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How governments can create budgets for more equitable communities

Local and state governments are reassessing their budgets from the ground up to prioritize equity for all of their constituents.

In brief

  • Local and state governments have the potential to make substantial and lasting impact in creating equity for all people in their communities.
  • Budgeting is one of the most change-making tools to produce more equitable outcomes.
  • Equitable budgeting requires understanding what equity is, using data and evidence, focusing on results and engaging communities in new ways.

There is a well-known saying that budgets are value statements. In reality, traditional budgeting — bringing last year’s spending plan forward and adjusting it incrementally up or down to match revenues — can result, over time, in budgets that are disconnected from the values of the people they serve. That became strikingly clear last year, when George Floyd’s death by a police officer sparked calls across the United States to “defund the police,” and political leaders scrambled to respond. Already some leaders have begun repurposing a portion of their police dollars to promote racial equity and social justice.

Local and state governments have the potential to make substantial and lasting impact in creating equity for all people in their communities, and one of the most change-making tools is their budget. Budgeting for equity may appear straightforward: organizations should prioritize spending where it makes the most impact, addresses the greatest need and repair past harms. Simple in concept, but putting it into practice is challenging. Why? Like any other bureaucratic process, budgeting perpetuates the status quo, which favors those with the most access, influence and power.

While the playbook for budgeting is evolving, there are four fundamental practices that are essential to its success: understand equity, use data and evidence, budget for outcomes and engage the community in new ways.

Understand equity

Budgeting for equity cannot be separated from governing for equity. It is part of an organization- and community-wide cultural shift that begins with a shared understanding of what equity means, the causes and consequences of inequity, and why advancing equity is important.

Equity is achieved when individuals’ race or gender, for example, can no longer predict their life outcomes, and outcomes for all groups are improved. Equality is about treating everyone the same, such as equal protection under the law and equal pay for equal work. Equity recognizes that treating everyone the same will not repair the effects of past harms. Those who have been historically disadvantaged may need differential treatment to reach desired levels of academic achievement, health and employment. A community looking to use public resources to advance equity must find consensus around what equity means given its own unique history, economy, demographics, current conditions and goals for the future. Achieving consensus begins by agreeing on a shared set of facts.

Use data and evidence to inform budgeting

With data and evidence, governments can pinpoint disparities, establish goals to fix them and find solutions that work. For equity to inform budgeting, governments must move from goals to strategies — the actions and initiatives that can be determined, communicated, carried out and counted. A common-sense approach to strategy development is results-based accountability (RBA), a structured, data-driven planning process that works backward, from ends to means. RBA can be a powerful tool for disrupting the pattern of “we’ve always done it that way.” RBA also combats a rush to fund well-intentioned new programs that have not been shown, with credible evidence, to produce results or be cost-effective.

Using evidence to guide budgeting does not, however, limit governments to invest only in what is known to be effective. Instead, progress may require experimentation, measuring the results, learning and adaptation. Federal, state and local leaders should make room in their budgets for initiatives that have a sound theory of change, and then rigorously evaluate those initiatives, scaling up the ones that make a difference and dropping the ones that don’t.

Budget for equitable outcomes

Truly reorienting budgets toward equity will require a fundamental rethinking of the budget process itself. That is because traditional government budgeting is notoriously incremental and siloed. Revenue shortfalls, for example, are typically managed with across-the-board cuts. While that approach has long been considered the “fair” way to balance budgets, it also protects the status quo, including low-performing programs.

Budgeting for equity requires governments to rebuild their budget from the ground up, including redefining “fair” to focus on outcomes and then aligning budgets with equity goals. One useful approach to rebuilding budgets from the ground up is to implement budgeting for outcomes (BFO). It breaks from traditional budgeting by:

  • Starting with the goals governments want to achieve in the future, instead of considering how they have spent money in the past
  • Allocating available funding toward these goals, instead of departments
  • Giving the job of budget proposal reviews to “results teams” of employees and community members whose focus is purchasing outcomes, not funding line items

By looking at the entirety of a budget, starting from zero and then creating “investment portfolios” — program funding decisions — governments can make the best possible use of their resources to reduce racial and other disparities.

Engage the community in new ways

Many people imagine government budget decisions being made in a “smoke-filled room” where the average resident is shut out. Even budget deliberations that happen in plain sight, such as council hearings and town hall meetings, tend to be dominated by the “usual suspects” — well-to-do neighborhood associations, single-issue advocates and chamber-of-commerce types.  People from marginalized communities may be absent or outnumbered.

The advent of online budget engagement tools have done little to change the lopsided power dynamic. Budget simulators and online surveys can be valuable, but participation tends to be heavily skewed to young, white and highly educated residents. Governments that are serious about equity have to find ways to bring new voices to the budget discussion, build trust in that process and ensure that budgeting discussions are relevant to all residents. To do that, they can take three steps:

1. Take the budget to the people

Those with the most at stake in budget priorities are the least able to shape them. Evening meetings at city hall are off-limits to people who work night shifts or have childcare duties. Rule No. 1 of budget engagement is to meet people where they are, not just by holding meetings in libraries or recreation centers but also by co-designing engagement strategies with community organizations, showing up at neighborhood events and even knocking on doors.

2. Have grown-up conversations

Community budget meetings should be structured to put participants in the shoes of their elected officials and to grapple with real choices and trade-offs.  If there is a revenue shortfall, participants will need to consider hard decisions. Should the city close the least-utilized library branch? Cut back on recycling pickups? Raise property taxes?

3. Use engagement to empower

A good way to think of budget engagement is as a continuum. At one end, it should be to inform — giving people access to data so they can better understand the budget. At the other, it should be to empower, which means putting decision-making authority in the hands of residents. Inviting residents to serve on budget advisory panels is one way to use engagement to empower people, however, efforts must be made to ensure panels reflect a variety of community representation and voices. Some communities have introduced participatory budgeting, where residents propose and vote on how to spend a portion of the budget.

As the nation reckons with issues of race and social justice, government leaders at every level have an incredible opportunity to bring about a more equitable society. One powerful option is to break from traditional, incremental budgeting and budget for equity: creating a true values-based budget that focuses on outcomes, data and evidence and meaningful public engagement.


Traditional government budgeting is incremental and siloed, often perpetuating the status quo. Budgeting for equity requires building a budget from the ground up — funding goals (not departments), measuring results and including input from multiple voices. Equitable budgeting improves outcomes for all members of the community, not just the most influential and powerful.

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