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The Pillars of a Sound Financial Planning Process

There are five pillars to a sound financial planning process:

A long-term service vision. Define the future the community wants.
  • Service visioning is a great chance to engage elected officials in the planning process.
  • A service vision makes planning more meaningful to participants, especially those without a financial background.
  • It is essential for aligning financial strategy with service strategy.

Financial policies. Define the standards of stewardship of the public’s tax money.
  • Policies are the basis for accountability and increasing trust in government.
  • Policies define standards against which performance can be assessed.
  • Policies can be a crucial point of elected official involvement.
  • See GFOA’s Financial Policies book for more information

Technically sound analysis and forecasting. Provide accurate and credible financial foresight.
  • A credible forecast is essential for stakeholders to have confidence in the planning process.
  • Use scenario analysis to explore different possible futures.
  • Make sure the forecast is adaptable to changing conditions and requirements.
  • See GFOA’s MuniCast for improved forecasting

Collaborative and participative process. Gain the benefit of different perspectives.
  • Improve plan quality by getting different vantage points and accessing different expertise.
  • Build a wide basis of support for financial strategies.

Connection to other plans. Long-term financial planning is part of a complete planning portfolio.
  • Integrate with strategic planning to get the long-term service policies and to inject financial realities into service visioning.
  • Integrate with capital planning to understand long-term capital and operating expenditures and to better model debt scenarios.
  • Integrate with the budget to put into action long-term financial strategies.
  • Integrate with land use planning to reveal land use trends that impact financial condition and to emphasize land uses’ implications for financial condition

Go back to Step 9. Long-Term Financial Planning main page
Continue on to the phases in the planning process