CITY COUNCIL WORKSHOP AGENDA PACKET

Financial Management for Elected Officials January 2013 Institute for Local Government www.ca-ilg.org 4 • Are agency financial staff familiar with and do they adhere to the codes of ethics applicable to their professions? For example, both the California Society of Municipal Finance Officials 1 and the California Municipal Treasurers Association 2 have codes of ethics. Financial Planning Policies.3 • Budget Policy. Such a policy commits to a balanced operating budget (and defines what that is) and requires that decision-makers be alerted when deviations are either planned or otherwise occur. • Long-Range Planning. Such a policy supports financial analysis and strategies to assess the long- term implications of current and proposed capital improvement needs, cost of services, operating budgets, budget policies, cash management and investment policies, program and assumptions. For example, a capital improvement plan enables the agency details the agency’s plans and relative priorities for making improvements to and replacing capital facilities (a process that normally takes years to complete).4 Checklist of Financial Policy Topics 5 Local agencies have various—and various levels—of financial policies. Some policies relate to big picture, strategic topics (for example, budget policy, long-range planning and debt policy); others are very specific and practical policies (for example, credit card policies and expense reimbursement). Having a range of policies (from big picture to practical and operational) helps an agency to chart a wise course financially and avoid operational missteps. Whether a specific policy makes sense given the nature and scope of an agency’s operations will vary. • Asset Inventory. Such a policy requires an up-to-date listing of all major capital assets including. The policy can also require an assessment of asset condition and a plan for replacing assets (sometimes referred to as a “capital plan”). The definition of what constitutes a “major” asset is established by local policy, as is the determination of how often the inventory is to be updated. • Long-Range Planning for Pension and Other Post-Employment Benefit Costs. Such a policy analyzes how the agency will meet the future costs of agency employee pensions and other employee benefit obligations. • Reserve and Other Fund Balances. Such a policy enables decision-makers to maintain a prudent level of resources to protect against a need to reduce service levels or increase revenues due to revenue shortfalls or unpredicted one-time expenses. Specific kinds of reserves can also enable an agency to set aside moneys to replace assets (for example, fleet replacement reserves). Page 54 of 109