CITY COUNCIL WORKSHOP AGENDA PACKET

Financial Management for Elected Officials January 2013 Institute for Local Government www.ca-ilg.org 8 The budget document should be easily understood by the average member of the community. To help make this happen, financial information can be presented a variety of ways (including text, tables and charts). Including performance measures in the budget document can help the public see the relationship between costs and benefits. Because of the public information role the budget document serves, the Government Finance Officers Association recommends that budget documents be shared via the agency’s website.14 Questions to Ask Role of Governing Body Members • Do governing body members have a clear understanding of their role in the budget process? • Do governing body members have a meaningful opportunity to shape major goals and objectives before the preliminary budget is prepared (for example, in budget workshops conducted sufficiently in advance of the preliminary budget’s preparation)? • Do governing body members feel like they have been given an opportunity to understand and react to key decision points within a preliminary budget (versus being subjected to a long, random presentation about numbers)? General Questions about the Numbers in the Budget • What are the budget’s underlying assumptions (examples of key assumptions include population changes, projected case loads or service demands, state and federal funding, construction activity, utilities costs, service demands, inflation, and interest rates)? Are these assumptions realistic? What are the potential sources of uncertainty and risks regarding these assumptions? • Does the budget explain the projections for the most significant general fund revenue sources? (These probably account for close to a large percentage of total general fund revenues.) • For agencies providing social services, how are caseload and benefit costs forecast and managed? Budgets Don’t Tell the Whole Story Operating budgets and financial reports do not address many important issues that decision-makers must consider. For example, they do not: • Show postponed or avoided costs (for example, deferred maintenance on facilities or infrastructure) • Use of one-time or expiring revenue sources. • Indicate changes in purchasing power due to inflation or deflation. • Measure the decline or depreciation of infrastructure (like roads, bridges and sewer lines) and public facilities (like buildings and parks). Local officials may wish to ask staff to provide an analysis of how these variables affect the agency’s ability to deliver services and facilities. Page 58 of 109