Financial Management for Local Government

Kay Spearman

• Publisher: Taylor & Francis
• Year: 2019
• eBook ISBN: 9781136565816
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Ecology
• Index: Politics & International Relations

This series is designed to cover all aspects of sound financial management for local governments in developed and developing countries and economies in transition. Concepts of good governance, transparency and accountability are woven into the text of every chapter, and the needs and potential obstacles to greater decentralization and democracy are highlighted. Each volume is self-contained with its own Trainer's Guide, exercises and web resources. Chapters are divided into basic and advanced concepts and the detailed relationship of each topic to the others covered in the series is explained.

Financial Management Training Series

Creating a Financial Framework

Volume 1:

Financial Policy Making Financial Planning Citizen Participation Evaluating Financial Condition

First published in 2007 by Earthscan

Published 2013 by Routledge

2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN

711 Third Avenue, New York, NY, 10017, USA

Routledge is an imprint of the Taylor & Francis Group, an informa business

Copyright © United Nations Human Settlements Programme, 2007

All rights reserved.

Cover design: Susanne Harris

Cover photo: Stefan Boness/Panos Pictures

DISCLAIMER

This publication has been formally edited by the United Nations. The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or its authorities, or concerning the delimitation of its frontiers or boundaries or regarding the economic system or degree of development. Excerpts may be reproduced without authorization, on condition that the source is indicated.

The publication of the Financial Management for Local Government Series was made possible through the financial support of the Dutch Government through its project on Strengthening National Training Capabilities for Better Local Governance and Urban Development; and through the financial support of the Open Society Institute through its Local Government Public Service Reform Initiative.

A catalogue record for this book is available from the British Library

Library of Congress Cataloguing-in-Publication data

ISBN 13: 978-1-844-07402-0 (pbk)

Foreword

While the financial structure of local governments may not enjoy the visibility of other related governance issues, it is nevertheless one of the most pressing constraints on the delivery of services and infrastructure at the local level. The financial management of local governments has been brought into sharp focus by recent trends to decentralize powers and responsibilities to the local level in the hope that local governments will contribute to poverty reduction. All too often, the experience has been that inadequate resources combined with weak management systems conspire to prevent the effective delivery of services, especially to the poor.

Clearly, the inability of many local governments to distribute resources in an equitable way can be attributed to a number of constraints. But despite the many problems facing local government in the developing world, innovations and reforms are possible. They are to be found in municipalities that have developed an adaptive ability to overcome resource shortages and weak expenditure management. Some notable examples include the mobilization of additional revenues to fund pro-poor services, ensuring the effectiveness of their revenue collection systems, redirecting resources to where they are needed most through participatory budgeting techniques, and by strengthening mechanisms for greater accountability and transparency.

If local governments are to play their part in making our cities sustainable, training and capacity building in municipal finance must be a top priority. In order to assist in this endeavor, UN-HABITAT has designed this internationally relevant training tool kit. Based on the concepts of good governance the series addresses both basic and more advanced principles of creating an effective financial framework and managing budgets, capital investments and services.

This publication has been made possible thanks to the commitment of over forty professionals, as well as the principle author of the series, Kay Spearman, who have generously supported its development by sharing their expertise and insights throughout its development. The financial support from the Government of the Netherlands and the Open Society Institute has been equally significant in creating what I am sure in time will come to be regarded as an essential tool and reference manual for local government officials worldwide.

Anna K. Tibaijuka
Under-Secretary-General and Executive Director
UN-HABITAT

Preface

The original Local Government Financial Management (LGFM) series was conceived in the mid-nineteen nineties in Lucenec, in Eastern Slovakia. The United States Agency for International Development (USAID), through a contract with the International City/County Management Association (ICMA), had initiated a local government capacity building programme in Slovakia and financial management was one of the areas targeted for development.

When the City of Lucenec was approached as a potential recipient of technical assistance for the specific purpose of developing a capital improvement budget, they were grateful but not impressed. They saw the need for financial management assistance for the local government and others in Slovakia in much broader terms. Working with a group of dedicated local finance officers in Slovakia, ICMA assembled a small team of LGFM consultants. Together they produced the initial fourteen handbooks in this series.

Over time, the series spread quickly to other counties in the central and eastern European region and beyond. Funding for the adaptation and translation of the materials came from a variety of sources, including The World Bank and private foundations.

While UN-HABITAT had contributed to the initiation of the series, their involvement in the development and dissemination up to this point had been minimal. Nevertheless, they recognized the series’ potential for worldwide use. But, they needed to be updated to reflect new ideas in LGFM and revised to make them more user friendly as they crossed national borders and language differences. Among other things, the initial series was based on Slovak laws, regulations, and experience, which varied significantly from those in other countries. UNHABITAT commissioned a written user survey and convened a small group of experts to help determine how best to carry out the revisionist task. The expert group included the Slovak initiators and others who had used the materials in various countries around the world.

While the initial edition of these materials was directed to Slovak local government finance officers, this edition is intended for a much larger audience. It includes not just finance officers but all local government financial management personnel as well as chief executive officers, department heads, elected officials whom we refer to as policy makers, and others in local governments worldwide who might find them useful. National government departments that have oversight responsibility for local finances should also find them useful as should those educational institutions preparing students for jobs within local governments. And, of course, the audience includes financial management trainers and training managers. In other words, this series is aimed at a worldwide mix of training providers and training users.

Kay Spearman
Principal Author

Acknowledgments

The preparation of this revised and updated version of the Local Government Financial Management (LGFM) Series has drawn upon the professionalism and expertise of many persons and institutions.

First, we would like to acknowledge the various authors, both of the original series and the current revision, of each respective chapter in the series. Introduction and Trainer’s Guide written by Fred Fisher. Chp 1: Policy Making. Essay rewritten and expanded by Kay Spearman. Exercises rewritten by Kay Spearman and Fred Fisher. Original essay by Jack Matzer. Original exercises by David Tees. Chp 2: Financial Planning. Essay rewritten and expanded by Kay Spearman. Exercises rewritten by Kay Spearman and Fred Fisher. Original essay by Winston Evans. Original exercises by David Tees. Chp 3: Citizen Participation. Essay rewritten and expanded by Kay Spearman. Exercises rewritten by Kay Spearman and Fred Fisher. Original essay by Winston Evans. Original exercises by David Tees. Chp 4: Evaluating Financial Condition. Original essay by Sanford Groves and Maureen Valente. Published by International City/County Management Association (1990 Washington DC). Exercises by Kay Spearman and Fred Fisher. Chp 5: Operating Budget. Essay rewritten and expanded by Kay Spearman. Exercises rewritten by Kay Spearman and Fred Fisher. Original essay by Kay Spearman. Original exercises by David Tees. Chp 6: Financing the Operating Budget. Essay rewritten and expanded by Kay Spearman. Exercises rewritten by Kay Spearman and Fred Fisher. Based on original essays by Winston Evans, Kay Spearman and Maureen Valente. Original exercises by David Tees. Chp 7: Capital Investment Planning. Essay rewritten and expanded by Kay Spearman. Exercises rewritten by Kay Spearman and Fred Fisher. Based on original essays by Jack Matzer and Allistar Law. Original exercises by David Tees. Chp 8: Financing the Capital Investment Plan. Essay rewritten and expanded by Kay Spearman. Exercises rewritten by Kay Spearman and Fred Fisher. Based on portions of original essays by Jack Matzer, Winston Evans and Allistar Law. Original exercises by David Tees. Chp 9: Accounting. Essay rewritten and expanded by Kay Spearman. Exercises rewritten by Kay Spearman and Fred Fisher. Based on portions of original essays by Jack Matzer, Winston Evans and Kay Spearman. Original exercises by David Tees. Chp 10: Performance Measures. Essay rewritten and expanded by Kay Spearman. Exercises rewritten by Kay Spearman and Fred Fisher. Original essay by Jack Matzer....

Table of contents

• Volume 1
• Volume 2
• Volume 3
• Volume 4