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The Government Finance Officers Association <br /> • GDLong-Term Financial Planning <br /> An Introduction <br /> Faced with downward pressures on tax revenues, increasing expenditures, shifting <br /> demographics, as well as a host of other complex challenges,local government needs a <br /> new approach to planning. The traditional centerpiece of governmental planning,the <br /> annual budget, is not suited,by itself, to address these types of challenges due to its <br /> inherent tactical and short-term nature. This makes long-term financial planning a <br /> powerful complement to traditional budgeting and an invaluable piece of a government's <br /> overall planning framework because it <br /> provides a long-term and comprehensive financial perspective (Strategic <br /> Strategic Plan) <br /> that is not available through other <br /> governmental planning processes. The Budget Results Evaluation <br /> diagram to the right shows how <br /> financial planning interacts with other Gong Term <br /> traditional components of the planning (Fn) <br /> framework to form a complete system. fi <br /> Financial planning includes analysis of the financial environment and revenue and <br /> expenditure forecasting. However, it also includes a number of other essential features. A <br /> plan articulates the service level your government wants to provide to its citizens—this <br /> allows you to reconcile financial resources with desired service levels. Through financial <br /> • policies,long-term financial planning establishes the standards of financial stewardship <br /> your organization aspires to,thereby providing a common language and framework for <br /> guiding day-to-day financial management decisions. Financial planning occurs through <br /> collaboration between elected officials and staff,thereby producing a shared <br /> understanding of service and financial strategy. This understanding allows elected <br /> officials and staff to focus their energies throughout the year on the matters agreed to be <br /> most important to the on-going sustainability of the community. These characteristics of <br /> planning bring a number of benefits: <br /> Broader Outlook <br /> Good financial planning does not simply project the status quo into the future—rather, <br /> you consider a range of possible futures confronting the organization, examine the <br /> financial consequences, and determine the most appropriate policy and strategy <br /> responses. It is from this broad consideration that the primary benefit of financial <br /> planning flows: to stimulate discussion and <br /> thinking about the long-term impacts of "Long-term financial planning <br /> decisions made today and how your develops a mechanism that helps staff <br /> organization can begin positioning itself now to and policy-makers move from a <br /> maximize its ability to meet challenges, exploit reactionary mode to one of charting <br /> opportunities, and deliver a stable level of the course ahead,preparing for the <br /> essential services. pitfalls as well as the successes." <br /> Terry McCall,CFO <br /> City of Gresham, OR. <br /> Page 1 of 3 <br />