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HomeMy WebLinkAboutApproaches To Fiscal Health Select ICMA Presentation SlidesApproaches To Fiscal Health 2 Approach to Fiscal Health #1: Spend Within Your Means •Symptoms of Good Fiscal Health –Start with Revenues –One-time and Ongoing Alignment –Differentiate Program Revenues from General Government Revenues –Budget Allocations Responsive to Changes in Program Revenues •Spend Within Your Means in order to: –Base budgets on reliable sources of funding –Perform analysis to ensure reserves aren’t used for ongoing expenses –Prevent reliance on volatile revenues (that might not come in) –Promote revenue diversification –Engage departments in enhancing revenue sources –Provide for flexibility and promote collaboration when responding to program revenue shortfalls 3 Approach to Fiscal Health #2: Establish and Maintain Reserves •Symptoms of Good Fiscal Health –Establish Working Capital Reserve Policy –Indentify, Document and Understand All Reserves –Review Adequacy of Fund Balance Levels – too Little or too Much •Establish and Maintain Reserves in order to: –Provide a back-up plan for emergencies, revenue shortfalls, or other unforeseen changes –Set aside funding for long-range plans –Hold only the appropriate amount of reserves establishes credibility with internal and external stakeholders 4 Approach to Fiscal Health #3: Understand Variances •Symptoms of Good Fiscal Health –Identify ongoing resources devoted to one-time or cyclical (“seemingly ongoing”) expenditures –Eliminate unnecessary contingencies maintained in department budgets –Analyze and understand revenue variances –Don’t overlook thorough analysis of budget-to-actual variances –Promote multi-year budgeting for capital projects –Refine salary and benefit projections, to align with actual costs incurred –Effectively monitor revenue billing and collection •Understand Variances in order to: –Promote collaborative engagement of organization in understanding variances –Allow for more effective budget monitoring and management –Provide source of “hidden treasure” when looking for budget reductions –Help identify the “fluff” –Uncover “shadow” / “decentralized” support functions hidden in department budgets 5 Approach to Fiscal Health #4: Transparent About “True Cost of Doing Business” •Symptoms of Good Fiscal Health –Align supply/cost of internal services with customer demand –Appropriately allocate overhead and administrative costs to funds or departments who benefit –Identify total cost (direct and indirect) for all programs –Establish fees that recapture appropriate level of total costs of service delivery •Be Transparent About the True Cost of Doing Business in order to: –Engage departments in assessing demands for internal services –Promote enhancement of program revenues –Provide collaborative discussion of the total cost to provide services –Diversify burden from General Fund by appropriately sharing costs among other dedicated revenue streams –Establish cost parameters for assessing “centralization” vs. “decentralization”