Budgeting for equity

Strategy overview

  • Advancing equity through budgeting: By integrating equity considerations into their budgeting processes, local governments can use existing spending to advance equitable outcomes. Equity considerations can be integrated into the budgeting process in several ways: in the structuring of budget discussions and deliberations, in deciding where cuts are made during shortfalls, in engaging stakeholders, and in selecting which funding sources are used.

  • Bringing equity into the budget process: Localities can advance equitable outcomes by integrating equity into the structure of their budgeting process, their approach to making funding decisions, and their approach to collaboration. Structural changes, like establishing an Equity Office, can help ensure the locality executes on its equity mandate through its budget. Adding equity considerations to budget requests helps localities prioritize equity when making funding decisions. And localities can invite community members to participate in the budgeting process, such as by creating dashboards to share budget information or creating participatory budgeting opportunities.

  • Moving beyond across the board cuts: When local governments face budget shortfalls, many cut funding to all service areas equally. While across the board cuts are often perceived as fair, they can inequitably impact different communities that a local government serves, often disproportionately harming communities of color. By considering how budget cuts will impact access to and the quality of services, as well as how cuts will impact various communities, local governments can identify cost savings opportunities while minimizing the risk of exacerbating racial inequities.

  • Promoting equity through capital improvements: Local governments make significant investments in capital projects, but few have structured mechanisms to integrate equity considerations into their capital budgeting process. Localities should consider improvements to each phase of the process, from how community input is collected to how projects are selected and funded. Examples of these improvements include adding equity goals to scorecards for project selection and requiring set-asides on large projects to address equity concerns (e.g., anti-displacement measures along a new transit line).

  • Leveraging local funding sources and cross-jurisdictional partnerships: Local governments have options to raise revenue for equitable development projects beyond traditional mechanisms like property and sales taxes. More redistributive funding sources include land banks, community benefit agreements, and impact fees. For smaller cities and counties especially, partnerships with other jurisdictions in their region can be key. Such partnerships can enable more effective infrastructure decision-making and make larger projects more affordable to individual localities.

While this strategy has not been subject to rigorous, independent evaluations, it is widely-recognized as a best practice among experts in the racial equity space.

Before making investments in this strategy, city and county leaders should ensure this strategy addresses local needs.

The Urban Institute and Mathematica have developed indicator frameworks to help local leaders assess conditions related to upward mobility, identify barriers, and guide investments to address these challenges. These indicator frameworks can serve as a starting point for self-assessment, not as a comprehensive evaluation, and should be complemented by other forms of local knowledge.

The Urban Institute's Upward Mobility Framework identifies a set of key local conditions that shape communities’ ability to advance upward mobility and racial equity. Local leaders can use the Upward Mobility Framework to better understand the factors that improve upward mobility and prioritize areas of focus. Data reports for cities and counties can be created here.

Several indicators in the Upward Mobility Framework may be improved with investments in reducing obstacles to receiving public benefits. To measure these indicators and determine if investments in these interventions could help, examine the following:

Mathematica's Education-to-Workforce (E-W) Indicator Framework helps local leaders identify the data that matter most in helping students and young adults succeed. Local leaders can use the E-W framework to better understand education and workforce conditions in their communities and to identify strategies that can improve outcomes in these areas.

One, education-focused indicator in the E-W Framework may be improved with investments in this strategy. To measure these indicators and determine if investments in this strategy could help, examine the following:

  • Expenditures per student: Total instruction and student service expenditures per pupil, including an equity factor, or a measure that indicates variance in per-pupil funding within a state (see this brief by New America for more information).
  • Integrate equity into the process: By systematically reviewing their budgeting processes, local governments can identify opportunities to integrate equity considerations into each stage of budgetary decision-making. This approach can benefit not only the general fund and capital budgeting processes, but also how local governments structure budget cuts.

  • Change narratives around racial equity: As local governments begin incorporating equity considerations into budgeting processes, changing narratives among internal stakeholders and the broader public is an important driver of success. Without a shared understanding of the historical role that government has played in creating inequities, internal stakeholders are less likely to engage in new processes. And without a clear external narrative on the factors that have driven racial inequities and the steps needed to confront racist legacies, public support for equity-focused budgetary decisions will be less easily secured.

  • Make data-informed decisions: Local governments can use data on the well-being of different groups and neighborhoods to identify where inequity exists. With this information, local governments can target investments to increase equity and identify decisions that could cause adverse impacts.

  • Engage the public: Enabling community members to participate in the budgeting process can strengthen equitable outcomes. Local governments should pay special attention to informing and including groups that are frequently underrepresented in decision-making.

  • Apply change management principles: When changing the budget process, local governments should use best practices in change management. Taking this approach emphasizes building support from key stakeholders, embedding changes in the organization’s culture and practices, and evaluating the effectiveness of the change.

  • Consider the long-term: Many of a local government’s most significant investments result from long-term planning processes, like the development of its Capital Improvement Plan. Integrating equity considerations into these processes is an opportunity to create large, sustained investments to drive equity.

  • Create accountability: To ensure local governments follow through with prioritizing equity, they must create mechanisms to hold themselves accountable. These can include developing clear, measurable goals to promote equity; measuring progress toward those goals; and communicating both goals and progress publicly.