Effective Leaders Prepare for the Future and Possible Economic Downturns—The County of Los Angeles made fiscal decisions immediately after the passage of Proposition 13 that enabled it to withstand devastating economic cycles in the 1990s and 2000s. Recognizing that the attitude of voters had crossed a political threshold with the passage of Proposition 13, county officials changed their decision-making culture:  they included only longer-term, identifiable resources in their general fund budget and they developed strategies and external partnerships to help meet identified service needs. Contingent funding, including potential federal and state grants, was not embedded into any of the county’s long-term budgetary assumptions.  

Fiscal Fluency Is an Essential Leadership Requirement —Brea’s city manager initiated a “bottom up” strategic planning process in 2008 that asked employees from all levels to meet weekly for over a year.  These “learner practitioners” underwent an extensive education process about the inner workings of the various operating departments.  The participants’ willingness to both consider and make significant adjustments within their own departments post-exercise suggests that this strategy was successful in broadening employees’ critical decision-making.  In other jurisdictions, policy officials, working in conjunction with career staff,also demonstrated that the fluency they gained in identifying the actual fiscal realities their organizations faced, resulted in more strategic and timely institutional action.   

Structure and Collaboration Matter—Sustainable fiscal decision-making does not occur by accident but rather through structured collaboration. Elected officials and senior appointed staff do not need to have identical interests, but their willingness to work with each other is a critical pre-condition for success. In contrast, the conflict among elected officials in the City of San Bernardino resulted in a failure to develop clear and agreed-upon fiscal decision-making processes.  

Partnerships Advance Fiscal Sustainability—Encouragement from policy officials combined with legal authority are necessary to permit staff to seek and leverage outside partnerships for service delivery and cost saving opportunities.  Losing 85% of its affordable housing budget in one year, Pasadena’s housing department relied on collaborative relationships to ensure uncompromised service delivery.  The City partnered with a nonprofit to provide case workers with support from the United Way of Greater Los Angeles, while it concurrently identified available HUD vouchers.  

Strategy Matters—Strategy must inform self-enforcing fiscal practices and organizational culture in combination with institutional rules. In 2010, the City of Long Beach adopted an official policy of “proportionate share” to ensure that the percentage of the budget devoted to police and fire would not go above 70 percent. As a result, public safety departments that were experiencing growth were required to make appropriate reductions to concurrently manage that growth.  

Fiscal Sustainability Rules Must Extend Beyond the Budgetary Process—The right institutional design can create space for transparency and accountability within government and with the external community. To be effective, the new rules need to help build trust between the board/council and the appointed executive--as seen in LA County, San Bernardino County,and the City of Long Beach --and between local government and the voters--as seen in the Whittier Union High School District and the City of Riverside. Building trust resulted in fiscal sustainability success while the lack of trust—as seen in the cities of San Bernardino and Santa Ana – resulted in fiscal sustainability failure.