budgeting ethics city manager’s futures forum may 9, 2011 michael a. gillette, ph.d. (434)384-5322...

Budgeting Ethics

City Manager’s Futures ForumMay 9, 2011

Michael A. Gillette, Ph.D.(434)384-5322 [email protected]

www.bsvinc.com

Moral Managementand the

Process of Ethics

Leadership Ethics“Tough Choices Part I: The Revolution”

"Lee's green jacketed troopers broke in close to the British lines, completely upset Tarleton's dragoons in a stiff little fight, and then fell back toward Guilford Courthouse with the whole aroused British force after them... The stillness was broken as North Carolinians coolly ripped out the three volleys that Greene had asked and then peeled off from the fence toward the second line... Virginians in the second line became entangled in the woods and could offer little resistance as the fight swept north toward a brick courthouse. Disaster threatened, ebbed, threatened again. Washington's dragoons checked the course of the Guards, and down from the hill came John Howard with his Delawares is and Marylanders.

"There was wild fighting, with cocked hats, bearskins, bandaged heads, and silver helmets tangled in a whirl of bayonet lunges, gunfire, and swinging musket butts. The British line began to sag dangerously. Cornwallis, seeing his own sudden peril, took the hard ... course of turning his artillery on the confused struggle, killing Briton and American with mechanical impartiality. Gradually, the two swaying masses drew apart.“

• Lancaster and Plumb, The Book of the Revolution, Dell, 1975, p.317

Leadership Ethics“Tough Choices Part II: The Pinto”

NORMATIVE ETHICS

•Utilitarianism (J.S. Mill): Always act so as to bring about the greatest good (happiness) for the greatest number.

•Deontology (Immanuel Kant): Always treat people as ends in themselves, never as a means only.

•Virtue Theory (Aristotle): Always act consistently with the standards of the role you play in life.

Ethics in Supervision“When Can I Squeal?”

As a member of the Senior Management Team, you are aware that budgetary limitations are likely to require reductions in staffing on certain units. You have been asked to keep this information confidential, because the specific decisions as to how the cuts will be made have not yet been finalized. One of your direct supervisees is in the process of buying a new home and has expressed his excitement at finally having a stable enough job to make home ownership possible. Should you warn the employee of the upcoming cuts and recommend that he wait on buying the house until after his position is secure?

Moral Management“Being Nice Vs. Being Ethical”

Supererogation

Moral Management“Identify the Default Assumptions”

Background Obligations

Moral Management“The Source of Obligation”

What Is Your Role?

Moral Management“The Source of Obligation II”

What Are Your Relationships?

Moral Management“How Relationships Work”

Tacit Expectations

Explicit Promises

Moral Management“What Ethical Leaders Do”

•Identify Default Obligations

•Recognize Distinct Obligations Across Individuals, Disciplines and Departments

•Prioritize Conflicting Obligations

•Support Valid Processes

THEORY

CASES CASES CASESEASY CASES

EASYCASES

HARD CASE

PRINCIPLES

Methods of Doing Ethics“Theory and Casuistry”

Theory Casuistry

Top-Down Bottom-Middle-Down

IDENTIFY THE BURDEN OF PROOF

EASY CASES

EASYCASES

HARD CASE

PRINCIPLES

Methods of Doing Ethics“Method In Ethics”

Casuistry

THEORY

Scarcity

Disaster Ethics

Colonel Blake turned to Hawkeye with a frustrated and demoralized look and asked “What should I do?” He went on to explain, “This kid will take five units of blood and three hours of surgery and he’ll still die. With that time and those resources I could treat three other soldiers out there who could survive, but will die waiting.”

Hawkeye answered quickly. “Henry, he never should have been brought in here to begin with.”

Triage (On TV)

“The Zero-Sum Game”Ms. B is carrying twins at 26 weeks, 6 days approximate gestational age. Twin 1 is presently 789 grams on ultrasound and has moved closer to the birth canal than twin 2, who measures 875 grams on ultrasound. Twin 1’s membranes ruptured one week ago, and Ms. B has not progressed into active labor. Were twin 1 to have gone into distress as little as one week ago, the mortality and morbidity profile for a C-section would not have produced a clinical justification for aggressive intervention. If twin 1 goes into distress as little as one week from now, a C-section is likely to be indicated since it would provide a significant chance of benefit to twin 1 without substantially increasing the risks for twin 2. However, should twin 1 go into distress now, its mortality and morbidity profile is substantially worse if not delivered by C-section while twin 2’s chance for survival and health would be substantially lowered if it were delivered by C-section at this time. Selective reduction is not clinically feasible, and a C-section cannot be performed on only one fetus. The only hope for maintaining twin 2 in utero would be to wait for a vaginal delivery of twin 1 and then stop labor with tocolytics. That choice, if twin 1 is in distress and needs immediate delivery, creates a conflict of interests between these two fetuses and thus an ethical problem.

Allocation Ethics

Mr. Z is a 19-year-old individual with MR who has been receiving specialized services through the school system in his locality. Mr. Z has decided that he does not want to go to school anymore and his family has been looking for appropriate assistance in the community. They have requested services from the CSB but funding is scarce. Mr. Z requires intensive supports and the CSB has determined that it would prefer to use its resources for individuals who have no other options. Is it ethical to refuse to provide services to Mr. Z because he is eligible for school-based support until he is 22?

Wait Until He Ages Out

Ethical Challenges

Ms. E is a CSB client who recently refused to complete the application process to participate in Medicare Part D. Ms. E indicates that she does not want to go through the effort of completing the paper work and choosing a plan, and that she would prefer just to work with the agency to utilize their medication samples to receive free medications. Staff believe that Ms. E would meet eligibility for Medicare Part D and wonder if they can refuse to provide low-cost or no-cost medications given Ms. E’s other alternatives.

“No Alternatives By Choice”

Allocation Ethics

According to well-documented research by the National Highway Traffic Safety Administration, the incidence of serious injury and death are greatly increased in areas where disabled vehicles are unable to fully pull-off of the roadway. In response to this fact, the Department of Transportation in the State of East Virginia has created a policy that requires all new construction of multi-lane roadways to include a full breakdown lane on each side of the thoroughfare. Although this policy has been met with great approval, it was recently amended to allow an exception for bridges. According to an internal EVDOT memo, “while accidents can happen on bridges just as easily as on other parts of the road, the costs associated with installing full breakdown lanes on bridges excessive in light of the number of lives saved”. Is this cost-benefit analysis ethically acceptable?

The High Cost of Safety

Allocation Ethics“Tax Relief”

A request recently came before Council to change the eligibility requirements for participation in the City’s tax relief program. While maintaining other inclusionary criteria, the proposal seeks to increase the maximum allowable annual income level of individuals served by 10%. City Council has indicated that overall funding for the program will remain fixed. Is it ethical to increase eligibility without allocating more resources to this program?

Allocation Ethics“Tax Relief II”

Upon closer examination of the matrix by which tax relief awards are calculated, it became clear that individuals at higher levels of fiscal stress sometimes receive lower levels of assistance. If a change is made in this regard, relief will necessarily be reduced to individuals who have previously received higher amounts of aid.

The Concept of Fairness:Is Best, Best?

The Allocation of Resources

The Concept of Fairness

A B

Movie One

Movie Two

Movie Three

Movie Four

5mi 5mi

3mi 9mi

8mi 2mi

4mi 3mi

The Allocation of Resources

Effectiveness, Efficiency, Equality, Equity

α β γ δ

A 1000 950 -7 500

B 25 100 -5 300

The Ethics of Scarcity“The Four E’s”

1. Efficiency: A maximally efficient outcome is one that provides the highest ratio of output over input in a system. Efficiency does not consider the distribution of outcomes across recipients, but only the return on investment that is generated.

2. Effectiveness: A maximally effective outcome is one that maximizes benefit to the recipient of the resources or services in question so as to bring about the greatest gain for the chosen recipient. When we consider effectiveness, we apply the economic principle of maximax; obtaining the best possible best-case outcome.

3. Equality: An equal distribution is one that maximizes the degree of similarity of outcome for all recipients of goods or services.

4. Equity: A maximally equitable distribution of goods or services is that which minimizes harm to the non-recipient of resources or services in question so as to bring about the least harm to all potential recipients. When we consider equity, we apply the economic principle of maximin; obtaining the best possible worst-case outcome.

The Allocation of ResourcesThe Concept of Fairness

A

B

α

β

Allocation Ethics“The Process of Rationing”

1. A fair approach to rationing is one that seeks to maximize benefit to the least advantaged member of the group.

2. Once minimum standards are met for everyone, additional resources should be used to improve the situation of those who are least advantaged

Allocation Ethics“The Justification of Rationing”

Rationing a PUBLIC resource is morally justified if and only if:

1. There actually exists a shortage of the resource in question,

AND

2. An identifiable victim of a failure to ration exists,

AND

3. The victim of the adopted rationing scheme is disadvantaged less than the victim of any other rationing scheme, including the lack of rationing altogether.

The Ethics of Scarcity“Altered Standards of Care”

In an environment of true scarcity, our goal must be to minimize the harms done rather than to maximize the benefits received. ‘Best Practice’ is a luxury for the wealthy. When allocating scarce resources, our only constraint on the lower end is to satisfy minimum standards of care.

Micro-Allocation:An Operational Algorithm

The Ethics of Scarcity“Exclusionary Criteria”

Constituency: The facility exists as an agency within a specific geographic and political location that is designed to meet the needs of individuals who reside in that area. While it may be appropriate to enter into cooperative regional efforts with neighbors and thereby extend constituency claims in specific ways, services should otherwise be restricted to those individuals who are residents of the catchment area.

Inappropriate Requests: Some individuals may request services that the facility is simply not designed, mandated or funded to satisfy. We recommend that the organization must clearly define what it does, and that it is ethical to refuse to provide services that are inconsistent with its mission.

The Ethics of Scarcity“Inclusionary Criteria”

Prior Commitment: Currently enrolled individuals who continue actively to satisfy the terms of their treatment plans should remain enrolled even if new potential consumers present with equal or greater need. We do not believe that active clients should have their services withdrawn for so long as the services that have been initiated are indicated.


Alternative Resources (Need, Part I): If the organization is defined as a safety net provider, then this designation implies that the facility has a special obligation to help individuals who need to be helped. Individuals who can access services by other means do not actually need our services. Therefore, we recommend that such individuals may ethically be considered as lower priority in the face of scarcity and may be excluded from further consideration


Need (Part II): We recommend that those individuals with serious and imminent needs should be given priority over those with lesser need. Need must understood to include the risk of harm associated with a failure to access services. When assessing need, all efforts should be made to identify those individuals who will suffer serious and imminent risk to life or irreversible harm. Clearly, many individuals will present with a variety of needs. At this point in the process, however we consider only those individuals whose need is of a serious, emergent type such that failure to meet their needs will likely result in A) loss of basic physiological function, B) exposure to life and/or safety risks, C) failure to meet basic developmental needs, or D) degeneration of condition that will lead to one of risks A-C. These individuals should be given priority at this step in the allocation process.


Efficiency: Once those with serious and imminent needs have been served, assuming that additional resources remain for allocation, the organization should attempt to serve as many individuals as possible. Therefore, efficiency now becomes a relevant factor. The organization should, at this point, rank possible allocation schemes in order to maximize efficiency. Efficiency should be understood to include not only serving the maximum number of individuals, but also a cost-benefit analysis. If revenues can be generated by serving some clients, those new revenues can then be used to extend the scope of service. These types of efficiency calculations are morally acceptable after we have served those already in the system and those with serious and imminent risks


Effectiveness: Once we have maximized efficiency, if resources continue to be available, priority may then be placed on individuals who show the greatest likelihood of maximally benefiting from receipt of services. While the concept of efficiency is applied across a group of individuals, the concept of effectiveness is applied to specific individuals and indicates a desire to maximize the outcome for the targeted individuals.


Comparative Need: Once basic needs have been met and efficiency and effectiveness achieved, attention may then shift to a comparative analysis of lesser needs. At this point in the allocation process, individuals should be rank ordered based upon the likelihood that we can support their achievement of better social functioning, higher cognitive development and employment success. Needs of these types should be distinguished from the more serious and imminent needs addressed above, although we in no way mean to indicate that this level of need is unimportant.


Random Selection: Once the above delineated criteria have been applied, it is plausible to argue that any remaining claims on services are of relatively equal urgency and efficiency. Recognition of this fact generates an assumption that all additional claims are of equal value and should be treated equally. It is then ethically permissible to allocate any remaining resources on the basis of random selection. We recommend that a first-come-first served selection model is ethically acceptable at this point.

Macro-Allocation and Budget Development

Macro-Allocation“The Source of Ethics”

In a pluralistic society, ethics derives from an understanding of the reasonable expectations for behavior. These are generated by identification of general roles (that produce tacit expectations) and specific relationships (that produce explicit promises). On the macro level, these concerns can be shaped by public opinion. Politics matters!

Macro-Allocation“Exclusionary Criteria”

ConstituencyInappropriate Requests

Define the Facility’s Mission

The Ethics of Scarcity“Macro-Allocation”

Prior Commitment Leave Intact ORPhase Out Over Time

Alternative Resources Leverage ResourcesNeed Apply A Concept of Fairness To The Commitment

To Comprehensive ServicesEfficiency Leave Intact

Effectiveness Swap Order With Efficiency?Comparative Need Replace With Consideration

Of Public OpinionRandom Selection Delete

The Ethics of Scarcity“The Macro Algorithm”

1. Identify the range of services to be offered over time (begin with mandates, mission, and the demands of considered public opinion).

2. Maintain a commitment to provide the services identified in step one.

3. Spend additional resources to limit the harms of the budget cuts (equity).

4. Select programs that leverage resources to increase funding for steps two and three (efficiency).

5. Select programs with high and measurable success rates (effectiveness).

6. Satisfy the demands of public opinion (when these demands are clear enough, re-engage in step one)

Macro-Allocation“Reflective Equilibrium”

When a public agency engages in the provision of public services, it is not unreasonable for society to set the broad goals of activity. Therefore, a balance must be maintained between step one and step six on the previous slide. This is a bi-lateral process designed to generate equilibrium.

Macro-Allocation“Standard Method”

The first and most common strategy is to state preferences for budget reductions in negative language and then to argue about which cuts make the most sense. While this is how most budgets are written, it does have a tendency to accentuate political differences.

Macro-Allocation“Preferred Method”

Rather than ruling certain ideas in or out, proceed by prioritizing spending options with all expenditures placed on the list in positive language. By prioritizing expenditures, it is unnecessary to debate any philosophical opposition to specific spending and the most raucous political disagreements can be avoided. Adjust priorities with the understanding that beyond a certain level, no funds will be available to low priority activities.

Back To Cases

Macro-AllocationExample Applications

The XX City Government has decided to reorganize human services as a result of budgetary constraints. As a result, the City will merge the Department of Human Services, the Community Services Board, the Office on Women and all CSA services. Where does prevention fit into this new organization? What will its priorities be?


In order to balance the budget, City YY will have to make additional cuts in the range of $100K. Two options are available: Close a second branch of the public library or close one venue in the City museum system. Which option is preferable and why?


City ZZ is unable to afford any additional debt service but there are important infrastructure projects that need to get done. Staff has suggested diverting all CDBG money to the CIP but many local non-profits rely on that money to deliver public service activities. Is it ethical to reduce allocations to public service in order to extend bricks and mortar projects?

THE ETHICS OF SCARCITY “But He Can Make Us A Bundle”

As Commissioner of your Department, you have been charged with making specific budgetary cuts. The magnitude of the cuts will require staffing reductions, and you want desperately to maintain quality services. Unfortunately, the most senior of your employees is not your most productive worker. Neither is your most junior employee. You initially contemplate laying-off the most junior of your employees, but you then remember that he was sent to apply for a job in your Department by a high-level State Administrator. You do not want to do anything to attract attention to your Department as State level budgetary decisions are made. Is it ethical to retain this most junior employee in hopes that it may help you preserve funding?

budgeting ethics city manager’s futures forum may 9, 2011 michael a. gillette, ph.d. (434)384-5322...

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