The Pillars of a Sound Financial Planning ProcessThere 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