TO: Chair and Members of the Audit Advisory Committee
FROM: Trang Nguyen, Finance Director
1. Subject
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Review proposed revisions to the City's Financial Management and Fiscal Sustainability Policies.
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2. Summary
Staff has completed a comprehensive review, restructuring, and retitling of the City's existing financial policies to establish a more cohesive framework for financial stewardship, long-term fiscal sustainability, and financial governance.
The revised Financial Management and Fiscal Sustainability Policies, previously titled Financial Management Policies, are intended to serve as the City's overarching financial governance framework and establish guiding principles for budgeting, long-term financial planning, reserves, debt, pensions, capital investment, and other significant fiscal decisions.
3. Recommended Action
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1. Provide comments and feedbacks on the proposed Financial Management and Fiscal Sustainability Policies.
2. Recommend revised policies to the City Council for adoption.
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4. Discussion and Background
BACKGROUND
The City's Financial Management Policies provide the foundation for the City's financial practices and establish expectations for responsible fiscal management. Periodic review of these policies is important to ensure they continue to reflect the City's financial priorities, current practices, and evolving fiscal environment.
Staff has conducted a comprehensive review of the existing policies. Rather than simply updating individual provisions, the review provided an opportunity to reconsider the overall structure and purpose of the document and establish a more comprehensive financial governance framework.
DISCUSSION
The proposed revision restructures the policies around the principles of financial stewardship, long-term fiscal sustainability, sound financial planning, and accountability.
The revised policies are intended to establish the City's financial philosophy and provide long-term guardrails for financial decision-making. They are not intended to function as an accounting or procedural manual. Detailed administrative procedures remain the responsibility of City management and are addressed through separate administrative policies and procedures.
The revised framework focuses on strengthening four core principles:
• Financial Stewardship - Establishes overarching principles for the responsible management of public resources and consideration of both current and long-term financial impacts.
• Financial Planning - Strengthens the relationship between the annual budget, long-term financial forecasting, capital planning, and other significant financial decisions.
• Financial Sustainability - Establishes principles for maintaining structurally balanced operations, appropriate reserves, sustainable debt and pension obligations, infrastructure investment, and management of financial risks.
• Financial Governance and Accountability - Clarifies responsibilities for financial oversight, reporting, transparency, internal controls, and periodic review of the City's financial policies.
The revised framework also recognizes the relationship between the Financial Management and Fiscal Sustainability Policies and the City's other financial policies and planning documents. The Financial Management and Fiscal Sustainability Policies establish the City's overarching financial philosophy and governance principles, while companion policies and administrative procedures provide more detailed guidance in specific areas.
Staff is specifically seeking the Committee's comments regarding the overall framework and financial governance principles contained in the proposed policies. Following the Committee's review, staff will incorporate appropriate revisions before presenting the proposed policies to the City Council for consideration at a regularly scheduled public meeting.
5. ATTACHMENTS
• Attachment 1 - Proposed Financial Management and Fiscal Sustainability Policies
• Attachment 2 - Resolution No. 11628 Financial Management Policies