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Comment by chrisbennet | Hacker News Reader

Since this forum for founder/entrepreneur types, let me inject a bit of caution from my own experience with dealing with government organizations:

If you save a business organization money, they appreciate it.

If you save a government organization money, the next year the "savings" is likely to be deducted from their budget. They don't get to benefit from the savings and thus their motivations aren't what you might expect if you are used to dealing with businesses.

It makes sense but when I encountered this the first time it caught me by surprise. I mean who wouldn't want to save money, right?

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Plenty of business organizations behave exactly the same way, which is one reason for sales cycles in b2b services. Departments are willing to spend money at the end of a budget period on things they otherwise wouldn't have, divisions unwilling to reduce staffing because they may not get approval to hire more people later...

Exactly right: this is a pattern of bureaucratic empire-building versus smaller/flatter organizations, not one of government versus business institutions.

The part that always blew me away about governmentese was when i realized that "budget cuts" meant the program isnt getting less money than last fiscal year, but their increase YoY has been reduced!

How else could you plan beyond one year, other than in reference to expected increases/decreases in subsequent years? Those expected increases can't be ignored in "the budget", so they are planned for and probably allocated before that fiscal year ever starts. If you reduce that increase, you absolutely cut the budget.

But to an idiot like me, the absolute amount should go down if it is a cut; not up!

So if i spent $500 eating lunch at work two years ago; $600 last year and plan/allocated $610 this year i had a "budget cut?" no. I spent more.

Thats how i think

Think of the budget as a multi-year allocation. If Budget A from 2 years ago was "$500 this year, $600 next year, $700 the year after that" and now you reduce the allocation to $610, that is a budget cut from the original Budget A.

Only if the budget was reasonable in the first place. All too often they "budget" far more money than is possible and then celebrate the cuts.

This is two different things, not helped by the multiple meanings of the word budget. If the organization makes the budget (i.e. a spending plan) without confirming the funds (or knowing them through, say, a long term understanding), and don't get what they seek, of course that's not somebody else "cutting" their budget. That's just a budget you made up not being agreed to.

But this is more about having an expectation of funding at a certain level from whatever source, and knowing that that will be your "budget" (now meaning a spending _limit_), then having that amount come down. You now have a smaller limit.

I suppose they should be talking about budget velcoties.

Ah, the mythical budget vector.

Oh hey budget space must have an L1 norm. That's neat.

Pretty soon, we'll see the new consulting offering from McKinsey: Vector-based Budgeting. Very useful helping to mathematically quantify your various business unit's planning cycles in infinite dimensional space. You thought ZBB was cool, VBB is even cooler.

Interestingly in this case it seems it was the government that initiated the search for cost savings:

> In hopes of spending less this year, the school system offered $15,000 in prize money in a contest that challenged competitors to reduce the number of buses.

The way this typically works is that they were told from on high that their budget was getting cut, so they had to figure out a way to do so. Not sure if that happened here, or if these are just folks who are really interested in governing well, but that's been my experience.

There is a difference between local government and state or federal government here: local governments are more likely to be perennially underfunded, rather than competing with other agencies for federal money.

> If you save a business organization money, they appreciate it.

Is that based on past experience?

Yes, they appreciated it so much they'll paid me money. :-)

Yes it's how an expense becomes viewed as an investment with an ROI.

Actually most non-VC startup companies are heavily focused on opportunities to reduce their spending so long as it does not effect their ability to grow revenue

I didn't write that original comment, but yes, my experience is that businesses are VERY happy to find ways to save money.

As they say, a marginal dollar saved "drops straight to the bottom line" (profits).

That's also why third-party analysis of how government organizations spend their money is so crucial. Without such analysis, there is no check on wasteful spending.

They work for the people, after all.

Uhmm. Saving money doesn't mean they have to give it back you know. They could spend on other things like better computers for kids, more staff etc.

As I understand it (and I could be wrong), next year's budget uses last years budget as a baseline. If you spent $20K less on school books for example, you'd probably get $20K less for books next year. If instead you spent the same, but got 20% more books for the same money, that might work.

There is also this practice in organizations where money is allocated in "pots"[1]. For example, there is probably a pot for hardware/computers and a different pot for software. If you save them money on hardware, they don't automatically get to spend the savings on software.

(I thought you were unfairly down-voted so I up-voted you.)

[1] The correct term escapes me at the moment.

Agreed. This is why we need zero-based budgeting. Force organizations to justify every dollar every year rather than just using previous years as the starting point.

That doesn't work either: you get situations like the TSA artificially backing up airport security lines to "necessitate" budget increases.

They should incentivize efficiency. In government, it would be citizen impact per employee. If you have more, you make more money, if you have less, you make less.

> citizen impact per employee.

Do you think it would actually possible to quantify this in a way that:

1. Accurately represented "reality"?

2. Couldn't/wouldn't be gamed?

Seems challenging to me.

I think you can probably boil impact down to several key metrics:

1) How many people are affected by the work of this agency

2) How quickly are peoples' needs handled on average

3) How pleased are people with the work of this agency

I think you could trivially measure each of those.

How pleased people are this year, or in ten years time? There are lots of ways to make users happy in the short term at the expense of long term benefits.

If the police stopped arresting people then criminals would be much more pleased with their work

I've never seen any metric that can't be gamed somehow.

Choosing metrics to represent practical value, rather than let them be decided by profit-seekers, that's the real trick.

Meh, there are times/places when that is a good idea.

But if you make it annual standard operating procedure, then you are paying people to create spreadsheets and documents rather than, say, do something useful.

And the money will funnel to the people who are awesome at creating spreadsheets and documents rather than the people who are good at doing useful stuff.

Effective oversight requires understanding the domain and being motivated to continually improve things.

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