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A Framework for a Financial Sustainability Index

Shayne Kavanagh, Mark Pisano, Shui Yan Tang, Michael F. McGrath, Doug Linkhart, Monika Hudson, and Erik Colon

April 2017, English

In order to navigate the many challenges local governments face today, leaders will need new and better systems of governance and decision making. These new systems must help government meet its responsibilities of promoting the health, safety, and welfare of the community while doing so in a financially responsible and sustainable manner. This paper provides a set of tools and techniques to help local government leaders to develop these systems of governance and decision making. These tools and techniques address technical concerns that one might expect to find in a document about finances, but more importantly they also address the psychological and interpersonal aspects of governance that have a critical impact on how decisions are made.

Readers of this document will quickly see that solving a complex, far-reaching problem such as financial sustainability requires participation from a broad spectrum of potential stakeholders in the financial sustainability of local governments. Consequently, we encourage local government leaders to involve diverse groups of stakeholders in their efforts to achieve financial sustainability. Though this document is primarily intended for local government leaders with some degree of “expertise,” the framework, along with the accompanying Financial Sustainability Index, may be used to engage a broader group of stakeholders in the conversation about financial sustainability. The Financial Sustainability Index invites stakeholders to assess the local government’s governance and decision-making practices and compare those practices to the standards suggested within this document, the Framework for Financial Sustainability. When local government leaders have a strong working knowledge of the framework, they will be better equipped to lead others through a conversation about financial sustainability.


Local Government, Municipal Fiscal Health, Public Finance, Public Policy, Stakeholders