Financing the Future Long-Term Financial Planning for Local Government  Florida GFOA 2008
Agenda <ul><li>Part I – Introduction to Financial Planning </li></ul><ul><li>Part II – Overview of Planning Process </li><...
Part I – Introduction
What is Long-Term Financial Planning? <ul><li>A combination of technical analysis and strategizing </li></ul><ul><ul><li>F...
What is a Financial plan? <ul><li>Essential characteristics </li></ul><ul><ul><li>What is the time horizon?  </li></ul></u...
Coral Springs’ Business Model Strategic Plan Business Plan Budget Output to Citizens Data Analysis Citizen Input
Why Financial Planning? <ul><li>Generally… </li></ul><ul><ul><li>Bring financial perspective to planning </li></ul></ul><u...
The Case for Change in Coral Springs <ul><li>Approaching Build-Out  </li></ul><ul><li>Fiscal Impact Model  </li></ul><ul><...
Why Financial Planning Now? <ul><li>Difficult housing market  </li></ul><ul><li>Health care and pension costs </li></ul><u...
Challenges To Long-Term Planning <ul><li>Taxation and Budget Reform Commission </li></ul><ul><ul><li>Considering revenue a...
Ad Valorem  Tax Revenue Impact If 1.35% Petition Adopted
So, Why Financial Planning? <ul><li>Establish indicators for key conditions </li></ul><ul><li>Build case for action </li><...
Trust
Trust <ul><li>Preliminary Findings of “Choice Works Dialogues” </li></ul><ul><li>“We are prepared to pay more in taxes if ...
Business Perception of  Property Taxes
Trust Leads To Loyalty  Recommend City to Friends, Family, Co-Workers
Five Pillars of Planning <ul><li>Long-Term Service Vision </li></ul><ul><li>Financial Policies  </li></ul><ul><li>Technica...
Long-Term Service Vision <ul><li>Define the future the community wants </li></ul><ul><ul><li>Great opportunity to engage e...
Coral Springs Long-Term Vision  <ul><li>2004 Visioning Summit  </li></ul><ul><ul><li>100 participants dedicated an entire ...
Coral Springs Vision Consensus Areas <ul><li>Healthy, fit citizens  </li></ul><ul><li>Walkable, bikeable  </li></ul><ul><l...
Financial Policies <ul><li>Define standards for stewardship of public’s tax dollars </li></ul><ul><ul><li>Define financial...
Getting Elected Officials On-Board <ul><li>Private sector support  </li></ul><ul><li>Focus on results & outcomes </li></ul...
Policy Vs. Operations  Strategic Plan Business Plan Budget Administration Operation Policy
Analysis and Forecasting <ul><li>Sound analysis and forecasting provides: </li></ul><ul><ul><li>Credibility </li></ul></ul...
Analysis & Forecasting  Contribute to Planning Process <ul><li>Begins with an Environmental Scan </li></ul><ul><ul><li>Dem...
Collaborative & Participative Process <ul><li>Process must engage different groups to </li></ul><ul><ul><li>Gain different...
Police Teams: Pushing Results <ul><li>Key Objectives: Crime rate, Safety rating </li></ul><ul><ul><li>Report Writing  team...
Connection to Other Plans
Part I – Take-Aways <ul><li>LTFP is a strategic and visionary process </li></ul><ul><li>LTFP is part of a complete plannin...
Part II – Overview of the Planning Process
Four Major Phases
Mobilization Phase <ul><li>Align Resources </li></ul><ul><ul><li>Identify participants </li></ul></ul><ul><ul><li>Design a...
Mobilization Phase <ul><li>Service level preferences </li></ul><ul><ul><li>Strategic priorities and objectives </li></ul><...
Example of Policy Self-Assessment
Align Resources With Strategy Resource Allocation (Budget & CIP) Measurement (Quarterly Performance Reports and State of t...
Mobilization Phase Take-Aways <ul><li>Preparation is key to financial planning. </li></ul><ul><li>A clear “roadmap” increa...
Analysis Phase <ul><li>Environmental Analysis </li></ul><ul><ul><li>Objective and subjective sources </li></ul></ul><ul><u...
Crime Rate Good
Drill Down… Good
…and Down
 
Quantitative <ul><li>Demonstration of excel modeling </li></ul><ul><ul><li>Scenarios </li></ul></ul><ul><ul><li>Correlatio...
Analysis Phase <ul><li>Debt Analysis </li></ul><ul><ul><li>Analyze impact of current obligations </li></ul></ul><ul><ul><l...
Fund Balance
5 x 5 Table Taken from  The Price of Government  by Osborne and Hutchinson
Environmental Factors
Revenue Trend Will Slow Assuming No Additional Property Tax Reform Projected Millions Recession Tax Reform
Getting the Right Tax Rate/Service Level Mix Operating Millage Rate Good
A Measure of Productivity    Employees per 1,000 Residents Good
The City’s Financial Policy is Focused Long-Term Direct Net Long-Term Debt per Capita Good
General Fund Ad Valorem Tax Revenues
Analysis Phase Take-Aways <ul><li>Environmental analysis is the foundation of planning – invest in it! </li></ul><ul><li>H...
Decision Phase <ul><li>Develop Financial Strategies </li></ul><ul><ul><li>Match strategy to size of imbalance </li></ul></...
Our Business Plan <ul><li>Translates the Strategic Plan into action   </li></ul><ul><li>Develop initiatives to support Str...
Decision Phase Take-Aways <ul><li>The means by which strategies are developed is as important as the strategies themselves...
Execution Phase <ul><li>Executing the Plan </li></ul><ul><ul><li>The budget is the most important execution tool </li></ul...
Sustainable Results Residential Build-Out Property  Tax Reform Economic Recession September 11th Hurricane Wilma Customer ...
Financial Planning Delivers Results   customer service satisfaction households 94% 96% 97% AAA bond ratings from all three...
Execution Phase Take-Aways <ul><li>The budget and LTFP must be linked </li></ul><ul><li>Participant commitment  is crucial...
The End <ul><li>For more information … </li></ul><ul><li>Get on our mailing list (email  [email_address] ) </li></ul><ul><...
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  • Split focus between Data Analysis = TANGIBLE Citizen Input = VOICE And always REPORT back
  • We were criticized for typical bureaucratic behaviors both at commission meetings and in the press. Rapid growth—a “small town” management philosophy was overtaxed by “big city” issues.
  • State action rolls back millage rate for property taxes to 2006 levels. This year the legislature is looking to limit increases to fees. 20-year commission. Commission can put thing directly on the ballot. Some grass root efforts to limit tax authority to 1.35% of home. Would be very costly. Important to be proactive to all of this
  • A particularly important participant is the leader. Typically, this is the CEO or the CFO. The process helps participants visualize the outcome and their role in planning An initial environmental scan is indispensable. Other analyses might include preliminary revenue/expenditure forecasts, etc.
  • Preferences come from a strategic plan Policies set the standard against which long-term financial stewardship can be judged. (fund balance, user fees, capital budgeting). Reserves are a good example of a stewardship standard. Scope establishes common understanding for purpose of plan. It is suggested by all of above
  • The entire process creates a feedback loop so that we are always able to make “course corrections” and react to changing conditions. We also use what we learn from measurements and feedback to make process improvements aimed at increasing efficiency, customer satisfaction, and effectiveness.
  • Environ analys builds expertise for forecasting, strategizing. Environmental analysis also addresses contextual events (i.e., gresham’s bit about Microchip plant) Rialto Example of factors: trucking industry, public attitudes towards utility tax, development plans for vacant/redevelopable areas, wage levels (people buying the essentials) Palo Alto engaged an economist to compare City’s hybrid of historical trending and expert judgments against more statistically rigorous techniques and found that there was no appreciable gain in accuracy available. Revenue model on the next slide
  • Figure 7.1-6 Crime Rate Incidents per 100,000 (Composite Index Indicator and KIO) For Fiscal Year 2006, the City of Coral Springs’ crime rate is lowest in the State and the fourth lowest in the nation for cities with populations of 100,000-499,999. We came in 10th place overall, in all categories. Morgan Quitno Press has not yet released rankings for Fiscal Year 2007.
  • Debt can have important ramifications for future financial position Examples of imbalances Underfunded liabilities: pensions, asset maintenance, capital needs Policies that need revision: user fees Unfavorable trend: Gresham education levels
  • If you don’t have debt, but have a lot of unfunded capital needs, an important purpose of the plan might be to develop a strategy to use debt effectively.
  • Different mechanisms: council-staff workshops, committees, community surveys Mix of strategies: short and long-term. Short-term strategies can be used to buy time, but know what you are buying time for Correcting decision-making processes: Financial policies that decision-makers support and a budget process that focuses on meeting citizen priorities, addresses financial constraints, and aligns budget with strategies. Culminating event: Celebrate success, transition to action Commitment: Participation is essential to commitment
  • Uses of budget Implement specific recommendations Develop budget within given parameters
  • Bob Goehrig

    1. 1. Financing the Future Long-Term Financial Planning for Local Government Florida GFOA 2008
    2. 2. Agenda <ul><li>Part I – Introduction to Financial Planning </li></ul><ul><li>Part II – Overview of Planning Process </li></ul>
    3. 3. Part I – Introduction
    4. 4. What is Long-Term Financial Planning? <ul><li>A combination of technical analysis and strategizing </li></ul><ul><ul><li>Forecasting & strategy development </li></ul></ul><ul><li>A collaborative and visionary process </li></ul><ul><ul><li>Elected officials, staff, & public </li></ul></ul><ul><li>An anchor of financial sustainability </li></ul><ul><ul><li>Changing mindsets </li></ul></ul><ul><ul><li>Institutionalize long-term thinking </li></ul></ul>
    5. 5. What is a Financial plan? <ul><li>Essential characteristics </li></ul><ul><ul><li>What is the time horizon? </li></ul></ul><ul><ul><li>What funds are considered? </li></ul></ul><ul><ul><li>How often is a plan done? </li></ul></ul><ul><ul><li>What is in it? </li></ul></ul>
    6. 6. Coral Springs’ Business Model Strategic Plan Business Plan Budget Output to Citizens Data Analysis Citizen Input
    7. 7. Why Financial Planning? <ul><li>Generally… </li></ul><ul><ul><li>Bring financial perspective to planning </li></ul></ul><ul><ul><li>Stimulate long-term & big-picture thinking </li></ul></ul><ul><ul><li>Raise specific issues </li></ul></ul><ul><ul><li>Create discipline </li></ul></ul><ul><ul><li>Communicate to citizens </li></ul></ul>
    8. 8. The Case for Change in Coral Springs <ul><li>Approaching Build-Out </li></ul><ul><li>Fiscal Impact Model </li></ul><ul><ul><li>High density development </li></ul></ul><ul><li>Population Tipping Point </li></ul><ul><ul><li>Small town management model not appropriate for large urban city </li></ul></ul>
    9. 9. Why Financial Planning Now? <ul><li>Difficult housing market </li></ul><ul><li>Health care and pension costs </li></ul><ul><li>State-imposed constraints on local revenue </li></ul>
    10. 10. Challenges To Long-Term Planning <ul><li>Taxation and Budget Reform Commission </li></ul><ul><ul><li>Considering revenue and spending caps </li></ul></ul><ul><li>Legislature </li></ul><ul><ul><li>Considering additional property tax relief </li></ul></ul><ul><li>Legislature/Grass Roots Organizations </li></ul><ul><ul><li>1.35% Petition </li></ul></ul>
    11. 11. Ad Valorem Tax Revenue Impact If 1.35% Petition Adopted
    12. 12. So, Why Financial Planning? <ul><li>Establish indicators for key conditions </li></ul><ul><li>Build case for action </li></ul><ul><li>Develop long-term strategies for financial health </li></ul><ul><li>Prioritize services </li></ul><ul><li>Build trust with citizens! </li></ul>
    13. 13. Trust
    14. 14. Trust <ul><li>Preliminary Findings of “Choice Works Dialogues” </li></ul><ul><li>“We are prepared to pay more in taxes if that is necessary to realize the future we want, but only if steps are taken to increase accountability and trust.” </li></ul>
    15. 15. Business Perception of Property Taxes
    16. 16. Trust Leads To Loyalty Recommend City to Friends, Family, Co-Workers
    17. 17. Five Pillars of Planning <ul><li>Long-Term Service Vision </li></ul><ul><li>Financial Policies </li></ul><ul><li>Technically Sound Analysis & Forecasting </li></ul><ul><li>Collaborative & participative process </li></ul><ul><li>Connection to other plans </li></ul>
    18. 18. Long-Term Service Vision <ul><li>Define the future the community wants </li></ul><ul><ul><li>Great opportunity to engage elected officials and the public </li></ul></ul><ul><ul><li>Makes planning more meaningful for participants </li></ul></ul><ul><ul><li>Key for aligning finances with service levels </li></ul></ul>
    19. 19. Coral Springs Long-Term Vision <ul><li>2004 Visioning Summit </li></ul><ul><ul><li>100 participants dedicated an entire weekend </li></ul></ul><ul><li>Responsibility for making the vision a reality rests with the entire community, not just the City </li></ul><ul><li>2008 Visioning Summit Update </li></ul><ul><ul><li>60 participants spent one evening informing others </li></ul></ul>
    20. 20. Coral Springs Vision Consensus Areas <ul><li>Healthy, fit citizens </li></ul><ul><li>Walkable, bikeable </li></ul><ul><li>Safety and security </li></ul><ul><li>Aesthetically pleasing </li></ul><ul><li>A vibrant downtown </li></ul><ul><li>Family values and spirituality </li></ul><ul><li>Educational excellence </li></ul><ul><li>Appropriate housing for all </li></ul><ul><li>Innovative approaches to preserve resources </li></ul><ul><li>Involved citizens </li></ul><ul><li>Advanced technology </li></ul><ul><li>Open spaces </li></ul><ul><li>Recreational activities for all </li></ul><ul><li>Innovative transportation </li></ul>
    21. 21. Financial Policies <ul><li>Define standards for stewardship of public’s tax dollars </li></ul><ul><ul><li>Define financial future community wants </li></ul></ul><ul><ul><li>Forms basis for accountability and increasing trust in government </li></ul></ul><ul><ul><li>Another crucial point of elected official involvement </li></ul></ul>
    22. 22. Getting Elected Officials On-Board <ul><li>Private sector support </li></ul><ul><li>Focus on results & outcomes </li></ul><ul><li>Don’t jump in the deep end – get results from a small project then build on that success </li></ul><ul><li>Partnership between elected officials and professional staff </li></ul><ul><li>Data trumps politics </li></ul>
    23. 23. Policy Vs. Operations Strategic Plan Business Plan Budget Administration Operation Policy
    24. 24. Analysis and Forecasting <ul><li>Sound analysis and forecasting provides: </li></ul><ul><ul><li>Credibility </li></ul></ul><ul><ul><li>Scenario analysis capabilities </li></ul></ul><ul><ul><li>Adaptability </li></ul></ul>
    25. 25. Analysis & Forecasting Contribute to Planning Process <ul><li>Begins with an Environmental Scan </li></ul><ul><ul><li>Demographic data </li></ul></ul><ul><ul><li>Performance measurement track record </li></ul></ul><ul><ul><li>Resident and business surveys </li></ul></ul><ul><ul><li>Stakeholder input </li></ul></ul><ul><ul><li>Strengths-Weaknesses-Opportunities-Threats </li></ul></ul><ul><ul><li>Workforce analysis </li></ul></ul><ul><ul><li>Financial Trend Monitoring System </li></ul></ul>
    26. 26. Collaborative & Participative Process <ul><li>Process must engage different groups to </li></ul><ul><ul><li>Gain different vantage points </li></ul></ul><ul><ul><li>Increase plan quality </li></ul></ul><ul><ul><li>Build a wide basis of support for strategies </li></ul></ul>
    27. 27. Police Teams: Pushing Results <ul><li>Key Objectives: Crime rate, Safety rating </li></ul><ul><ul><li>Report Writing team reduced cycle time </li></ul></ul><ul><ul><li>“ Choppers” team reduced cycle time </li></ul></ul><ul><ul><li>“ Wolf Packs” reduced accidents at intersections </li></ul></ul><ul><ul><li>Directed surveillance reduced “smash and grabs” from cars </li></ul></ul><ul><ul><li>First offender programming reduces recidivism </li></ul></ul>
    28. 28. Connection to Other Plans
    29. 29. Part I – Take-Aways <ul><li>LTFP is a strategic and visionary process </li></ul><ul><li>LTFP is part of a complete planning portfolio </li></ul><ul><li>LTFP provides benefits across a spectrum of concerns </li></ul>
    30. 30. Part II – Overview of the Planning Process
    31. 31. Four Major Phases
    32. 32. Mobilization Phase <ul><li>Align Resources </li></ul><ul><ul><li>Identify participants </li></ul></ul><ul><ul><li>Design a process </li></ul></ul><ul><li>Preliminary Analysis </li></ul><ul><ul><li>Initial SWOT analysis </li></ul></ul><ul><ul><li>Other analyses, like forecasts </li></ul></ul>
    33. 33. Mobilization Phase <ul><li>Service level preferences </li></ul><ul><ul><li>Strategic priorities and objectives </li></ul></ul><ul><li>Financial policies </li></ul><ul><ul><li>Self-assess compliance with policies </li></ul></ul><ul><ul><li>Identify new policies </li></ul></ul><ul><li>Define purpose and scope </li></ul><ul><ul><li>Consensus on problems planning is to solve </li></ul></ul><ul><ul><li>Limit scope of planning to those issues </li></ul></ul>
    34. 34. Example of Policy Self-Assessment
    35. 35. Align Resources With Strategy Resource Allocation (Budget & CIP) Measurement (Quarterly Performance Reports and State of the City) Feedback (Surveys, Town Meetings, Focus Groups, and Citizen Committees) Strategic Alignment (Business Plan) Policy Deployment (Strategic Plan)
    36. 36. Mobilization Phase Take-Aways <ul><li>Preparation is key to financial planning. </li></ul><ul><li>A clear “roadmap” increases confidence in the planning process </li></ul><ul><li>Financial policies are crucial </li></ul><ul><li>Mobilization must identify service priorities </li></ul><ul><li>There must be consensus on the purpose of planning </li></ul>
    37. 37. Analysis Phase <ul><li>Environmental Analysis </li></ul><ul><ul><li>Objective and subjective sources </li></ul></ul><ul><ul><li>Build expertise for analysis & strategizing </li></ul></ul><ul><ul><li>Examine variety of factors, not just financial </li></ul></ul><ul><li>Revenue and Expenditure Forecasting </li></ul><ul><ul><li>5 to 10 year forecasts are typical </li></ul></ul><ul><ul><li>Hybrid techniques are the most common & powerful </li></ul></ul><ul><ul><li>Revenue modeling is a key practice </li></ul></ul>
    38. 38. Crime Rate Good
    39. 39. Drill Down… Good
    40. 40. …and Down
    41. 42. Quantitative <ul><li>Demonstration of excel modeling </li></ul><ul><ul><li>Scenarios </li></ul></ul><ul><ul><li>Correlation analysis </li></ul></ul>
    42. 43. Analysis Phase <ul><li>Debt Analysis </li></ul><ul><ul><li>Analyze impact of current obligations </li></ul></ul><ul><ul><li>Examine capacity for future indebtedness </li></ul></ul><ul><li>Financial Balance Analysis </li></ul><ul><ul><li>Consider all different types of imbalances </li></ul></ul><ul><li>Data visualization helps communicate imbalances </li></ul>
    43. 44. Fund Balance
    44. 45. 5 x 5 Table Taken from The Price of Government by Osborne and Hutchinson
    45. 46. Environmental Factors
    46. 47. Revenue Trend Will Slow Assuming No Additional Property Tax Reform Projected Millions Recession Tax Reform
    47. 48. Getting the Right Tax Rate/Service Level Mix Operating Millage Rate Good
    48. 49. A Measure of Productivity Employees per 1,000 Residents Good
    49. 50. The City’s Financial Policy is Focused Long-Term Direct Net Long-Term Debt per Capita Good
    50. 51. General Fund Ad Valorem Tax Revenues
    51. 52. Analysis Phase Take-Aways <ul><li>Environmental analysis is the foundation of planning – invest in it! </li></ul><ul><li>Hybrid techniques are the most effective </li></ul><ul><li>Debt analysis varies in importance with local circumstances </li></ul><ul><li>Consider multiple types of imbalances </li></ul><ul><li>Develop effective presentation techniques </li></ul>
    52. 53. Decision Phase <ul><li>Develop Financial Strategies </li></ul><ul><ul><li>Match strategy to size of imbalance </li></ul></ul><ul><ul><li>Find the right mix of strategies </li></ul></ul><ul><ul><li>Correct decision-making processes that led to imbalance </li></ul></ul><ul><li>Plan Conclusion and Transition to Action </li></ul><ul><ul><li>Design a clear culminating event </li></ul></ul><ul><ul><li>A public meeting to approve the plan is common </li></ul></ul><ul><ul><li>Gain formal commitment to financial strategies </li></ul></ul>
    53. 54. Our Business Plan <ul><li>Translates the Strategic Plan into action </li></ul><ul><li>Develop initiatives to support Strategic Priorities </li></ul><ul><li>All resources are allocated within the Business Plan </li></ul><ul><li>Financial strategy aligns short-term objectives with long-term financial health </li></ul><ul><li>Performance monitored via review of KIOs and process-level performance measures </li></ul><ul><li>Focuses budget decisions on strategic </li></ul><ul><li>priorities instead of line items </li></ul>
    54. 55. Decision Phase Take-Aways <ul><li>The means by which strategies are developed is as important as the strategies themselves </li></ul><ul><li>Redressing a fiscal imbalance almost always requires a change to decision-making processes </li></ul><ul><li>A culminating event is a mandatory part of the planning process </li></ul>
    55. 56. Execution Phase <ul><li>Executing the Plan </li></ul><ul><ul><li>The budget is the most important execution tool </li></ul></ul><ul><ul><li>Other tools include performance measurement, action plans, and participant commitment </li></ul></ul><ul><li>Monitoring </li></ul><ul><ul><li>Updates </li></ul></ul><ul><ul><li>Scorecards </li></ul></ul>
    56. 57. Sustainable Results Residential Build-Out Property Tax Reform Economic Recession September 11th Hurricane Wilma Customer Satisfaction
    57. 58. Financial Planning Delivers Results customer service satisfaction households 94% 96% 97% AAA bond ratings from all three agencies employee satisfaction customer service satisfaction business
    58. 59. Execution Phase Take-Aways <ul><li>The budget and LTFP must be linked </li></ul><ul><li>Participant commitment is crucial for execution </li></ul><ul><li>Develop on-going monitoring mechanisms to keep the plan at the forefront </li></ul>
    59. 60. The End <ul><li>For more information … </li></ul><ul><li>Get on our mailing list (email [email_address] ) </li></ul><ul><li>E-mail us </li></ul><ul><ul><li>[email_address] </li></ul></ul><ul><ul><li>[email_address] </li></ul></ul><ul><li>Visit our websites </li></ul><ul><ul><li>www.gfoa.org/ltfp </li></ul></ul><ul><ul><li>www.coralsprings.org /quality </li></ul></ul><ul><li>Read our book Financing the Future </li></ul>

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