2/5/2014
The Benefits of Multi-year Financial Planning
Categories: Bond Trends, Strategic Capital Planning
Multi-year financial planning, regardless of whether or not you have heard of it or are doing it, like it or not it, it is here to stay. Until recently and as a way for clients to add a structured approach to their finances, we have only recommended developing a multi-year financial plan to clients with less than perfect credit ratings. Today, in the wake of East Coast storm devastations however, even the best credits are at risk and the benefits of such a global financial plan are many:
- Stabilized and improved credit ratings: The development, presentation and adherence to a sound multi-year financial plan, provides opportunities for your municipality to clearly demonstrate a sound fiscal agenda and enable rating agencies to measure results.
- Clarity of fiscal purpose: A multi-year financial plan becomes an “action plan” and a vehicle for managers to communicate with their governing boards, and the governing boards to its residents.
- Enhanced fiscal policies: The analysis intrinsic to plan development often offers governing boards the opportunity to establish fiscal policies, which not only facilitates sound fiscal management but enhances a municipality’s credit rating.
Before one can devise a forward looking financial model, municipal financial professionals need to analyze what the trends have been, calculating actual historical growth in key budget lines. Our analysis for clients will include a complete trend analysis of the last five years of data.
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