Using Data to Make Better Budget Decisions

 

For public servants who carry the significant responsibility of funding decisions, pandemic-induced fiscal burdens can mean difficult budget cuts.

Budget cuts weren’t fun before the COVID-19 pandemic, and they’re only getting tougher. So one of the most important things governments can do during this time is to set themselves up to make better decisions about what to cut.

If you’re in that hot seat, how do you help determine what to keep and what to cut? While there are value judgments that guide these decisions, there is one thing we can all agree on: the right data helps us make better decisions.

With the right data, communities can answer these types of questions:

• What does the data show about the impact of our public services on our populations?
• What does the data expose as the biggest impact for our investment in public services?
• Where does the data hint that cuts will have the lowest negative impact now and in the future?

So what can governments do to ensure they get the right data to the right people at the right time and make better decisions? Start with these three steps:

1. Get a clear picture: gather data from the ground up in each service.

The first step in making better budget decisions is understanding what’s really happening in your communities and jurisdictions by collecting data at each individual point of interaction.

How do you know how helpful a service is unless you know whether and how much it actually helped the individuals who used the service? You can’t, or at least not with a high degree of confidence.

When the data is collected from the ground level, it creates a much cleaner and clearer picture of each public service. It’s like pixels in a picture. The crispness and clarity of a digital image on a screen is determined by how many tiny little pixel dots are in that image. If you don’t have many pixel dots, you can’t really tell what’s going on in the image. When you have a large number of pixels over that same sized screen, the image is crisp and clear.

To make sure budget cuts aren’t a blurry guessing game (which OpenLattice makes possible with proprietary individual-linking technology), get the data that shows how effective and efficient each service is.

2. Get a complete picture: connect data across services.

The second step in making better budget decisions is seeing how one service affects another by connecting individual data across services.

Having a clear picture of each service is critical to making better decisions within that service. But it’s not enough. Those pictures are more like close-up snapshots, and they need to get connected together to form a complete picture so that you see where the overlaps are. In these overlaps, you can find new opportunities for investment, cuts, or simply process adjustments because the effectiveness of one service often influences outcomes of another.

For example, one community used data linked across homeless services and healthcare and saw success. They allocated supportive housing to higher-risk folks in their homeless population in order to reduce emergency room visits for that same population. It was effective in that fewer folks in the population of interest experienced trauma, and it was efficient in that it lowered total systemic costs.

If the data hadn’t been complete in that it could link an action in one organization to an outcome in another organization, then perhaps the community never would have been able to get a more accurate measure of the impact of their adjustment and then ensure the change was sustained.

There are countless overlaps between services. When you connect each individual across services, (which OpenLattice makes possible and safe for organizations and the public through the creation of secure data collaboratives with de-identified data), then you can start to see what and how significant those overlaps are. It’s a complete picture of what’s going on.

3. See the big picture: aggregate the data and set goals.

Finally, to determine what to fund (and what to cut), use aggregated data across services to guide goal setting and tracking.

Once you have collected data from the ground up and identified overlaps across services, then aggregated views of your data allow you to see the big picture of what’s going on in your communities and jurisdictions. You can start to identify the ‘low hanging fruit’, or quick and easy changes that would drive the fiscal or social impact you’re looking for.

You can also start to set important goals, accurately track what happens to your key metrics as you take action, and adjust or optimize where needed.

When you’re working with clear, complete data and can see the big picture of what’s really happening, you’re all set up. (OpenLattice makes all of this possible through its secure data platform technology.) All you have to do is run the process. Over time, you can leverage insights from one success to help you create many other successes. You get faster and faster at replicating the process, and the vastness of the data and insights allow for a flywheel of progress towards your goals.

Conclusion

With each passing day, it becomes more important for state and local governments to get really skilled at making funding decisions, whether that’s reinvesting in the most valuable public services, trimming the least valuable services, or finding opportunities for new ways of doing things.

Unfortunately, right now, the vast majority of governments don’t have a fully-functional system to get the right data to the right people at the right time, which means they are making decisions using fragmented data and are missing critical pieces of the puzzle. In some cases, state and local governments have spent considerably large budgets trying to do this, but the old, custom-developed, overweight technology never delivered the return on investment they needed. In other cases, states and local governments haven’t had the resources to even start putting together a data-driven process.

Following the three steps above gets you a clear picture of each service, a complete picture of all services with how they overlap, and the ability to see the big picture to guide budget decisions at every level. In order to follow the steps, governments need to ensure their data technology provider, is powerful enough to handle all of their needs, simple enough to easily implement and work with, trustworthy enough so that they only pay for what they use and always own their own data, and finally scalable enough so that no matter what their capacity, they can become truly data driven. (OpenLattice does all of that.)

Whatever budget situation you find yourself in, now is the time to improve the decision-making process, informed by real evidence, and that starts with data.