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It is vital that your council knows where it is going in the long term. To do this, your council requires a financial strategy that is consistent with the strategic plan.
Your council must be able to fund the projects it has planned for and ensure that it is financially viable in the future. Your council must identify the risks that will be taken in pursuing goals and ensure appropriate strategies are in place to minimise those risks. A sound long-term financial strategy will enable your council to meet its objectives.
In considering future funding requirements, your council must reflect on how much funding it is likely to have over the next 10 years, and whether the available funding is insufficient to maintain the current level of services in a long-term financial management plan. If you cannot increase funding or achieve savings, then some adjustment to service levels will be required.
The Local Government (Content of Plans and Strategies) Order 2014 outlines what should be covered in your council’s long-term financial management plan. These include capital works and expenditure, asset management requirements, recurrent revenue and expenses, underlying surplus or net deficit, assets and liabilities, and cash held.
Financial management is the decision making process and control procedures associated with acquiring the necessary funds to operate a council and ensure its sustainability.
Councillors (sitting on the council) have an overall accountability for the council’s finances. It is therefore extremely important that you consider financial decisions and management as priority activities.
Your council must ensure that the following staff, systems and functions are in place:
It is important that you understand the information provided to you by council administration. Financial reports should inform you simply and directly on the financial performance of the council. You should be able to review the variances between actual and budgeted income and expenditure to establish overall financial viability.
A key accountability of the general manager and the chief financial officer is financial management. While the council has the overall accountability, the administration and its key players have critical responsibilities for financial planning and management, and for providing regular reports to council.
Some important points to note:
Given that a council is a collection of individual councillors who have been elected on the basis of individual platforms, council planning can pose a particular challenge. Often strategic planning will require significant negotiation and compromise.
Developing a means for addressing a number of individual mandates and being open to input from the community – all the while ensuring continuity and sustainability – is a challenge for successful strategic planning. While there is no magic formula for success, councils will benefit from following a process which ensures that everyone has a chance to be heard.
You should keep in mind that while an election may result in the introduction of new councillors, the council as a legal entity will remain unchanged. The strategic plans, policies and budgets that were put in place by the previous councillors (as the council) will continue until they are amended by the new councillors (as the council).