Long Term Financial Plan
Long term financial planning involves financial forecasting and strategizing how to meet both current and future needs of the community. This process requires developing a financial forecast projecting revenues and expenditures over a long-term period, using assumptions about economic conditions, future spending scenarios, and other salient variables.
“All knowledge is about the past; and all our decisions are about the future” (Wilson, 2000, p. 24).
Preparing for an uncertain future requires consideration of a wide range of factors as well as direct and indirect influences on Central Whidbey Island Fire & Rescue’s success in providing the community’s desired service delivery level on a sustainable basis. The planning process stimulates discussion and provides a framework for decision-makers to develop a long range perspective and for communications with internal and external stakeholders.
The Government Finance Officers Association (GFOA) Best Practice on Long Range Financial Planning (GFOA, 2008) recommends that public agencies regularly engage in long term financial planning and that plans include the following elements:
- Time Horizon: A plan should look at least five to ten years into the future. Governments may elect to extend their planning horizon further if conditions warrant.
- Scope: A plan should consider all appropriated funds, but especially those funds that are used to account for the issues of top concern to elected officials and the community.
- Frequency: Governments should update long-term planning activities as needed in order to provide direction to the budget process, though not every element of the long-range plan must be repeated.
- Content: A plan should include an analysis of the financial environment, revenue and expenditure forecasts, debt position and affordability analysis, strategies for achieving and maintaining financial balance, and plan monitoring mechanisms, such as a scorecard of key indicators of financial health.
- Visibility: The public and elected officials should be able to easily learn about the long-term financial prospects of the government and strategies for financial balance. Hence, governments should devise an effective means for communicating this information, through either separate plan documents or by integrating it with existing communication devices.
In 2010, Central Whidbey Island Fire & Rescue staff and Board of Fire Commissioners began the process of planning to consider multiple fiscal scenarios and develop a long-term financial plan. In 2015, the District expanded on this initial financial planning process, using Fiscal Environment Analysis (FEA) (Kavahagh, 2007) as a method for measuring and evaluating fiscal condition and to provide more comprehensive long term fiscal planning consistent with the best practices advocated by the GFOA.