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Enhance Planning

Better planning can lead to better and more sustainable decisions. The techniques in this section help the planner increase focus on financial issues and improve the quality of decision making.

Financial Policies
Strategic Planning
Long-Term Financial Planning
Program Inventory

 
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Financial Policies

Financial policies define standards for financial stewardship and convey the strategic intent for financial management. For example: a fund balance policy defines the level of reserves that will be maintained; a debt policy describes the level and types of debt that will be incurred and under what circumstances; and a non-recurring revenue policy defines the use of one-time revenues for non-recurring purposes. While the policies themselves may not change financial condition, they do help forge consensus between elected officials and managers on what constitutes acceptable and unacceptable financial practices and, ideally, provide steps to remedy instances of non-compliance. Policies also clarify financial management goals, enabling management to be more focused in its actions and recommendations and elected officials to embrace consistency in long-term financial planning. Best Resources:

Long-Term Financial Planning

Long-term financial planning uses technical financial analysis like long-term forecasting, debt analysis, and economic analysis to identify future potential imbalances in financial position. Stakeholders from across the government then collaboratively develop strategies to address these imbalances. Including long-term analysis when considering short-term actions also allows the organization to better assess potential unintended consequences and take appropriate mitigating or preventative steps. Long-term financial planning is essential to long-term financial sustainability and, ultimately, financial resiliency. Best Resources:

Strategic Planning

A strategic plan defines the organization’s mission and vision, analyzes the organization’s external and internal environment, and sets forth the strategies and accountabilities needed to achieve the mission and vision and overcome challenges. Ideally, it identifies responsible parties, as well as needed and available resources. Specific action steps are assigned to ensure progressive achievement of the established goals. A strategic plan helps counteract financial distress by encouraging multi-year thinking, prompting recognition of major challenges, and clarifying the organization’s priorities. Strategic planning (and subsequent performance management initiatives) is essential to comprehensive budgeting and provides focused attention to the most important goals established over the long-term view. Best Resources:

Program Inventory

A program inventory lists all the programs provided, their direct and indirect costs, and, ideally, includes measures of demand for the service as well as measures of results. The program inventory makes clear the breadth of services provided and enables better discussion about the services government should be offering. A program inventory is also a great foundation for other long-term treatments like priority-driven budgeting or program reviews.

A program budget shares some features with a program inventory, but may not include the level of discussion formally outlined in a program inventory or review. It defines the budget allocations by program but does not imply that reductions or additions can be made solely along programmatic lines, rather how the existing resources are allocated amongst activities and services provided.
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