Equity in government budgeting

November 23, 2021

by Marilyn Rubin

In this project, we are looking at how city and state governments in the United States are using their budgets to advance equity for all residents. Opening the core routines of budgeting to include an equity dimension can make government more responsive to all its residents and can provide a pathway to a more equitable society.

City Budgets

We are looking at cities included in “What Works Cities” with Results for America as its lead partner.[1] Specifically, they are developing cases and action-oriented research to advise mayors and city financial leaders on how to develop and implement equity-focused reforms in city budgeting. Examples we have thus far identified of cities using their budgets to advance equity include San Antonio, Texas; Philadelphia, Pennsylvania; Madison, Wisconsin; and Austin, Texas.

San Antonio, Texas.  The city’s Budget Equity tool is “both a product and process” to assess the equity impacts of budget decisions. The tool is used to gather evidence from city agencies with reference to:

  • How their budgets allocate funds to advance racial and economic equity.
  • What racial/economic inequities do their programs address?
  • What metrics are being used to evaluate the impact of budget decisions on communities of color?

Philadelphia, Pennsylvania. The City has implemented a process known as Participatory Budgeting, that allows for direct community involvement in city spending decisions. Philadelphia is also implementing other changes for operating and capital budgets to increase racial equity in the budget process and in decisions about city revenues and spending.

Madison, Wisconsin. The city is using a Racial Equity and Social Justice tool to advance equity through the budget process. Some of the questions the city is asking agencies to address in their requests include:

  • Are there potential disproportionate impacts on communities of color or low-income communities?
  • Have stakeholders from different racial/ethnic groups been informed and represented in the development of proposals or plans?
  • What are the root causes or factors creating any racial or social inequities associated with proposals and plans?

Austin, Texas. The city has developed an equity assessment tool with 74 questions divided into four sections, one of which focuses exclusively on budgetary analysis. The budget section asks departments to assess how their budget may disproportionately impact some communities and how funds could be re-allocated to advance racial equity. All departments are required to detail the funding and personnel dedicated to 10 key areas and to use an equity analysis worksheet.

State Budgets

We are looking at the incorporation of equity measures in state budgeting, with a specific focus on states’ use of performance-based budgeting (PBB) that organizes spending by activities performed by government rather than what it buys. [2]  We are looking to see if state governments with performance budgeting laws and systems are now including equity, i.e., are states adapting performance budgeting laws to advance equity, and, if so, in what ways?

Our first step has been to screen the 50 states on the status of their PBB laws with specific reference to the inclusion of equity language in the laws. In addition to analyzing performance budgeting laws in the 50 states and any mention of equity that might be included in such laws, we are also identifying new state initiatives focused on equity, particularly those within the budgeting realm.  Some examples we have found include:

  • California has proposed an Office of Health Equity in the State Department of Public Health, “for purposes of aligning state resources, decision-making, and programs to accomplish certain goals related to health equity and protecting vulnerable communities.”
  • Colorado put equity at the forefront of its state budget this year, with a spending plan including millions of dollars earmarked for new programs focused on racial and health equity.
  • Alaska has made investments in education to advance fairness in school funding.
  • Illinois has proposed a law to create a Commission on Equitable Public University Funding to combat “historical and systemic racism in college access, affordability, and completion for Black, Latin, and other underrepresented and historically underserved students.

As part of our analysis of the states, we are also conducting a sweep of their diversity, equity, and inclusion (DEI) initiatives. For example, several states have adopted DEI initiatives in different forms to educate their legislators and legislative staff.  Once we have completed this sweep, we will take a sample of states that have a DEI initiative to see if, and how, they are linking the initiative with state budgets to advance equity. We hope that this work will provide valuable lessons for New Jersey.

References

[1] What works cities is an initiative funded by Bloomberg Philanthropies (https://medium.com/city-budgeting-for-equity-recovery/city-fiscal-health-and-equity-initiative-88563149f41)

[2] The Governmental Accounting Standards Board’s (GASB) defines “managing for results” as the focus of governments on missions, goals and objectives, requiring the development, use and reporting of performance measures “so that management, elected officials, and the public can assess the degree of success the organization has in accomplishing its mission goals and objectives” (GASB 2012).

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