The Planning Cycle - Priorization

Description:
Priorization is listing, in order of importance, the activities to be undertaken in the upcoming fiscal year. It means striking a balance between obligations to the funding agency and community, needs of the community, and the resources available to the Band Council.

Purpose:
If needs didn't exceed resources, there would be little need for setting priorities. Unfortunately, with continued government fiscal restraint and the lack of any real power to generate revenue in most First Nations, it will be a very long time before resources match community needs.

As a result, at any given time Chief and Council face an ever increasing number of fiscal pressures all of which are important and worthwhile, but not all which can be funded from the funds that are available. In addition, First Nations have an obligation to meet minimum standards for programs and services through funding agreements which further limit their flexibility to reallocate funding to other areas. Because financial resources are always limited, Band Councils must establish priorities early in the Planning Cycle.

Although funding realities limit what can be done, when First Nations develop priority lists, decision-makers should not consider the issue of available funds as that will be addressed later. In actual fact, when costed out, a priorized list usually exceeds available funding. Nevertheless, it will be important for Chief and Council to understand clearly which items on their priority lists are "funded" and therefore will be completed during the fiscal year, and which are "unfunded" and will not be funded unless additional revenues become available.

Process:
Decisions about where to invest funding each year, and where to cut back, if needed, are some of the most difficult facing a Chief and Council and their senior administrative staff. The difficulty comes with having to choose among worthwhile and needed projects, many of which carry significant human and political impact.

To make their job easier, decision-makers can follow a standard process to establish priorities. Following this method, decisions made can be based on established criteria such as health and safety, legal requirements, and funding agreement standards to determine which of the goals and objectives identified earlier in the planning process can in fact be funded with available resources.

With the help of senior program staff, Chief and Council must decide which objectives are the most pressing and can be addressed with the resources available for the upcoming fiscal year. The results of priorization must be reflected in Preliminary Program Budgets. Many factors will affect which programs and/or services will get priority including associated costs, perceived need in the community, immediacy of results, ease of implementation, and possible indirect impacts.

In setting priorities for the fiscal year, the Chief and Council along with senior management may undertake a step-by-step process:

  1. A useful first step in this process is to adopt a set of criteria to help the decision-making process. (see "Prioritization Criteria")

  2. It is necessary to separate the prioritization process into two separate exercises-the first related to Capital and the second related to non-Capital programs and services. It is simpler to deal with Capital and non-Capital separately because separate priority lists are required to complete Preliminary Program Budgets and the Capital Plan. It is also important to ensure that any restrictions related to the use of Capital for non-Capital purposes and vice-versa, are well known and taken into account in the Priorization process. Many First Nations have other priorization lists which also need to be reviewed as subcategories of Capital and non-Capital. For example there may be a Housing priority list, a post-secondary student assistance priority list, housing renovations priority list, and so on.

  3. A review of the Revenue Forecast (see Budgetary Cycle) will identify the total revenue available to the Band in the new fiscal year.

  4. Mandatory services in each program area should be identified and costed. Because providing these services is a condition of funding agreements, Bands do not have a choice but to include them. Costs associated with mandatory services are the first to be considered from the amount of total funding available. The most recent Expenditure and Variance Reports by program will provide helpful information.

  5. Costs associated with activities to achieve the Chief and Council's Mandate Objectives should be accounted for next.

  6. The completed priority lists will include projects that exceed the available resources. These projects will be completed only if funds become available through additional revenue or other projects are delayed. It is a good idea to have these "unfunded" priorities as part of the Priorization process as it provides direction to staff and avoids the need to hold special meetings to reconsider priorities as additional funding is secured.

Timing:
Priorization follows directly from the establishment of Mandate Objectives as set by Chief and Council. Priority setting should take place immediately after Band Council has established its Mandate Objectives early in the 4th quarter (end of January).