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Long Term Financial Planning

The Long-Term Financial Plan must project financial forecasts for the council for at least ten years, and be updated annually as part of the development of the Operational Plan. The Long-Term Financial Plan must be used by the council to inform its decision-making during the finalisation of the Community Strategic Plan and the development of the Delivery Program.

The Long-Term Financial Plan must be structured to include:

  • projected income and expenditure, a balance sheet and cash flow statement
  • planning assumptions that were used in the Plan’s development
  • a sensitivity analysis which highlights the factors and assumptions most likely to impact on the Plan
  • financial modelling for at least three different scenarios, for example the planned scenario, an optimistic scenario (eg taking into account a yet-to-be-approved special rate variation) and a conservative scenario
  • methods of monitoring financial performance.

Better practice hint:

A number of councils ensure that the projected income and expenditure spreadsheet of the Long-Term Financial Plan is available at all council meetings. Any proposed variations to the adopted budget are input into the spreadsheet so that the short and long-term consequences of the expenditure can be demonstrated. This includes not just the one-off expense that may be being proposed, but the workforce costs, and lifecycle maintenance and renewal costs that might be associated with the proposal.

Such practice ensures that councillors are able to make fully informed decisions, and understand the importance of the Resourcing Strategy documents to that decision-making.

The ‘Resourcing Strategy’ chapter of the Integrated Planning and Reporting Manual provides further information and good practice examples.


 

 

 

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