By aligning with these criteria, governments can implement strategic financial management and planning. More importantly, they can better ensure utmost transparency and accuracy when putting together budgets that align with federal guidelines and requirements.
We will break these criteria down in detail, with particular focus on the mandatory components of each. Here are the four criteria you need in your government budget to improve accuracy and build public trust:
- Policy Document
- Financial Plan
- Operations Guide
- Communications Tool
For this blog, we’ll focus on compiling your policy document.
Policy Document
Your policy document must include these four essential components: budget goals and strategies, priorities and issues, financial policies, and the budget process.
Goals and Strategies
What’s it all about?
Your goals and strategies are related to long-term, entity-wide strategic goals and provide context for decisions made within the annual budget.
How to put it into practice
- Provide a coherent statement of organization-wide goals and strategies that address any long-term budget concerns and issues and mention how those goals were derived.
- Include action plans or strategies on how the goals will be achieved and summarize those as major, overarching goals.
- Follow GFOA’s best practice on establishing strategic plans. Ultimately, a government should have a financial plan that illustrates the likely financial outcomes of particular courses of action to strategize accordingly.
Pro Tip
Using cloud-based budgeting software enables governments to digitally establish goals and track them in one place. Questica’s cloud-based solution enables performance management tracking where you can easily link your specific budget initiatives to goals and track them from there. Leverage a system of programs, measures, and scorecards to measure overall performance.
Priorities and Issues
What’s it all about?
Addressing any foreseen priorities and issues requires a summary of explanation of the key issues and decisions made during the budget process. You also need to address the ramifications of these decisions.
How to put it into practice
- Provide a budget message that articulates priorities and issues for the upcoming year. The message should describe significant changes in priorities from the current year, such as focusing on law enforcement or decreasing capital investments. Explain the factors that led to those changes. You can do this through several forms, such as a transmittal letter or budget summary section.
- Include major changes in service levels, fees, and/or taxes presented.
Pro Tip
Questica’s budget software enables you to assemble actionable data from anywhere in the system for analysis. Quickly access summary reports of budget initiatives for each goal and keep track of your priorities and issues with a digital system of record.
Financial Policies
What’s it all about?
This criterion requires a discussion of long-term financial policies. It’s important to adopt a policy that defines a balanced operating budget for your agency and indicate in the document whether the budget presented is balanced. Such financial policies should include but not be limited to:
- Financial planning policies
- Revenue policies
- Expenditure policies
How to put it into practice?
- Adopt policies that support a financial planning process and assess the long-term financial implications of current and proposed operating and capital budgets, budget policies, and cash management and investment policies.
- Adopt policies to inventory and assess the condition of all major capital assets.
- Expenditure policies should consist of debt capacity, issuance and management, fund balance, reserves, and operating/capital budget versus actual monitoring.
- Include a coherent statement of agency-wide long-term financial policies. You may want to use an organization chart of the governments’ funds.
Pro Tip
Ready-to-use dashboards and reports can be pulled using any set of budget data for long-term planning and data-driven policy making. Questica Budget aggregates budget data into a single source of truth so you can be more confident in the numbers you’re using to make immediate and long-term decisions.
Budget Process
What’s it all about?
Here is where you provide a concise narrative of the budget process, including an explanation of relevant legal or policy requirements.
How to put it into practice
- Describe the process for preparing, reviewing, and adopting the budget for the coming fiscal year. This description should include the internal process to prepare the budget, the opportunities for public input, and the actual adoption of the budget. It’s important to include a budget calendar as well, noting both key operating and capital dates.
- Describe the procedures for amending the budget after adoption.
Pro Tip
Questica Budget can be configured to reflect each organization’s unique processes and workflows. Then, budget processes and procedures that you define can be reinforced and guided by purpose-built budgeting software.
Want to learn more? Download our free playbook “4 Ways the Pandemic Has Force Governments to Rethink Budgeting.”
