HomeMy WebLinkAbout2A, Long Range Financial PlanEN HILLS
Request for Council Review
Prepared By: Sue Iverson, Finance Director
Kyle Howard, Finance Intern
Worksession Date: November 15, 2010
A
Long -Range Financial Plan
Discussion Topic:
Discussion and presentation of the Long -Range Financial Planning Model.
Supporting Documents:
1. Memorandum dated November 15, 2019 from Sue Iverson and Kyle Howard.
2. PowerPoint presentation hand out.
DATE: November 15, 2010
EN HILLS
MEMORANDUM
TO: Honorable Mayor and City Council Members
Patrick Klaers, City Administrator
FROM: Sue Iverson, Finance Director/Treasurer
Kyle Howard, Finance Intern
SUBJECT: Long -Range Financial Plan
Background
The City Council had a goal/directive for the finance department to prepare a long-range
financial forecasting model. Preliminary work had been done in 2006 with Ehlers Inc
which resulted in the model that currently is included in the 2009 and 2010 budget books.
It was requested that the model be more interactive to be used for strategic planning (part
of the goals and objectives written into the Finance Director's performance evaluation for
2010).
Forecasts can be used to create a context for evaluating the annual budget, establishing a
baseline for measuring the long -term effects of decisions, to test the economic effects of
best -case and worst -case scenarios, and to establish a baseline projection of revenues,
expenditures, and future cash flows and fund balances.
The long -range financial model should help both staff and council evaluate the financial
effects of proposed initiatives and to help educate constituents about an organization's
present and potential financial capabilities. It should include well- designed charts and
tables that can be used as visual aids in public presentations which can help elected
officials, citizens, and other stakeholders gain a better understanding of financial issues.
Current Discussion
Finance staff had been researching and working on a model as time has permitted.
During this research, staff found a model produced by MuniCast that is done entirely in
Excel and has the features and capabilities requested which includes programming,
customization, and is entirely turned over to us when completed.
City Council Meeting
Metro- inet.us \ardenhills\Admin \Council\Agendas Packet Information\2010\ 11 -15 -10
Worksession\Packet Information \Long -Range Financial Plan.doc
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Finance has spent the last three months working on this model and gathering the
necessary data for the historical information or the baseline forecast.
We have a template which we are ready to present to the City Council, but this model is
still a work -in- progress and we now need additional information from the City Council to
continue working on the model. We need feedback from the Council to program the
metrics for trend and correlation analysis. The model will help us produce alternative
scenarios depicting favorable and unfavorable variations.
Our finance intern, Kyle Howard, will do a brief presentation on the model and then will
introduce and lead a discussion on the type of information on what type of indicators the
Council would like to see us program into the model.
We anticipate that the model will be ready to use for the 2012 budget cycle.
Council Action
Provide feedback and discussion to staff on the model and the Key Indicators that the
City Council would like to see programmed into the model.
City Council Meeting
Metro- inet.us \ardenhills\Admin \Council\Agendas Packet Information\2010\ 11 -15 -10
Worksession\Packet Information \Long -Range Financial Plan.doc
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Lang -Term Financial
Forecast Model
Outline
0 Benefits of a Long -Term Financial Forecast
0 Background
0 Cautionary Statement
Council Input
How the Program Works
0. Future Plans
0 Questions?
Benefits of a Long -term
Financial Forecast
Create a more strategic context for evaluating
the yearly budgets.
2. Establish a baseline for measuring the long-
term impacts of future decisions.
Ability to do "Best and Worst Case" scenarios of
future finance decisions.
4. Establish baseline projections of Revenues,
Expenditures, Future Cash Flows and Fund
Balances.
11/12/2010
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Background of Project
0. What we have done so far and currently
working on.
1St stage of planning and data gathering were
completed at the end of October
7 years of past Historical Data (Audited Data)
2 years of Future Data (Budgeted)
Initial Familiarization of the Program
Checking for Data Consistency
Verifying Data Transfer Accuracy
General Fund (101) is the initial fund that is being
worked on and modified
fiait
Caution
k A long -term Financial Forecast Model does
not show the absolutes of the future
It is a tool that is helpful in making an
educated guess on the long -term effects of
different financial scenarios
For the model to be accurate as possible, it
must be maintained and updated regularly
It is a Fluid Model and will always be changing
Information which is Still Needed
k We need Council Input on Indicators you
would like to see added to the program.
Relevance to Department Functions
Performance Indicators
Economic Indicators
Financial Indicators
1. For Example
A Property Tax Levy Indicator was identified and
is under construction
11/12/2010
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Model Demonstration
Key Indicators
0 Financial Summary
o Sensitivity Analysis
Forecast Assumptions
0 Statistical Analysis
o Trend Analysis
Account Based
Department Based
Future Plans
o Continue to work with MuniCast to
customize and complete the General Fund.
Then complete the rest of the funds.
o Identify the Key Indicators
0 Prepare to start using the Software for the
2012 forecasted budget.
Routinely maintain and up -date forecast
model.
11/12/2010
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