Holistic Financial Planning at a Tribal Level

Guest Blog By Jeff Goebel, with Theresa H. Vlases

In 1995 I began working with the Confederated Tribes of the Colville Reservation in Nespelem, Washington. As far as I know, prior to the work described here, no government had used Holistic Financial Planning. The work in the Tribe’s natural resource department was the previous largest scale application I am aware of. A holistic policy analysis course was taught at the Tribe in December of 1995 in which we analyzed the Tribe’s conventional government budget process using the Holistic Financial Planning process. As a result of this analysis the 55 tribal leaders made a decision to adopt the Holistic Financial Planning process as policy. I began teaching Holistic Financial Planning to tribal members in January of 1996, at which time the Council also developed and adopted the Tribe’s Holistic Goal. In the course of less than a year, the Tribe was able to balance their budget, save over $8 million, and invest those savings into the greatest needs for the Tribe.

 Creating a Profitable Budget

Work on financial planning began with the development of a month-by-month plan to begin in February and culminate in June. The core planning team was made up of administrators, program managers, and budget staff. In February we started with the Annual Review by using the consensus building process to address concerns about the process and identify best possible outcomes for this work. Best possible outcomes included passing the budget three months early by a unanimous Council vote, reducing tribal spending to 5% below projected income, cutting no jobs or salaries, and protecting some politically important programs. This work was concluded by determining what work would be required over the next four months and deciding when to do it, who would do each task, and how the tasks would be carried out.

We set a reduction in the tribal expenditures of 5% as a best outcome. This became what would be called the “profit target” for our financial plan. We needed to alter the concept of “profit” in government. Since this was a sovereign tribe, any monies that they saved could be returned to the tribal membership, used to acquire infrastructure and assets like additional land, or placed in “reserve” for future use.

Work started in March by developing a worst-case estimate of the Tribe’s income for the following fiscal year, which was $47 million. Allowing for the 5% “profit,” our projected budget was $43 million. The remaining 5% could be invested in performing actions yielding positive long-term benefits for the Tribe such as investing in education, land acquisition, and building financial reserves. Tribal Enterprises, which is non-governmental entity, was also included in the planning.

The planning team learned that many grants that provided funding for the Tribe supported programs that were not always consistent with the Tribe’s Holistic Goal. Often, programs went after money for the sake of the money, not thinking about the full consequences to the Tribe. Grant-funded programs and projects that were not consistent with the Holistic Goal were identified and funders were approached about modifying, or even canceling, the contract. Any contracts that could not be modified would be fulfilled but not renewed. Several funders, such as EPA, supported the change. Based on this work, EPA now incorporates a holistic approach in requests for proposals.

Expenses were planned during April and May. Administrators, program managers, and budget staff from each program area developed clear purpose statements for their program, tested that purpose toward the Tribe’s Holistic Goal and determined program objectives for the coming year. They were to then allocate dollars to the objective and develop a program expense budget. Over 250 government programs were tested.

The Integrated Resource Management Program team was part of the tribal effort to improve the tribal budget while making decisions towards the tribe’s Holistic Goal.

Lessons Learned

• Planning should proceed from the Holistic Goal downward, not from the bottom up (in developing program purposes, strategic plans, and actions).

• The tribal organization was fragmented, with a lot of duplicated services. This was an opportunity for saving resources by using a process to open up the territorial boundaries of programs and departments.

• External funding needed to be reviewed. Some sources of revenue did not lead toward the Holistic Goal. Contract/Grant scopes of work had to be rewritten. Some funders changed, some did not, so either the Tribe fulfilled the obligations of the contract or returned the funds. Not asking these questions in the past had been damaging to the integrity of the Tribe.

• Treating symptoms rather than the root causes of problems was the focus of 80% of government programs. Being aware of this issue allowed action to be taken to work on strategies to resolve the conflict of treating symptoms rather than underlying causes. The game wardens provided an example of refocused resource allocation to resolve this issue. They realized that they had to patrol a very large reservation with roads in poor conditions and limited staff, and the cause of the problem was that people violated game regulations for various reasons. To address this issue, they reallocated 40% of their financial resources and time to work with community education and involvement to resolve the poaching problem.

• When program strategies and actions fail in testing, they should be checked to see if these strategies or actions are addressing symptoms. The reason for this challenge was semantics. ’Failure’ is traditionally viewed as a negative result. However, in holistic testing, failure means there is a great likelihood the action will not guide the organization toward the Holistic Goal. This creates a “red flag” to take notice and be creative in coming up with other solutions, or to be willing to accept the consequences and make necessary changes later. Other language could replace ‘pass’ and ‘fail’, such as the question “will the action move us toward or away from the Holistic Goal?”

• Program staff was generally objective in testing. This was an impressive outcome to observe and created a high level of trust and credibility in the testing process. Holistic testing also significantly reduced levels of conflict over budget development.

• Training and education can speed up the process and improve quality by increasing understanding. Staff and the Council needed help writing strategic plans and actions, and testing programs and actions.

• Enterprises are difficult to test due to the profit motive. Tribal employees had to ask themselves about all programs and projects: “where does this fit into the Holistic Goal?” The Holistic Management® Framework is actually very effective to use in businesses, particularly with the gross profit analysis and comparing options testing questions and the Holistic Management Financial Planning process. However, in this case, the Tribe’s Holistic Goal did not mention profit but it did mention a healthy economy and secure employment.

• The process provided much information about the programs and activities of the Tribe. The holistic testing provided an excellent opportunity to understand the complexity of the tribal government and how each program related to the larger perspective of operations and that relationship to the Tribe’s Holistic Goal.

• More testing may be beneficial and necessary. Only a small group participated in testing.

Given the previous learning, expanding the numbers of people involved in the testing process could significantly increase the awareness of the tribal government’s relationship to the Tribe’s Holistic Goal and the consistency of daily activity toward it.

• Goals being tested do not always reflect how things really operate. This learning highlighted the inconsistencies between the stated Holistic Goal and current actions, providing an opportunity to create a better alignment between the organization’s stated purpose and actions.

• A good monitoring process is needed. This was a major failing of the process after I moved away from the direct leadership of this project with the Tribe. This important step was highlighted in my recommendations, but was not carried forward after my involvement ended.

• Some entities, such as the Council, Per capita, Tribal Gatherings, and Emergency Funds did not have written goals. Clarity of the purpose of various entities can help in determining appropriateness of actions as mentioned above.

• Most programs failed to address the financial weak link (understanding and education). This issue is described as the “limits to growth” concept which points out how a restriction in knowledge can result in limited ability to address the root cause of a problem and make progress.

• Human service programs can be tested. Often, Holistic Management is seen as a ranch management or natural resource process. The process of developing a holistic goal and doing holistic testing allowed participants to realize a much broader application. The group was also willing to adapt the Holistic Management process to fit the tribal government, without losing the underlying assumptions of the holistic decision-making process.

Not All Money is Equal

Participants in the financial planning process learned that subjectivity could be removed from budget decisions and people would take an honest look at what needed to stay or go, even if it was their own program. Also, because we treated every program the same, programs did not compete with each other for resources. When we found that some programs, such as the communication program (Tribal Tribune), actually needed twice the funding, several programs took even deeper cuts for the good of the Tribe. The Holistic Goal became real through the realization that money not squandered today could be available for the Tribe and children of tomorrow, resulting in everyone making a commitment to the process.

While tribally-generated money could be saved, federal funds had to be spent each budget year. While it may be in the best interest of taxpayers to return unspent money to the Federal treasury, it was best for the Tribe to get and spend as much in federal funds as possible, rather than spending the tribal dollars that could be saved. So, a list of needed items that could be legitimately purchased with the federal funds if money was left at the end of the year was devised. Programs would also be rewarded for returning tribal money at the end of the year. 75% of surplus funds would go to the tribal coffers and 25% would go into a program’s discretionary fund to be used for any purposes, with no strings attached, as long as it was legal. This kind of creativity was used throughout this process.

Overcoming Challenges 

At the end of May, expenses were compared with income. Expenses were 5% over, not under, the target. By then it was only three weeks until Council elections, which would throw out all the planning, as the new Council would have its own agenda. To further complicate things, Council members had stopped participating after the first month of planning.

Planning meetings always started with the consensus building process. Usually, people thought this was a waste of time. At the end of May, when everyone was disappointed about being over budget, the group broke into small circles. Each group developed a list of all the reasons it was impossible to attain the best possible outcomes. The groups listed five pages of reasons. The groups then answered the question, “Given that it’s impossible to attain our best possible outcomes, if it were possible, what would you do?” This question stimulated a great deal of creative thought and, within two hours, they had developed a superb action plan.

Within three weeks, by the middle of June, the expense budget had been reduced to 8% below income--$39 million--without any job losses or salary cuts. The group plan for presenting the budget to the Council included a reading of the Holistic Goal in Salish by young people who had been taught by elders. Council passed the budget, at the reduced level, unanimously, the week before elections and three months before it was due. The budget was celebrated with a potluck, which, according to a former CEO for the Tribe, was the first time a budget process had ended in a celebration. The passage of the budget concluded my contract with the Tribe. A tribal team, which had been allocated $100,000 for training from the Center for Holistic Management, would pick up where my contract left off.

Investing in the Future 

The planning process included writing recommendations for the coming year and developing a plan for the money saved. The planning team was directed to determine how best to use this “profit.” The team had identified over 700 “unmet needs,” which had not been funded before but were necessary for the Tribe’s success. All of these were tested and prioritized and money was allocated. Money for reserves was top priority and 25% of the $8 million savings was allocated to a reserve fund. Acquisition of additional land within the reservation was next with 20%, then education of tribal members, also 20%, followed by numerous other important and tested actions. The plan also included a recommendation that the budget be monitored monthly.

Positive results include one team member being voted into Council and becoming Tribal Chairwoman. She served three terms. The Tribe was also recognized as a “New Founder of the Northwest” award recipient for 1997 by Sustainable Northwest. Since I have worked with the Tribe, they have acquired over 100,000 acres of additional land. They have invested in preserving their three languages and changing state law so that the elders could teach in the public schools to their children so the young people could learn their culture. After twenty years, the Tribe’s Holistic Goal still remains as a vision for the Tribe.

Jeff Goebel is a Holistic Management Certified Educator. He can be reached at 541/610-7084.