but rather, what citizens valued most in their city services. Officials made an effort to ensure that residents understood how public input affected final decisions to ensure that people did not feel that their participation in the process was ignored. Equality of Participation: While city officials note that the primary stakeholders during the budget process have not changed significantly with the implementation of participatory budgeting, the discussion has broadened somewhat. City officials noticed increased
35 36
Monterey: Preliminary $5 million General Fund Budget Reduction Plan, 2011 Monterey: Priority-based Budgeting Process Presentation, 2011 37 McGrath, 2011 Center on Civility & Democratic Engagement Goldman School of Public Policy
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participation by individuals with busy lives and not necessarily enough time to come to city hall for a meeting; by taking the $500 exercise into the community, Monterey gave a broader group of individuals opportunities to contribute to the process.
MOUNTAIN VIEW Fiscal Background

In its previous two budget cycles, the city of Mountain View has faced deficits of $6.1 million (2009-10) and $4.6 million (2010-11) respectively. While in the past the city was able to address these shortfalls through staff eliminations, for the FY 2011-2012 budget cycle, Mountain View was faced with making difficult cuts to city programs. Knowing that the public would feel the impact of reduced service levels, city officials turned to civic engagement in order to better understand public priorities on spending and minimize these impacts.
Process
Mountain View has had a Narrative Budget process in place for several decades. The Narrative Budget is a complementary document to the citys traditional budget, which summarizes the key revenue and expenditure issues for the upcoming year. It is an effort to make the final budget more transparent to the average citizen and provide key information about the financial health of the city. The City Manager uses the Narrative Budget to address major issues that the city will face in the coming year as well as any budget recommendations. The city releases the Narrative Budget ahead of the formal budget proposal to allow citizens as well as council members time to consider the issues that the city faces and the potential resolutions to these issues. The release of the Narrative Budget includes an accompanying study session where residents are invited to a community meeting to provide their reactions to the forthcoming budget. This process also allows the City Council to identify any discrepancies between priorities that they have identified and the priorities of the community. While the Narrative Budget process has been in place for quite some time, in developing the FY 2011-2012 budget the City Council put an even greater focus on public outreach and education.38 Faced with cutting service levels, city officials reached out to the community to better understand the publics priorities. With the primary goal of educating the public about the citys fiscal realities, officials in Mountain View used numerous channels to reach a broad cross-section of the population. The city used its website to provide more in depth information about the budget and the budget process. It set up a specific email address for budget-related items and concerns. It allowed citizens to sign up for an e-notification system, whereby they would be notified about any budget-related events or discussions. City officials set up a budget information hotline, did cable broadcasts on the local cable channel, and posted live web-casts of city council meetings online. They also published articles in the local newspaper (The View), publicized city council agendas and minutes online, and produced and distributed informational flyers in numerous languages. The City Manger and Finance Director presented an educational forum City Budgeting 101 which was also filmed and posted to the website. Finally, city officials reached out to specific groups who would be affected by fee increases as well as internally to labor groups who would be affected by compensation cuts.
38
Ansted, 2011
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Mountain View has always prioritized youth programs, infrastructure maintenance, and the general fiscal health of the city. The education process during participatory budgeting process did not alter these goals significantly. While all of this outreach helped city officials to better understand the priorities of the community for the coming year, the additional educational outreach did not necessarily change Mountain Views long-term priorities.39 Education: With Mountain View cutting services, the annual budget did not leave a lot for citizens to be happy about. Yet after the FY 2010-2011 budget cycle and the additional effort to educate citizens about the budget, city officials reported a greater level of understanding among citizens at commission meetings.40 Specific to the citys ability to pass a revenue measure, city officials were able to place a utility user fee measure on the November 2010 ballot. City council members did significant outreach around the measure, as well as a formal public opinion survey on the measure, and it passed. The impact of the effective fee increase will ultimately result in higher revenue for the city and help improve the citys fiscal health. Engagement: City officials note that following the additional outreach done surrounding the budget, people frequently commented about how much they appreciated the opportunity to give their opinions and to make recommendations.41 Individuals felt like the City Council listened to what they had to say and went back to reevaluate funding allocation priorities. While there is effort to make sure that individuals are kept up-to-date on the budget process and aware of key decision milestones, there does not appear to be significant time or effort spent soliciting feedback from the community about changes they would like to see. As a result, during the overall budget process, the city doesnt receive a lot of input from the public.42 Equality of Participation: Despite efforts by the city to reach a diverse group of citizens, the participants in the budget discussion have not changed dramatically in the last decade, even with the additional educational outreach for FY 2011-2012. The city faces a common problem of constituents who are generally disinterested in budget issues. The city does, however, occasionally see increased interest on particular issues. For example, in 2010 a large group of residents came out to the budget meetings to discuss proposed recreational services fee increases that would have doubled fees for many of the citys youth and adult summer camps.43 Likewise, almost annually, lower income residents participate in budget meetings in order to request more funding for improving the local teen center. Local officials have not noticed significant changes to the types of issues brought up in council meetings or a greater diversity of opinions brought to the table since the implementation of participatory budgeting.
39 40
Ansted, 2011 Ansted, 2011 41 Ansted, 2011 42 Ansted, 2011 43 Debolt, 2010 Center on Civility & Democratic Engagement Goldman School of Public Policy
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PALO ALTO Fiscal Background

As with other local governments in California, the city of Palo Alto faces the reality of falling revenues due to the recession. The city projects that there will be a deficit of $.9 million for FY 2010-2011 and a deficit of $2.2 million for FY 2011-2012. Into the future, the city projects that it may face a total net deficit of $11.3 million between 2011 and 2021.44 While this forecast is an improvement over earlier long range forecasts, the city still faces the difficult decision of which programs to cut.
Process
For the last several years, Palo Alto has created a Budget-in-Brief brochure as a complement to the release of its annual budget report. The brochure is targeted at the average citizen with little knowledge of the budget and tries to create a clear picture of the citys fiscal situation. The city distributes this supplementary guide to the budget in a mailing and has copies available for people at city hall. A copy of the brochure is also made available to online users through the citys website. The brochure outlines the citys sources of revenue as well as where the revenue is spent. It specifically clarifies the different types of revenue sources general, enterprise, and capital and makes clear which revenue sources can be used to fund which types of programs. The Budget-in-Brief makes the budget process more transparent and allows residents to gain a better understanding of how city officials make important spending decisions. Finally, the brief educates citizens about the realities of Palo Altos economic situation and provides information about how citizens can get involved in public budget hearings. Palo Alto does not integrate a formal civic engagement process with its budget process. Instead, officials use civic engagement on an as-needed basis.45 Historically, there has not been consistent public outreach during the budget process. In 2010, for example, while the city faced a $10 million budget gap, it did not engage citizens during the budget process, primarily because in 2010 there were not considerable service level changes. Most of the gap was met by deferring retiree medical payments, deferring funding of certain infrastructure efforts, and making negotiated salary cuts. Because these kinds of reductions did not impact service levels, a civic engagement process was not as appropriate. For the FY 2011-2012 budget process, however, the city faced a $7.3 million budget gap due to the economic downturn and rising pension costs.46 The size of the gap meant that the city would be unable to balance its budget without some amount of service reductions. Needing more information about how to prioritize spending decisions, Palo Alto used several civic engagement strategies to improve the budget process. The community outreach component involved a meeting with various commissions in the city (for example, Friends of the Library).
44 45
City of Palo Alto, Update to Long Range Financial Forecast 2011-2021, 2011 Paras, 2011 46 Paras, 2011 Center on Civility & Democratic Engagement Goldman School of Public Policy
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The goal of the meeting was to get feedback on proposed service reductions from the most active members in the community. A secondary role of the public meeting was to inform and prepare constituents for the intended service level cuts.47 Following the initial meeting with the commissions, Palo Alto officials held an open-ended town hall targeted at the broader community. Officials presented the budget constraints that the city faced and how it proposed to address them. Officials also integrated information about the root causes of the citys fiscal problems, including information on historical economic trends, historical funding levels, and Palo Altos employee salary and benefit levels. In addition to the community-wide outreach, the City Manager made an effort to reach out internally to city staff. With the number of full time equivalent city employees declining and salaries and benefits rising, he made clear that Palo Alto faced a structural issue with its employee benefit cost structure. Employees would need to be part of the larger discussion about how to resolve the issue and the City Manager used these meetings to solicit creative ideas on how to solve the problem.
Whether or not the participatory budgeting process made a difference in Palo Altos budget outcome is unclear. Ultimately, final decisions on what to include or cut in the budget were made by the city finance committee. Many items were reinserted into the final version of the budget (for example, funding for school crossing guards) partially because citizens came to the open budget hearings to protest their cuts in earlier versions of the budget. In reality, however, the items that were reinserted into the budget tended to be for programs that were politically untouchable i.e. programs like youth safety and thus would have been restored anyway.48 Education: Palo Alto made efforts to reach out to the broader community, as well as internally, on the budget. The relative success of this outreach, however, is unclear. In terms of education that the city has done on revenue measures, in 2009 Palo Alto tried to approve a business license tax. The city did some public outreach to inform constituents about the proposal, which amounted to creating a flier about the issue and circulating it to the public. Beyond the fliers, however, the city did not conduct specific meetings related to the measure or do more aggressive campaigning. The measure failed, and the city has not attempted to pass a revenue measure since. City officials believe that they could have greater success in passing revenue measures in the future by better translating proposed revenue measures into more tangible, concrete terms for the public i.e. by giving the public a message they can own.49
47 48
Paras, 2011 Paras, 2011 49 Paras, 2011 Center on Civility & Democratic Engagement Goldman School of Public Policy
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Engagement: Because Palo Alto only engages in budget education during years when it knows it will have to cut services levels, it does not build social capital from year-to-year. The city does not accumulate trust among its constituents that the participatory budgeting exercise will be useful and that the budget outcomes will reflect input from participants and so the city has found it harder to keep citizens engaged. Palo Alto has greater success in civic engagement in smaller spheres of the government, specifically around the citys capital plan. The city established an infrastructure blue ribbon commission made up of 18 individuals in order to receive input and feedback on how to prioritize spending for the citys capital plan. Input from the commission was taken into account in creating the capital budget for FY 2011-2012 and city officials felt that the process of soliciting input from a broader range of people in the community resulted in a better capital plan.50 Equality of Participation: City officials note that the nature of the discussion around the budget did not change drastically during the FY 2011 budget process when the city made an increased effort to reach out to the community. Approximately the same stakeholder groups were present during the discussion. This may be due partially to the politically active citizens that reside in Palo Alto. On average, the demographic is fairly well educated, wealthy, and democratic. As such, citizens expect a lot from local government and have traditionally been vocal in the budget process. If the same stakeholder groups emerge consistently year after year, it may be that these are truly a representative sample of the opinions in the community. These citizens are generally highly educated on the budget and have learned the loopholes in the process and how to work with them.51
50 51
Paras, 2011 Paras, 2011
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RECOMMENDATIONS FOR LOCAL GOVERNMENTS

#1 KNOW WHAT YOU WANT TO ACHIEVE FROM THE PROCESS
Local governments need to understand why they are going through the participatory budgeting exercise and what they hope to achieve, before commencing the exercise. Cities should know what specific questions about the budget they would like answered. Is the goal to learn what citizens think about the budget process, in general? Is the goal to learn about how citizens prioritize specific programs i.e. health care spending vs. police and fire spending? Is the goal to learn how citizens would divide a specific amount of funding? Is the goal to see whether citizens prefer to raise additional revenue or cut spending during a budget crisis? It is not enough to simply gather feedback about what citizens think of the citys budget. You have to know exactly what you want to ask. Cities may want to consider the communitys relative knowledge of the budget as they attempt to gather feedback. Residents do not know enough about a citys strategic support functions to be able to assign appropriate value to them. Every resident that you ask will favor cutting the department of finance, for example, over education spending, even though you need a payroll in order to run public schools. If you know that this will be every residents response, you should not test it.
#2 IF YOU CHOOSE PARTICIPATORY BUDGETING, MAKE IT A PRIORITY

Local governments have limited staff and resources to carry out a huge slate of public services. There are an unlimited number of tasks to accomplish and a finite amount of time in the day. With the latest recession, local governments are even less likely to have spare staff or resources to devote to new projects. To that end, cities deciding on a participatory budgeting process need to commit to the idea and make the process a priority. If local officials do not make citizen engagement a priority, it will simply add a layer of bureaucracy to an already complex process. Without sufficient government buy-in, participatory budgeting runs the risk of actually moving further from the goal of creating an informed citizenry engaged in key decision making.
#3 IF YOU USE A PARTICIPATORY BUDGETING GAME, PLAY BY THE RULES

Any budget games used in the participatory budgeting process whether a survey or inperson revenue allocation exercise should be set up fairly. In other words, local governments cannot go into the participatory budgeting exercise with the idea of achieving a particular answer or outcome. Residents are smart enough to know when a survey or game is rigged. Even when you set up the budget exercise completely fairly, there will always be constituents who will question the outcomes. Knowing that some will question the results, you should make sure, going into the game, you have asked fair questions and not rigged the game to achieve a particular outcome.
#4 TIE PARTICIPATORY BUDGETING TO SPECIFIC OUTCOMES Citizen education should not end when the participatory budgeting process ends. It is important for those who participated in the process to know that a decision-maker looked at the data they helped create used it in determining the final budget. Local governments should be certain, from the beginning of the process, therefore, that there is someone in the administration who will want
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to use the information, whether it is the Mayor, the City Council, or another office. To improve on outcomes achieved with participatory budgeting, local governments should strive to improve government-citizen communication in order to avoid misperceptions about the outcomes of the participatory budgeting exercise or how the outcomes affect the final budget. #5 INSTITUTIONALIZE THE PARTCIPATORY BUDGETING PROCESS
Citizenship is a dynamic learning process. Cities that use participatory budgeting annually report that citizen education on budget issues improves from year-to-year. Local governments should institutionalize the civic engagement process to increase the number of participants who return one year to the next. Increasing the overall knowledge of most citizens on budget issues can put minority voices at a greater advantage in community meetings traditionally dominated by powerful stakeholders. Improving the overall budget education of citizens over time will also improve the effectiveness of the process; the administrative costs of the program will fall as the amount of resources needed to educate citizens falls. Participatory budgeting, through engaging citizens in one small area of governance, can serve to enhance good citizenship in other areas of governance.
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CONCLUSION
The emphasis throughout implementation on mobilization and networking, and the lack of involvement in institution building and outreach has led primarily to the achievement of increased political voice, but with the jury still out on the extent to which the system will satisfy other political goals [like] democratic legitimacy, representation, quality of participation. - Juliet Musso, Community Networks and Power in Los Angeles Given the challenges facing local governments in California, citizens are increasingly being asked to join in the discussion about their communitys values and priorities. These community dialogues range in topic from land use issues, to housing issues, to environmental issues. On the broader topic of the annual budget process, cities are increasingly turning to civic engagement processes to better inform their decisions. This report outlines where local governments are using participatory budgeting in California and evaluates how participatory budgeting has affected the process and outcomes in these cities. The case studies discussed focus primarily on how participatory budgeting functions in terms of how well the process educates constituents, how engaged citizens feel during the process, and how well the process levels the playing field by minimizing the dominance of powerful stakeholder groups.
NEXT STEPS
While this report can draw some conclusions about the degree to which participatory budgeting processes inform the most active and engaged citizens and create buy-in to the final outcomes, it is more difficult to determine whether the process equally informed or engaged the average citizen. Despite increased outreach efforts by cities in order to draw in a broader selection of citizens, the ultimate participants in the process are still likely to include only the most active citizens. Cities need to think strategically about how to improve outreach to the average citizen and ensure equal access to and understanding of the final budget outcome. To gain a better understanding of how involved the average citizen in each community is in the participatory budgeting process, a next step should be to conduct a broader, California-wide survey of citizens. The survey should include questions that address the fiscal condition of a city before and after the budget process to gain a better understanding of how civic engagement in budgeting impacts budget outcomes. The survey should reach out to control cities that do not use participatory budgeting, but that have similar demographic and economic characteristics to the cities that do. Having a clear comparison group for cities using civic participation in the budget process will allow for a more statistically rigorous comparison of how participatory budgeting affects fiscal outcomes, independent of current economic trends. For political reasons, aside from achieving a fiscally stable and sustainable budget, local officials ultimately should care about whether or not citizens are satisfied with the budget results. Yet gauging citizen sentiment about the process and the outcomes is difficult. For that reason, a broader citizen-centric survey should also attempt to capture the quality of the participation as a close proxy for citizen happiness with the final outcomes.
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REFERENCES
A Local Officials Guide to Public Engagement in Budgeting. (2010). Institute for Local Government. Retrieved from http://www.ca-ilg.org/budgetingguide Ansted, Helen. Principal Financial Analyst, City of Mountain View. Telephone interview. 21 April 2011. Augustine, Carol. Finance Director, City of Menlo Park. Telephone interview. 29 April 2011. Ceja, Ben. Chief of Budget at City Administrative Officer, City of Los Angeles. Telephone interview. 21 April 2011. Citizens United v. Federal Election Commission, 558 U.S. 50 (2010). Retrieved from Cornell University Law School, Legal Information Institute website: http://www.law.cornell.edu/supct/html/08-205.ZS.html City of Palo Alto, Update to Long Range Financial Forecast 2011-2021. (February 2, 2011). Retrieved from http://www.cityofpaloalto.org/depts/asd/financial_reporting.asp Debolt, Daniel. (April 8, 2010). Council gets lowdown on $1 million in new fees. Mountain View Voice. Retrieved from http://www.mv-voice.com/news/show_story.php?id=2715 Desobe, Eric. Del Ray Neighborhood Council President, Los Angeles. Telephone interview. 28 April 2011. Gianpaolo Baiocchi and Josh Lerner. (2007). Could Participatory Budgeting Work in the United States? The Good Society, 16 (1), 8-13. Guerra, Antonio. Budget and Policy Analyst, City of San Jose. Telephone interview. 27 April 2011. How does Participatory Budgeting Work? (2011). Retrieved from http://www.torontohousing.ca/key_initiatives/community_planning/how_does_partic ipatory_budgeting_work Lessons from California: The perils of extreme democracy. (April 20, 2011). The Economist. Retrieved from http://www.economist.com/node/18586520 Los Angeles Budget Challenge: Understanding Next Years Projected Budget Deficit. (2011). Retrieved from http://labudgetchallenge.lacity.org Mayors Budget FY 2011-2012. (2011). Retrieved from http://mayor.lacity.org/Issues/BalancedBudget/MayorsBudget2011 McGrath, Anne. Communications and Outreach Manager, City of Monterey. Telephone interview. 15 April 2011. Musso, Juliet. (2007). Community Networks and Power in Los Angeles: Implementation of Neighborhood Governance Reform. Public Administration in Transition: Theory, Practice, Methodology. Newton, Damien. (January 14, 2010). Mayors Online Budget Challenge Forces Players to Pick Privatized Parking. Retrieved from http://la.streetsblog.org/2010/01/14/mayors-onlinebudget-challenge-forces-players-to-pick-privatized-parking/
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Nguyen, Candice. (November 9, 2010). Monterey Gives "$500" to Residents to Fund Programs. Central Coast News. Retrieved from http://www.kionrightnow.com/story/13474841/500-exercise-for-monterey-residents-toh?redirected=true ODonnell, Tim. City Manager, City of Brea. Telephone interview. 22 April 2011. Paras, Christine. Senior Financial Analyst, City of Palo Alto. Telephone interview. 21 April 2011. Participatory Budgeting in Los Angeles. (2011). University of Southern California, School of Policy, Planning and Development. Civic Engagement Initiative. Retrieved from http://www.usc-cei.org/?url=participatorybudg.php Pinnington, Lerner, and Schugurensky (2009). Participatory Budgeting in North America: The Case of Guelph, Canada. Journal of Public Budgeting, Accounting & Financial Management, 21 (3), 455-484. Preliminary $5 million General Fund Budget Reduction Plan. (April 19, 2011). Retrieved from http://www.monterey.org/prioritybasedbudget/ Priority-based Budgeting Process Presentation. (October 6, 2011). Retrieved from http://www.monterey.org/prioritybasedbudget/ Rayner, Steve. (June, 2003). Democracy in the age of assessment: reflections on the roles of expertise and democracy in public-sector decision-making. Science and Public Policy, 30 (3), 163170. Report to Council. (February 8, 2011). Mayors Ad-hoc committee on Economic Sustainability. Retrieved from http://www.ci.claremont.ca.us Results of the April 10, 2010, 49th Participatory Budgeting Election. Retrieved from http://www.ward49.com/participatory-budgeting/#Results Tudor, Colin. Assistant to the City Manager, City of Claremont. Telephone interview. 20 April 2011. U.S. Census Bureau. (March 29, 2011). Quarterly Summary of State and Local Tax Revenue, Table 1: Latest National Totals of State and Local Taxes. Retrieved from http://www.census.gov/govs/qtax/
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AKNOWLEDGEMENTS
I would like to thank the board members of the Center on Civility and Democratic Engagement, particularly Selma Meyerowitz and D.D. van Loben Sels, for their help during the research of this report. Additionally, I would like to thank Bruce Cain and Henry Brady for help in shaping the direction of the research. I would also like to thank the city officials who took time to speak with me, including Helen Ansted, Carol Augustine, Ben Ceja, Eric Desobe, Antonio Guerra, Anne McGrath, Tim ODonnell, Christine Paras, and Colin Tudor. Gene Bardach provided discerning comments on early drafts of the report and general support throughout the process, for which I owe him many thanks. I would like to recognize Joy Bonaguro, Noor Dawood, Swetha Doraiswamy, Jacob DuMez, David Featherman, Mark Goodwin, Amy Katzen, Julia Nagle, and Kathy Wilson for their help and continuous feedback during the research and writing of this report.
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Public Participation in Budgeting: Putting Citizens at The Heart of Local Government Finance in California

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Public Participation in Budgeting: Putting Citizens at The Heart of Local Government Finance in California

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ADVANCED POLICY ANALYSIS SPRING 2011

PUBLIC PARTICIPATION IN BUDGETING:

Center on Civility & Democratic Engagement Goldman School of Public Policy

Center on Civility & Democratic Engagement Goldman School of Public Policy

Center on Civility & Democratic Engagement Goldman School of Public Policy

WHY CONSIDER PARTICIPATORY BUDGETING?

WHAT IS PARTICIPATORY BUDGETING?

Center on Civility & Democratic Engagement Goldman School of Public Policy

PREVIOUS CASES OF PARTICIPATORY BUDGETING

Baiocchi and Lerner, 2007

Center on Civility & Democratic Engagement Goldman School of Public Policy

IMPLEMENTING PARTICIPATORY BUDGETING IN CALIFORNIA

Center on Civility & Democratic Engagement Goldman School of Public Policy

EVALUATING BUDGET OUTCOMES UNDER PARTICIPATORY BUDGETING

Center on Civility & Democratic Engagement Goldman School of Public Policy

Center on Civility & Democratic Engagement Goldman School of Public Policy

EVALUATING CALIFORNIA CASE STUDIES

Center on Civility & Democratic Engagement Goldman School of Public Policy

CLAREMONT Fiscal Background

Evaluating the Outcomes

Tudor, 2011 Tudor, 2011 23 Tudor, 2011

Center on Civility & Democratic Engagement Goldman School of Public Policy

Center on Civility & Democratic Engagement Goldman School of Public Policy

MONTEREY Fiscal Background

Evaluating the Outcomes

MOUNTAIN VIEW Fiscal Background

Center on Civility & Democratic Engagement Goldman School of Public Policy

PALO ALTO Fiscal Background

Paras, 2011 Paras, 2011

Center on Civility & Democratic Engagement Goldman School of Public Policy

RECOMMENDATIONS FOR LOCAL GOVERNMENTS

#2 IF YOU CHOOSE PARTICIPATORY BUDGETING, MAKE IT A PRIORITY

#3 IF YOU USE A PARTICIPATORY BUDGETING GAME, PLAY BY THE RULES

Center on Civility & Democratic Engagement Goldman School of Public Policy

Center on Civility & Democratic Engagement Goldman School of Public Policy

Center on Civility & Democratic Engagement Goldman School of Public Policy

Center on Civility & Democratic Engagement Goldman School of Public Policy

Center on Civility & Democratic Engagement Goldman School of Public Policy

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