multi year financial planning two approaches for forecasting the future l.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Multi-Year Financial Planning Two Approaches For Forecasting the Future PowerPoint Presentation
Download Presentation
Multi-Year Financial Planning Two Approaches For Forecasting the Future

Loading in 2 Seconds...

play fullscreen
1 / 20

Multi-Year Financial Planning Two Approaches For Forecasting the Future - PowerPoint PPT Presentation


  • 306 Views
  • Uploaded on

Multi-Year Financial Planning Two Approaches For Forecasting the Future Brenda West, CPA Government Finance Officers of Texas Spring Institute April 13-15, 2008 What is Long-Term Financial Planning? Strategic process Outlines economic development & service goals

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Multi-Year Financial Planning Two Approaches For Forecasting the Future' - Ava


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
multi year financial planning two approaches for forecasting the future

Multi-Year Financial PlanningTwo Approaches For Forecasting the Future

Brenda West, CPA

Government Finance Officers of Texas

Spring Institute

April 13-15, 2008

what is long term financial planning
What is Long-Term Financial Planning?
  • Strategic process
    • Outlines economic development & service goals
    • Uses trends in current operations to forecast future financial condition
    • Details year-by-year steps needed to preserve the fiscal health
why do long range planning
Why Do Long-Range Planning?
  • Guides annual decision making process
    • Maintain, reduce or increase service
    • Meet future operating & capital needs
    • Expand or initiate new programs
  • Deals with long-term core issues
  • Maintains focus on key issues of the future
  • Allows time to act on foreseeable hurdles to come
  • Basis for evaluating debt capacity
pitfalls to long range planning
Pitfalls to Long-range Planning
  • Forecasting could be wrong (Really??!)
  • Educating users
  • Forcing tough decisions to the forefront
  • Keeping the benefits ahead of the costs (Time Investment)
  • Understanding components well enough to forecast
bottom line
Bottom Line
  • Every government is different
  • Establish assumptions
  • Know what you want to achieve
    • Adapt the long-term financial plan to meet your needs
  • Recognize the limitations of forecasting
  • Establish management’s trust and usage of this tool in their decision making process
edmond ok approach
Edmond, OK Approach
  • Edmond’s goals
    • Five-year long term forecasting
    • Incorporate into annual budget process
    • Require all funds to be balanced throughout the five-year window
    • Departmental involvement in balancing their budgets
    • Each line-item was reviewed and forecasted
edmond continued11
Edmond, continued
  • Assumptions
    • High growth city with no current signs of slowing down so revenue forecasts reflected a conservative linear trend upward
    • Revenues/Expenses based on historic trends
      • Utility Revenues history long enough to average wet/dry years
    • Revenue Bonds to pay for utility infrastructure projects
edmond continued12
Edmond, continued
  • Pros
    • Recognized what programs and capital needs were financially attainable
    • Focused thinking into the future, not just on the next year needs
    • Budget process easier after 2-3 years when updating is all that departments need to do to their yearly plans
    • Departmental buy-in and involvement
  • Cons
    • Additional work for departments balancing five years at times
    • Added complexity which was not always understood by Council
    • Staff frustration if Council ignores the plan
lewisville tx approach
Lewisville, TX Approach
  • Lewisville’s Goals
    • Financial Planning for the two major funds—General Fund & Utility fund
    • Available to Council as a tool for planning and direction
    • Incorporate long-term capital and debt planning
    • Project expenditures as a whole, rather than line-item
    • Project revenues by categories based on trends
lewisville continued19
Lewisville, continued
  • Assumptions
    • O&M portion of property tax rate maintained through planning years
    • I&S portion at levels to support debt service
    • Total property tax rate never reaches rollback level
    • FORECAST function for property tax values
    • Revenue & Expenses based on historic trends
      • Utility Revenues history long enough to average wet/dry years
    • Payroll costs are adjustable
lewisville continued20
Lewisville, continued
  • Pros
    • Focuses Council on the big picture, course corrections
    • Ease in forecasting categories of revenues and expenses rather than individual accounts
    • Highly manageable when detail is left to key areas
  • Cons
    • Care must be taken not to over-simplify
    • Established conservative budget process & long-term financial plan thinking at odds with one another
    • Frustration when Councils ignore warning signs