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Review of Financial Resiliency Policy
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Submitted by:
John Ruggini
Department:
Finance Department
Issue
In 2016, the Common Council adopted a "Financial Resiliency Policy" based on research conducted by the Government Finance Officers Association. Given the passage of time as well as changes in the organization, local economy and make-up of the Common Council, a review and update of this policy is needed. Over the past several months, the Committee and staff have discussed updates to this policy. A marked-up and clean copy of the policy including all of those changes is attached.
Background/Options
Financial resiliency is defined as the ability to quickly recover from external environmental shocks, such as a severe recession. Attached is a research paper written by the Government Finance Officers Association that describes eight characteristics of a resilient system.
1. Diversity: Avoid a single point of failure or reliance on a single solution.
2. Redundancy: Have more than one path of escape.
3. Decentralization: Centralized systems look strong, but when they fail, the failure is catastrophic.
4. Transparency: Don’t hide your systems. Transparency makes it easier to figure out where a problem may lie. Share your plans and preparations, and listen when people point out flaws.
5. Collaboration: Work together to become stronger.
6. Fail Gracefully: Be patient when honest efforts fail and strive to build in safeguards to limit the impact of those failures.
7. Flexibility: Be ready to change when plans aren’t working. Don’t count on stability.
8. Foresight: You can’t predict the future, but you can hear its footsteps approaching. Think and prepare.
The attached policy applies these eight characteristics to the City’s financial systems in order to build a resilient organization. Much of what is included are existing financial practices the City already utilizes while also identifying areas for improvement. A significant component of the policy is adopting specific directions and assumptions to develop the five-year forecast.
It is intended that this policy be reviewed annually with the presentation of the five-year forecast and updated every 5-years to reflect changing economic and political conditions.
The policy has not been updated since adoption. Over the past several months, the Committee and staff have discussed updates to this policy. A marked-up and clean copy of the policy including all of those changes is attached.
Fiscal Impact
This item is for informational purposes only
Recommendation
Staff recommend the committee provides feedback on the policy which will be incorporated and then brought again before the committee for formal approval.