Policy AM-111-1 Innovation Program

This policy establishes guidelines for the Innovation Program. The Innovation Program consists of two parts: the Innovation Fund and the Employee Rewards Program.

<strong> <u>Innovation Fund</u> </strong> The purpose of the Innovation Fund (the Fund) is to provide seed money that will lead to improved results, reduced ongoing operating costs, and/or new revenue. City agencies or quasi-City agencies may apply for Innovation Fund loans by submitting proposals to the Innovation Program Committee. Grantees are not eligible to apply directly for Innovation Fund money, but can partner with eligible agencies. Innovation Fund proposals are separate from normal operating budget proposals. Innovation Fund investments are one-time loans. Awarded funds must be paid back to the Fund by the agency so that monies are available for future awards. Any follow-on funding will be available on a competitive basis in future years’ regular operating budget processes. The Fund seeks proposals that demonstrate a positive <strong>Return on Investment (ROI) </strong>through reduced operating costs and/or new revenue. Proposals that improve results, but do not reduce costs and/or increase revenue should be advanced through the regular budget proposal-making process. Proposals which do not demonstrate a positive ROI are not eligible for an Innovation Fund investment. <ul> <li>An investment that leads to <strong><em>reduced operating costs </em></strong>produces cumulative operating</li> <li>savings within five years of implementation that exceed the initial investment.</li> <li>An investment that leads to <strong><em>increased revenue </em></strong>may be as a result of better performance</li> <li>such as leveraging new funding sources, more fees collected due to increased</li> <li>effectiveness, or the implementation of new fees due to a change in service delivery.</li> </ul> Operating cost savings realized during the first two repayment years will be split between the agency and the Innovation Fund, in equal shares. The agency shall use its share of savings to fund projects which conform to the requirements of investments made hereunder and such use shall be certified in detail to the Innovation Fund Committee prior to commencement. Savings during subsequent years shall go to the Innovation Fund, until the Innovation Fund has been repaid 100% of the investment, after which time, 100% of the savings shall go to the General Fund. Operating savings will be certified by the Bureau of the Budget and Management Research (BBMR), and agencies that receive Innovation Fund monies will be expected to report on their progress to BBMR quarterly. Upon approval by the Mayor, BBMR will draft a Letter of Agreement specifying funding amount and use, funding terms, deliverables, schedule, and project monitor and manager. Both the Budget Director and agency head must sign the Letter of Agreement to acknowledge the terms and conditions of the funds issued. <strong> <u>Employee Rewards Program</u> </strong> The Employee Rewards Program is designed to: <ul> <li>Encourage employees to suggest creative and divergent solutions to problems facing the City and formulate improvements to existing operations and procedures.</li> <li>Reward employees whose suggestions are adopted.</li> </ul> This program applies to all City employees except those whose job responsibilities involve the investigation of methods to improve operations or services and supervisory personnel if the suggestion involves operations that they have the authority to change. Employees may suggest ways to improve customer service, employee relations, administrative procedures, operations, equipment, production methods, safety measures, or other aspects of the work environment. Their suggestions must result in significant savings in terms of time, money, or materials, solve an operational problem, increase revenue, or greatly increase customer service or other work performance. Suggestions may be made by an individual employee or jointly by two or more employees. The minimum savings or increase in revenue considered will be $50,000. Generally, awards will amount to 1% of the anticipated savings or increased revenue, up to a maximum of $5,000. For cost-neutral service quality improvements chosen as Rewards Program winners, awards of $500 may be made. The Innovation Program Committee's (or Board of Estimates’) decision on any matter related to innovation submissions, including the amount of any award, is final and may not be the subject of a grievance. Additional non-cash awards, such as tickets, gift certificates, or compensatory time, may be also be presented to Rewards Program winners. Awards shall be charged to accounts of those departments receiving the improvements or savings, as determined by the Committee and are subject to any applicable taxes. All prize awards are subject to the availability of funds. Each suggestion is treated confidentially. The name(s) of employee(s) are released only with the employee(s)’ consent. Only the control number assigned by BBMR identifies the submission. BBMR vets each submission for completeness, sending responses to participants to ensure that they know that their ideas have been received and that they meet the submission criteria.

<strong> <u>Innovation Fund</u> </strong> The amount budgeted for the Innovation Fund is at the discretion of the Mayor and City Council. Proposals must be for loans of $100,000 or greater. Funding for investments of less than $100,000 must be requested and justified within a regular operating budget proposal process. <strong> <u>Employee Rewards Program</u> </strong> Cash awards may be made to an employee whose suggestion is adopted. Awards for group suggestions are distributed evenly among the members of the group. When two or more similar suggestions are submitted, only the one received first is eligible for a cash award. If sufficiently similar suggestions reach BBMR on the same day, any award is shared equally among all the employees whose suggestions were similar. If a suggestion is rejected without award and the same suggestion is submitted and adopted within three years, the employee who made the original proposal will also be eligible for an award. Awards are generally funded by the agency to which the idea is applied, and are subject to any deductions required by law.

Proposals for the Innovation Fund and Employee Rewards Program will be reviewed by the Innovation Program Committee, chaired by the Director of Finance and consisting of the Director of Human Resources, the CitiStat Director, and three individuals appointed by the Mayor. <strong> <u>Innovation Fund</u> </strong> The Innovation Program Committee will rank proposals based on the following criteria, in order of importance: <u>Disruptive Innovation</u><strong><u>.</u></strong> The Fund seeks proposals that disrupt the status quo way of addressing a challenge or delivering a service, and offer a compelling and game-changing solution. Not all innovative ideas are new. Applicants are encouraged to apply existing, proven ideas which have been funded and applied by others (e.g., philanthropic partners, educational institutions, business practices) but not used by our agencies at all or to scale. <u>Sustainability.</u> The Fund seeks proposals that create sustainable improvements lasting for many years beyond the initial investment. Projects that provide a one-time “bump” in results but then revert back to the base level of performance will not be eligible for funding. The Innovation Fund will not provide funding beyond the initial investment. If the investment is for a pilot or demonstration project, any follow-on funding will be subject to a competitive process in future years’ regular operating budget cycles, and applicants should demonstrate how future funding may be obtained either from the regular operating budget or from external sources, or both. <u>Leverage.</u> The Fund seeks proposals that partner the City with other investors, such as foundations, businesses, and State and federal agencies who want to join us in promoting innovative solutions to our toughest challenges. Proposals that demonstrate strong potential for such partnerships, such as proposals seeking to leverage external dollars through a “last-in investment” by the City will receive priority consideration. <u>Customer Service Focus.</u> The Fund seeks proposals that focus on providing excellent customer service. Applicants should think of customers broadly. Internal customers could include other City agencies or City staff members. External customers could include citizens, businesses, vendors, or other potential users of City services. Based on these criteria and available funding, the Committee will make loan recommendations to the Mayor for final approval. <strong> <u>Employee Rewards Program</u> </strong> This Committee examines all suggestions and determines their merit and financial impact. The Committee may authorize cash awards, commensurate with anticipated savings or increased revenue. Eligible innovations would be limited to those that are: original to the City of Baltimore not currently being developed in the City implementable in the current context of the City of Baltimore scalable in their capacity to be expanded either in scope or to new challenges quantifiable in their impact The Committee judges ideas on a uniform scorecard to ensure fairness of judging.

<strong> <u>Innovation Fund</u> </strong> Agencies requesting Innovation Fund monies must submit a two part application. A standard template will be provided by BBMR including a narrative portion in a Word document and an Excel spreadsheet. Innovation Fund Proposals should: <ul> <li>Clearly demonstrate how they are going to pay their Innovation Fund award back to the Fund, and over what period of time.</li> <li>Clearly demonstrate the benefits, including how they advance the Mayor’s Priority Outcomes and goals; how costs will decrease; how performance will improve; and how revenue will increase.</li> <li>Not simply espouse the benefits, but “unpack” the projections with data sources and clear Assumptions.</li> <li>Not be wish lists. They should reflect thoughtful, strategic use of funds for a specific purpose and benefit.</li> </ul> <strong> <u>Employee Rewards Program</u> </strong> Individuals or groups must submit suggestions to InnovationProgram@baltimorecity.gov from their City email account by the established deadlines. The submission would be in the form of a word processing document containing responses to the following items: <ul> <li>First Page: Contact Information (1 Page).</li> </ul>

The Bureau of the Budget and Management Research (BBMR) has overall responsibility for administering the program. In administering the Innovation Fund, BBMR provides the standard template of application, informs agencies of the Innovation Fund Committee’s decision, and evaluates quarterly reports provided by agencies being awarded Innovation Fund monies. In administering the Employee Rewards Program, BBMR informs the employee of the assigned control number, the date of receipt, and the expected date of consideration by the Innovation Program Committee. BBMR also oversees the recognition of accepted suggestions and presentation of cash awards and prepares quarterly reports on the program for the Mayor.