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APPENDIX III <br />GFOA Recommended Practice <br />Adoution of Financial Policies (20011 <br />gack~round. The National Advisory Council on State and Local Budgeting (NACSLB) has <br />developed a comprehensive set of recommended budget practices. The recommendations have <br />been endorsed by a number of key governmental associations, by academia and by labor groups <br />associated with state and local governments. These practices and the associated framework <br />outline a budget process that encompasses the broad scope of governmental planning and <br />decision-making with regazd to the use of resources. This work is recognized as one of the most <br />important advances in governmental finance in decades. The Government Finance Officers <br />Association (GFOA) has adopted a recommended practice endorsing the NACSLB practices <br />and the associated framework. However, the policies included in this Recommended Practice <br />aze those considered fundamental to the budget process and relevant to the broadest number of <br />jurisdictions. <br />The work of the NACSLB provides a framework for describing the overall budget process. The <br />framework is organized azound the four principles of the budget process: <br />^ Establish Broad Goals to Guide Government Decision Making <br />^ Develop Approaches to Achieve Goals <br />^ Develop a Budget Consistent with Approaches to Achieve Goals <br />^ Evaluate Performance and Make Adjustments <br />Each of these principles has additional elements that provide guidance for an effective budget <br />process. Element #4, or Principle 2, Adopt Financial Policies, addresses the need for <br />jurisdictions to establish policies to help frame resource allocation decisions. <br />Recommendation. The Government Finance Officers Association (GFOA) recommends that, at <br />a minimum, financial policies in the following areas be developed by professional staff and <br />formally adopted by the jurisdiction's governing board as well as the governing boards of those <br />component units; state, provincial and municipal corporations and organizations; and other <br />bodies under their jurisdiction. <br />^ Financial Planning Policies <br />^ Revenue Policies <br />^ Expenditure Policies <br />The jurisdiction's adopted fmancial policies should be used to frame major policy initiatives and <br />be summarized in the budget document. <br />It is further recommended that these policies, along with any others that may be adopted, be <br />reviewed during the budget process. Professional staff should review the policies to ensure <br />2005 MVJMC Financial Plan -Appendix III Page 42 <br />