Budgeting in Small Police Agencies

Best Practices

Guide

International Association of Chiefs of Police

by W. Dwayne Orrick

This project supported by a grant from:

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Best Practices Guide for

Budgeting in Small Police Agencies

W. Dwayne Orrick

Introduction

The best police chiefs are never satisfied with the status quo and are always seeking ways to improve

themselves and their departments. They also realize money is the fuel that runs their organization.

accomplish their mission and future goals, department heads must have sufficient funding. This funding is

received through the budgeting process. If the department fails in the budgeting process, it is likely to fall

short of meeting its goals later in the year. However, few officers climb the organizational ladder in aspiration

of working with a budget. It requires the chief to step out of their “comfort zone” of operational processes

and into the administrative and political environment.

In smaller communities, the city council or city manager are likely to develop the budget with little or no

input from the department. When fewer people are involved in the process, it is easier to compile a budget.

But this technique centralizes control of the operations outside the department and does not help address the

needs of the community.

The purpose of this guide is to remove some of the ‘mystic’ associated with developing a budget. It is

designed to help leaders of smaller police departments take an active role in obtaining funding for something

they know a lot about, running a police department.

The remainder of this guide will focus on reviewing the budget cycle; developing a personnel budget;

projecting the capital or long-term expenditures; forecasting operational or short-term costs; budget cutting

techniques; alternative service delivery strategies, approaches to budget justification; and execution.

Developing a budget is an art, not a science. There is no “one best way” to develop a budget. There are

different types of budgets and each community does things a little different. What works in one may not

work in another. Regardless of the technique used, budgeting serves as the funding process for department

operations. The budget can also be viewed as a:

Planning document - It is the funding document for what the organization plans to

accomplish during the next year.

Political document - It is a financial expression of our values.

Living document - The conditions and events impacting the department change. Because of

this, the organization must be flexible and respond to these conditions.

Developing a budget is defined as a process of estimating revenues and expenditures, comparing the two, and

making adjustments until they balance.

Unlike personal budgets, redundancy is built into the public funding

process to ensure accountability. To facilitate this process, local governments subject themselves to a budget

cycle. The budget cycle is a year-round process consisting of four phases. Two or more of these phases may

be occurring simultaneously. These phases include: executive preparation, legislative review, execution, and

the audit.

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Executive Preparation

This phase marks the beginning of a new budget year. In most communities, budget analysts will provide

department heads and elected officials with a budget calendar. This calendar will provide a time line for the

development of the budget. It is important to never underestimate the time required to develop the

department’s budget proposals. Once projections are formulated, they are placed in the format that has been

established by the funding authority. This ensures uniformity between agencies as well as administrative ease

for cross comparison. Budget meetings are held with each agency to review and analyze funding requests.

Legislative Review

During this phase, the proposed budgets for all of the departments, including the police, are presented to

elected officials. Final additions and/or deletions are made by the elected body before the budget is approved

and funds are appropriated for expenditure.

Execution

Also known as the fiscal year, this is the period the agency spends the appropriated funds. The fiscal year

defines the beginning and ending funding dates of agency services. Typically, this period lasts from July 1

until June 30

of the next calendar year.

Audit

This is the final stage of the budget cycle. During this period, accountants review each department’s

expenditures to ensure funds were appropriately spent and proper accounting processes were utilized.

Personnel Services Budget

The personnel budget typically comprises 80 - 95% of the department’s total budget. While it accounts for

the largest portion of funds, the personnel section is, in many ways, the easiest to project.

The first step in developing the personnel budget is to ensure the department’s manpower allocation is

accurate. If the department does not have enough officers and support staff, it will not be able to achieve its

mission. At the same time, having too many officers will severely impact the governing authority’s overall

budget. This may lead members of the community and the governing authority to question the need for the

officers and lose faith in the leader’s ability to responsibly use the taxpayer’s money.

Many factors affect the staffing levels of a law enforcement organization including the community conditions

and service requirements, operational philosophy, and budgetary considerations. If the department has never

completed an analysis of its staffing allocation, one should be conducted.

In an effort to substantiate the need for current or enhanced staffing levels, many administrators use

mathematical equations to project the number of officers needed. Even though most formulas are regarded

as being unbiased and objective, extraneous variables prevent any method from providing a “perfect”

estimate. Each method has different limitations in its ability to forecast the number of officers needed. When

making these calculations, it is important to provide accurate and objective estimates. There may be a

tendency to inflate the time spent on calls or the amount of activity. Failure to provide accurate, justifiable,

and objective projections can sabotage the department’s credibility and efforts to effectively address the

staffing needs. To ensure an unbiased report is completed, some agencies have relied upon outside “experts”

or consultants to complete these studies.

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If the community is experiencing dramatic changes in the population or workload, an analysis should be

completed on an annual basis. Otherwise it should be done every three years. This process will ensure the

department has adequate staff to address the needs of the community and allow administrators to strategically

plan for the future needs of the department.

Once the staffing levels have been established, the department should compare its salary and benefits package

to other agencies in the surrounding area. Studies have shown money is not a motivator, but absence of

money is a de-motivator. This is particularly true when staff perceive officers in nearby jurisdictions to be

considerably more compensated for similar responsibilities. Therefore, it is important for the department to

keep pace with the pay schedule in its labor market. To obtain this information, a salary survey should be

conducted. Many states collect and maintain this information but, the accuracy of the data may be

questionable. Some jurisdictions mail surveys to collect this information. This technique is dependent on

survey questionnaires being completed and returned by the respondent.

Another approach is for agency personnel to conduct a telephone survey of agencies in a 30 - 40 mile radius.

If the department is losing staff to a particular agency, such as a larger department or the state police, it

should be included in the survey. When collecting the information, comparisons should be made of positions

with similar job responsibilities, not rank. For example, a shift commander may be sergeant in one

department and a lieutenant in another. When completed, the results should be presented in a table for

comparison. It should include the base rate of pay, insurance, and other benefits for each community by

position. The survey should also identify if the department works eight, ten, or twelve hour schedules and if

the surveyed communities have other programs such as take-home cars, recruitment bonuses, educational

incentives, and shift differentials.

In states with collective bargaining, the staffing and salary may be part of the union contract. Regardless, this

information is important to have during negotiations.

Traditionally, staff turnover has been considered a cost of doing business. Since these expenditures do not

appear as a line item, little attention has been given to the cost of losing an experienced employee. The

development of the knowledge, skills, and abilities to be an officer occurs at substantial cost to the local

government. These skills make officers attractive candidates for many employers, public and private. Because

of this, many smaller agencies have become “training grounds” for larger agencies. Comparing the cost of

turnover with the cost to retain seasoned employees allows an agency to project the cost savings by reducing

its turnover. This information may provide significant justification for adjustments in compensation costs.

To calculate the cost of personal services, the following information must be completed. The information to

complete this computation may be obtained from the community’s payroll department and personnel

department.

Base Salary

Merit or Longevity Increases

Cost of Living Increases (Percentage of base, merit, and longevity increase)

FICA 6.2% on earnings up to $117,000 (if applicable)

Worker’s compensation (Percentage of salary with increases)

Retirement

Health/Dental/Life Insurance

Overtime

Other compensation related benefits specific to the community

TOTAL

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Cost of living increases may be part of a collective bargaining agreement or linked to the Consumer Price

Index. Other communities may make a political compromise in deciding adjustments to be made.

Overtime can be projected in the same manner as the short term or operating budget. It is important for

supervisors to closely monitor overtime. The use of overtime is a highly leveraged expenditure and costs 50%

more than regular staffing. An assessment of its usage may identify the need for staff transfers, work process

review, schedule adjustments, or increased staffing levels. The National Institute of Ethics suggests false

claims of overtime are a leading cause for discipline actions against officers. To prevent this, any claims

should be approved by the immediate supervisor.

In an effort to control costs, some agencies require staff to take compensation time in lieu of overtime pay. In

some cases, it may be more cost effective to pay overtime than to give compensation or “comp” time. First,

FLSA allow an employee to accumulate 480 hours comp time. Second, comp time not taken within the “work

period” must be compensated at 1 ½ times the normal rate. Third, it must be compensated at the highest rate

of pay. If the officer is promoted, he must be given the time off at the higher rate of pay. If he is demoted, he

must be paid while taking the comp time at the higher rate of pay.

Monitor Sick Leave. Like overtime, the use of sick leave requires close review by supervisory staff. Covering

positions for persons who have called in sick costs the department 250% of the budgeted amount. The

person who called in sick is being paid and another officer is paid overtime to cover the vacancy. Accurate

records of sick leave must be maintained and monitored for any patterns or trends. For example, taking sick

leave as soon as it is accrued, the same days of the week or times of the month being taken. High levels of

sick leave may be indicative of a sense of entitlement by staff which is an indicator of low morale,

disengagement, and misconduct. Because of this, persons who use high levels of sick leave should be

confronted and efforts taken to reduce the use of sick leave.

Personnel Grants. Over the years, departments have made use of personnel grants. The availability of these

grants vary depending on policy priorities of federal and state leaders. In some cases, agencies may obtain

funding for special initiatives from private foundations. It is recommended before the department applies for

these funds, staff review the grant application guidelines for retention requirements. A department

representative should bring the application to the attention of the governing body and receive their approval

for the application. Any retention requirements should be included in the council minutes. This is important

because when the grant expires persons in elected positions may have changed and some analysts may try to

eliminate the positions. It will be necessary to provide a copy of the grant and the minutes of the meeting to

indicate the authority approved the continued use of funds.

Capital Budget

The capital budget allows the community to make long term plans regarding the purchase of expensive items.

Some capital expenditures, such as purchase of land or renovation to buildings do not occur every year. The

risk of error is much higher for these decisions. Using a separate process assures major decisions are fully

considered before they are approved and funded.

A capital improvement program provides a plan for the

addition, replacement, or improvement of assets. It also includes the cost to support these purchases and a

schedule of replacement in the next three to five years. By scheduling these purchases, the community can

provide for the orderly replacement of major equipment and avoid peaks/valleys in the expenditures. This

allows the community to balance the costs with potential revenues. For example, the department has ten

patrol cars. Instead of purchasing all ten cars in one year, the replacements are spread over five years. This

will allow the orderly replacement of two cars a year and the budget is easier to balance.

To be included in the capital budget, items must have all three of the following characteristics:

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Tangible Asset (Something you can touch/feel)

Have a life expectancy or useful life of more than one year;

Exceed a minimum cost threshold established by the governing authority ($500 - $20,000).

The capital improvement program includes the following areas:

Land, Buildings, and Improvements to Systems

Motor Vehicles

Office Equipment

Machinery and Tools

Computer Equipment (including some software and supplies).

An easy way to develop the capital improvement program is to:

1. Inventory all of the department’s equipment that meets the guidelines for inclusion.

2. Identify the life expectancy for each item. This can be determined by researching with the

manufacturer, talking with other personnel on staff, and reviewing the useful life list provided by

the Internal Revenue Service.

3. Establish an estimated replacement cost for each item.

4. Place the items that will need to be replaced in the next five years on the schedule with the

associated costs.

5. Include additional equipment or enhancements on the schedule.

Justifying Capital Expenditures

Make or save Money. When requesting expenditures in the capital improvement program, the department

must be able to articulate a legitimate need for the equipment. If the department can describe how the

purchase will make the community money or save money, the budget analyst is more likely to approve the

request. There are some ethical issues that must be considered when law enforcement officials are being used

to “make” money. For instance, do not attempt to justify speed detection devices as a way to increase revenue

for the community. However, the department may more easily demonstrate how the community will save

money by making staff more efficient and effective with the equipment. For example, the use of technology

to accomplish more activity faster. Some agencies, have effectively used increased accountability, reduced

maintenance costs, and quick response from off-duty in the event of an emergency as a justification for a take

home car program.

It is cheaper to spend the money this year. The department may demonstrate the cost to the community

for the purchase is less this year than it will be in the future. For example, the cost for a piece of equipment is

expected to dramatically increase in the next few years.

Safety. The issue of safety may be used as a good justification for capital purchases. For instance, the radio

system has numerous “dead spots” where officers cannot communicate with the dispatcher. This would be a

good justification for additional towers or the implementation of a new radio system.

Another example would be a neighboring jurisdiction that experienced a tornado. Fortunately, no one was

hurt, but complaints arose afterwards that citizens had no warning of the tornado. In addition, the chief

noted the number of trains carrying hazardous materials was just as dangerous and the potential for an

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accidental spill was very great. As a result, the governing authority implemented a program to install

emergency warning sirens to cover the entire city.

Prioritization of funding. Some communities establish a rank order of priorities for capital expenditures

such as:

1. Legislative requirements

2. Hazards to staff/public

3. Economic advantage

4. Increased improved service

5. New Service or Convenience.

The prioritization of expenditures may vary with each community. However, knowing these priorities and

linking the request to the highest available justification, may increase the likelihood of approval. Recognize

competition for these funds is often tight and the requests may be postponed for a more pressing issue in

another area of the community.

Grant Funds. Grants and asset forfeiture funds are considered one-time revenue sources. It is not fiscally

prudent to use these funds to make operating expenditures. The next year, the supplies will need to be

purchased and there is no funding to make the purchase. In addition, most state and federal guidelines forbid

the use of these funds to supplant or replace existing funds. For this reason, grants and asset forfeiture funds

are a good source to enhance the department’s capital improvement program. These are a one-time revenue

source for one-time expenditures. The replacement of the addition to the program can be schedule years

down the road.

Forecasting Operating Expenditures (Short-Term Budget)

Once the personnel and capital budget estimates have been developed, the last section is the operating

budget. The operating budget funds the day-to-day supplies (fuel, paper, latex gloves), services (vehicle

repairs, telephones, maintenance contracts), and equipment (uniforms, ammunition) necessary for the

organization to function. Most of the same functions of a police organization are repeated each year.

Therefore, this year’s budget gives the department a good starting point for estimating next year’s costs. So,

the first step to developing an operating budget projection is to identify the current fiscal year’s budget as a

baseline for each area.

In the second step, officials determine if the department is going to initiate any new programs, make major

adjustments to current operations, or reduce levels of service delivery. The department’s strategic plan can be

very helpful in clarifying the adjustments needed.

The third step is to determine how much it will cost to provide these services. Many administrators simply

make incremental adjustments to each area or line-item such as three percent. While this approach may be

appropriate in some situations, these adjustments should not be done arbitrarily. As the department assesses

the operating costs, staff should critically evaluate their procedures. Efforts should be made to determine if

there are more cost effective procedures. This process is often overlooked, but it is essential to making

conscientious use of the public’s money. As a profession we cannot expect to throw more money at the same

problem to get the same results. Administrators should ask what does the agency need and what can it

eliminate? Are there areas the department can fund at lower levels? Is the organization performing work that

serves no function? What areas does the department really need additional funds to accomplish its goals?

Fourth, make adjustments in the budget projections.

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Finally, document what the funds will be used for, how the estimates were developed, and why the

department needs the funds. This documentation does not need to be a formal report. Clean notes listing the

calculations and assumptions used to make the projections are sufficient. This documentation will provide

much of the justification needed during the upcoming budget hearings.

Budget Cutting Techniques

As discussed earlier, developing a budget involves reconciling estimated budget revenues and expenditures

until the two balance. Therefore, some budget cuts are inevitable and cannot be avoided. Knowing how

requests may be cut is critical for preparing a solid justification. In his study of the budgeting process, Arnold

Meltsner noted analysts are likely to cut funding requests in several ways. Each of these techniques may be

observed during budget reviews.

Cut all requests for personnel increases. Staffing is a highly leveraged expenditure. As a general rule, once

a department receives additional staffing, they are seldom reduced. In an effort to control costs, requests for

staffing increases will be cut. In communities where there is a true need for increased staff, the ability of the

department to provide effective services may be affected. At the same time, if vacancies have been held for a

period of time with little impact on the department’s operations, budget analysts and elected officials may

question the need for continuing to fund elevated staffing levels.

Cut equipment viewed as luxuries. Each community has items the elected officials feel are luxuries and

unnecessary. Awareness of these idiosyncrasies allows the department to work around them and save valuable

political capital.

Use precedent - cut items that have been previously cut. If the request has been cut before with little

impact on the department’s operations, future requests will likely be cut again.

Recommend repair and renovation, not replacement. It is a common technique to postpone new

purchases by repairing current equipment. This approach is particularly feasible if the agency has a good

maintenance program. If the department has a regular replacement schedule, postponement may impact

purchases for several years. As a result, the department may be forced to expedite the replacement schedule

in future years. While this action may produce short term savings, it could result in more costs over the long

term (i.e. increased maintenance/repair costs).

Recommend a study to defer the costs. While studies may sometimes be used as a stall technique, they

also provide important information for making rational decisions regarding the cost and need for the

requested funds. Most elected officials do not like feeling “forced into” purchasing decisions. If a budget

request is for equipment or supplies personnel genuinely need, officials should feel confident in its approval

after the study. Therefore, it is important to anticipate the study being requested and recommend one be

initiated prior to the budget preparation beginnings.

Cut all costs by a fixed amount (i.e. 5%). Across the board reductions give the perception all agencies are

equally sharing the burden of the budget cuts. However, other departments may not be run as efficiently and

have more fat to cut. This approach could be more devastating for agencies with 24 hour, 7 day a week

operations, as compared with those that operate during traditional business hours. Essentially, these types of

cuts can impact the police department three times more than other departments.

Cut departments with a bad reputation. Agencies that do not enjoy strong community support may

experience difficulty in defending requests. In addition, if the department head has a reputation of making

unreasonable requests or does not have the confidence of the budget analysts, they are more likely to have

their budget requests cut. Unfortunately, legitimate requests may be eliminated.

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Don’t cut when the safety of staff or the public is involved. The primary purpose of government is to

provide for the public safety. This is critical for law enforcement administrators to remember. If a

“legitimate” risk to the staff or the public health and safety can be demonstrated the request will likely be

approved. To demonstrate this, the staff should conduct a risk analysis to identify the possibility of threats

and the probability of each threat occurring. Then a cost-benefit analysis can be conducted to determine the

most cost effective way to address the potential threat.

Point out areas for manager or legislative attention. The budget analyst may know they cannot cut some

of the department’s requests during their review. But, the request may be pointed out to elected officials for

them to question the need for the proposed funding and to make a final decision regarding its approval.

During budget review hearings, it is critical to ensure that cuts are made where the department can absorb the

loss. To accomplish this, a detailed review must be made of the operational expenditures and rank order each

request according to the following criteria:

1. Urgent and necessary for legal purposes/code compliance/mission

2. Necessary

3. Desirable, but not necessary.

It is recommended the department have a list of areas where the budget can be reduced. On many occasions,

budget analysts may try to cut an area the department does not feel comfortable. To address this, the staff

must know in advance the consequences for any potential cuts. As a compromise, the staff may propose cuts

be made in other areas they feel are more appropriate or can offset the loss. For example, the agency may

have a maintenance contract that covers the repairs for radios. Upon analysis of the cost of the contract

compared to the cost of repairing the radios as they malfunction, it is determined the contract could be

eliminated. The department can offer to drop the contract. At the same time, additional funds should be

included in the other area of the budget to cover the repairs.

Alternative Service Delivery Strategies

Historically, agencies have provided additional services with few conditions. As agencies are faced with

greater fiscal constraints leaders must critically evaluate their service delivery strategy. Programs or services

outside their core mission may need to be reduced or eliminated.

In some instances, the department may evaluate alternative service delivery strategies. For example,

contracting for services such as equipment rental, training, and background investigations allow the

department to access these services on an as-needed basis at a reduced cost.

In some agencies, sworn officers have been assigned to positions in which a civilian employee could perform

the same duties at a reduced cost. Civilianization enables departments to reduce the cost of service delivery

through lower salaries. At the same time, highly trained sworn personnel can be redirected to enforcement

positions.

Finally, some activities require more staff or resources than one agency can reasonably justify. An effective

alternative for leaders to consider is networking with surrounding agencies to provide services. The use of

interagency agreements enable departments to share personnel, training, and equipment costs to provide

specialized services. Some of the areas agencies have worked together with this approach include selection

tests, accident reconstruction, tactical teams, fugitive teams, drug units, and crime scene units.

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Justification for Requests

As the department goes through the budget review process, the chief should be ready to justify each

proposed expenditure in the budget. A variety of techniques could be used to justify the projected

expenditures and this list should not be considered to be exclusive.

Be prepared. Don’t get caught off guard. Know what the hot issues are and have a response ready when they

surface. To accomplish this, it is critical to anticipate areas that may be opposed by the public or elected

officials. Identify the reasons for their opposition and how they could be countered.

As projections are developed, an analysis of previous expenditures must be completed to determine what

needs to be continued, eliminated, or improved. If department personnel go to budget hearings without good

justification for the proposed expenditures, they will have a difficult battle. Arbitrary or unsubstantiated

increases will likely be eliminated. If the department is expected to make the formal budget presentation it

should be rehearsed. This rehearsal should preferably be done before persons who are unfamiliar with the

department’s operations and will ask pointed questions. During the presentation, use high quality visual aids.

Mandates. Agencies are mandated to comply with local, state, and federal regulations such as minimum

training hours, collective bargaining agreements, Family Medical Leave Act (FMLA) and the Fair Labor

Standards Act (FLSA). The chief should be able to list these requirements and the associated costs.

Safety Issues. Making an affirmative link between proposed requests and officer/public safety, will greatly

increase the chances the proposed expenditures will survive budget cuts. For example, the use of electronic

control weapons (ECWs) will minimize the likelihood an officer will be injured fighting with a resisting

suspect.

Higher Costs. Areas such as fuel prices are volatile. The uncontrollable increases will require budget

adjustments.

Training. As a rule of thumb, the department gets ten dollars returned for every dollar invested in training. It

is one of the most important activities an agency can do to develop staff to meet the future challenges of the

community. However, when cuts are needed, this is one of the first programs targeted. Leaders must be able

to justify the return-on-investment of training. There are a variety of approaches to evaluate training. One

simple approach is to evaluate performance measures before and at intervals after the training. This could be

done for almost any type of training. For example, officers often encounter mental health consumers in crisis.

These incidents can quickly become very dangerous. Because of this, it is important for officers to de-escalate

these situations and divert the consumer to mental health services instead of becoming engaged in a

confrontation that results in their arrest and incarceration. To measure the impact of training on how to

manage and de-escalate encounters with consumers in crisis, leaders should measure the number of

encounters and the outcomes within a specific period (i.e. 6 months, one year, etc…) prior to officers

attending this training. Some of the criteria that could be examined include the total number of incidents,

numbers that resulted in persons being arrested or diverted to mental health services, number of injuries to

officers/consumers, cost of treatment, number of work days lost from injuries, complaints or investigations

resulting from these incidents, and cost to complete these investigations. After officers successfully complete

the training, the same criteria should be evaluated for the same period of time. The differences can be used

to illustrate the benefits of the training.

At the same time, leaders should evaluate how training can be provided in a more cost effective manner. For

example, new employees could be required to obtain basic academy training prior to being employed. The use

of internet based training programs can offer a cost effective option for classroom based training. In other

cases, several agencies can pool their resources to provide training in a cost-effective manner.

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Improvement in Methods. Every year, police chiefs across the country hear the phrase “Do more with

less”. Perhaps the focus needs to be on doing different with less. Examine each function of the department to

identify redundancies or activities that have no real purpose.

Improvements can occur through changes in

operational procedures, reorganization, or the implementation of equipment to make staff more effective

such as new technology. Involve the staff in this process. Many times, the personnel closest to the problem

have the best ideas of how to improve the operations.

Politics. One of the most common reasons some agencies fail to receive requested funding for operations is

the elected officials do not know or understand the department’s problems. Everything done in government

falls somewhere on the political spectrum. It is not recommended the chief become involved in the

campaigns of local officials. But, he cannot work in a vacuum and must be able to maneuver in the political

environment. Oftentimes, the elected officials have a different perspective of the department. Take time to

listen to their concerns. At the same time, explain the department’s problems and what it needs to serve the

community. Working together, the chief and elected body can improve the service delivery of the

department.

Otherwise, the chief may become the scapegoat for the department’s failure to address these

issues.

Demonstrate cost effectiveness of expenditures. This technique is particularly beneficial with capital

expenditures. A budget is like an eco-system. A change in one area may impact another. For example, it may

cost more to repair a vehicle or computer and maintain it for another year than it costs to lease or purchase a

new one. Accountants understand this concept very well. The chief should be able to explain how an

expenditure will save money for the community, or reduce risk associated with worker injuries, law suits, or

employee turnover.

Recommend incremental implementation. Funding a large project over two or more budget cycles

instead of a single year reduces the impact of a large one-time expenditure. It also enables the agency to

schedule replacement of these items in future years in a more palatable fashion.

Alternative funding sources. Departments that make use of funds such as grants and asset forfeiture funds,

are more likely to receive authorization for the expenditures. It should be noted state and federal regulations

often forbid the use of these funds to supplant or replace existing funds.

Take a positive attitude. Officers look to the chief for how they should respond to attacks on the budget.

Periods of retrenchment are not permanent and should be viewed as a challenge. It is an opportunity to trim

the fat, build teamwork, and work on a common cause. If this period is faced as a challenge to be overcome,

most of the staff will support the department’s efforts. As a result, the organization will become leaner,

stronger, and more productive. A negative response may give staff the perception they are aboard a sinking

ship and compound problems for the organization.

Develop a strategic plan. If you don’t know where you are going, you won’t ever get there. Many states

require local governments to develop a strategic plan. Some departments have begun to conduct community

surveys. These surveys help to identify operational issues the community would like to have addressed and

the public’s perception of the department’s service delivery. This information along with comments from

staff, elected officials, and the public during planning sessions can be very beneficial to identifying the

department’s weaknesses and improving the quality of its service delivery. This process will also help develop

a realistic schedule to addressing areas to be improved. The goals and objectives developed during these

sessions should be linked to the budgetary expenditures.

Develop confidence and trust. Trust is the glue that binds us together. This is done by developing a

reputation of making reasonable budget requests. Padding found in one area of the budget may be assumed

to exist in other areas. As a result, legitimate funding requests may be cut. Officials must know when a

request is made by the chief, the proposal has been fully researched, all of the alternatives explored, and the

recommendation is in the best interest of the staff and the community.

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Use the Media. Too often we unnecessarily distance ourselves from the media. Brave men and women in

police departments across the country are making great sacrifices to serve their communities. Yet this service

is going unrecognized by the community. Working with the media will help to spotlight officer’s efforts and

enhance the agency’s brand image. Together, these actions will help build public support for the department’s

operations.

Economic Development. More communities are starting to realize public safety is an issue of economic and

industrial development. As businesses look to locate and expand their operations, they examine the quality of

life in the community. The ability of the department to address citizen’s fear of crime can influence the

perception of the community as a whole.

Compare Potential Trends or Events. Identify evolving trends or high profile events that are occurring in

other communities that have the potential to occur within the department if preemptive measures are not

taken.

Write the Justification. Some communities require a written justification to accompany the department’s

proposed budget. Even when they are not required, written justifications are a good way to help the staff to

develop their argument for the requested funds. The justification should identify the need, problem, or

program to be addressed, the additional personnel and resources being requested, and the expected results.

Budget hearings can sometimes become very emotional. The department personnel are faced with many

challenges and are concerned about receiving sufficient funding to meet them. At the same time, budget and

elected officials are faced with the responsibility of making hard decisions regarding cutting costs or raising

taxes. During these meetings, staff members should never demonstrate anger or indignation toward an

elected official. In addition, department representatives should never argue with members of the elected

body. It demonstrates a lack of restraint and projects an unprofessional image. In the long run the entire

department will suffer.

Budget Execution

After the governing body approves the department’s budget, funds are appropriated and staff are expected to

provide law enforcement services within the projected costs. This process is budget execution.

Budget execution is much like firing a weapon. The sight alignment and trigger squeeze are correct but,

rounds are grouped to one side at the seven yard mark. This may not cause much concern. But if the shooter

does not take corrective action, he will miss the target from 15 or 25 yards. The same is true with a police

budget. If the line item is two percent over budget after the first month and no corrective action is taken it

may be 24% over at the end of the year. While a two percent over budget does not seem like much, it can

have a significant impact for the entire community. Two percent of a $500,000 budget is $10,000.

In order to stay on target with the budget, the department’s expenditures must be monitored on a monthly

basis. To do this, the department should receive a statement of expenditures and appropriations from the

community’s finance department. This statement will have several columns to identify the appropriations,

month-to-date expenditures, year-to-date expenditures, remaining balances, and percentage of expenses.

The difference in the budgeted amount and the expenditures is referred to as variance. An easy way to track

the progress of the budget is to compare the percentage of expenditures for each area with the portion of the

fiscal year that has passed. The percentage of funds that have been spent is calculated by dividing the amount

spent (expenditures) by the budgeted amount. For example assume the department was budgeted $1,200 in a

particular category or line item and has spent $300. So 300 is divided by 1,200 resulting in .25 or twenty-five

percent.

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Compare this percentage to the portion of the fiscal year that has passed. Three months divided by 12

months equals .25 or one fourth of the year. In this illustration, the department is on budget. If the

expenditures was less than the portion of the year that had passed the department would have been under

budget and vice versa.

When an area is identified as being over budget, a reason for the cost overrun must be determined. Assuming

expenditures have been charged to the proper line item or section variance in the budget is always caused by

one of three factors:

Price: The department is paying more or less than was expected for the supplies or services.

Volume: The organization has experienced an increase/decrease in the amount used. Reaction to

seasonal activity or large isolated expenditures such as insurance premiums or bulk purchase

of fuel can cause dramatic fluctuations in a line item.

Efficiency of Operations: The department is operating more/less efficiently that expected.

After the analysis is completed, describe in writing the reason for the variance, and the corrective action to be

taken to bring the section in line with the budget. Officials should also make a separate notation as a reminder

for when the next year’s budget projections are being developed.

As the fiscal year progresses, each department head is expected to attend periodic budget reviews. The

purpose of these meetings are to track how each department, and the community as a whole, are progressing

with the budget. During these meetings, being aware of the variance and having an explanation ready

demonstrates the department is monitoring itself.

Summary

Mastering the budgeting process is critical for the success of the police organization. Budgeting is not a

complicated process. Rather, it is a learned skill that requires ingenuity, creativity, attention to detail, and good

communication skills.

Bibliography

Swanson, Charles R. and Margaret Shedd, Jail Management, Carl Vinson Institute of Government,

University of Georgia, 1984, p. 7.7.

Mohor, Arthur B. Jr. A Basic Budget Guide for Small Cities and Counties, Institute of Government,

University of Georgia, 1981, p.6.

Orrick, Dwayne, “Calculating the Costs of Turnover”, The Police Chief, (October 2002), pp 100- 103.

Trautman, Neal E. The National Law Enforcement Officer Disciplinary Research Project, The National

Institute of Ethics, 1997

Vogt, A. John, “Budgeting Capital Outlays and Improvements,” Budget Management: A Reader in

Local Government Financial Management, Jack Rabin, W. Bartley Hildreth, and Gerald J. Miller

(Eds), Carl Vinson Institute of Government, University of Georgia 1983, p. 130

Ibid, p. 132

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Arnold J. Meltsner, The Politics of City Revenue, (Berkley: University of California Press, 1971), p.

178.

Swanson, p. 7.20.

Philip Arreola and Edward Kondraki, “Cutback Management, Cost Containment, and Increased

Productivity”, The Police Chief, (October 1992), p. 111.

Martin D. Stefanic, “Preparing a Budget: Some Tricks of the Trade”, The Police Chief, (May 1985), p.52

Orrick, Dwayne, “Justifying Police Budgets”, The Police Chief, (August 2003)

About the Author

W. Dwayne Orrick has more than 34 years law enforcement experience including 22 years as a police chief

and public safety director. He holds a Bachelors of Arts in Criminal Justice and Masters of Public

Administration from the University of Georgia. Orrick is a graduate of the 186

Session of the FBI National

Academy.