The Three Pillars of Financial Sustainability
As mentioned in Long Term Financial Planning for a Sustainable Future, the purpose of our Long Term Financial Planning Strategy is to ensure the ﬁnancial sustainability of Regional services and to guide our prudent use of tax payers' dollars.
The Long Term Financial Planning Strategy is founded on balancing the three pillars supported by the Canadian Institute of Chartered Accountants:
- Financial Sustainability
- Financial Vulnerability
- Financial Flexibility
Financial Sustainability is our ability to provide and maintain planned service and infrastructure levels without resorting to unplanned increases in rates or significant changes to services.
Financial Vulnerability is the level of risk exposure from external funding sources and the resulting impact this funding has on the ability to deliver Regional services and meet existing ﬁnancial obligations and commitments. This is increased in areas where the program is 100 per cent funded by external sources.
Financial Flexibility is related to debt and taxes; it is our ability to change debt levels or taxes to meet ﬁnancial obligations. Flexibility gives us the ability to issue debt responsibly without affecting the credit rating or the ability to generate needed revenues.
We maintain our strong ﬁnancial position by achieving a balance of ﬁnancial sustainability, vulnerability and ﬂexibility. In order to implement these pillars, nine financial principles have been developed. Each ﬁnancial principle addresses a speciﬁc ﬁnancial aspect such as debt, reserve adequacy and investments.
Our next story will focus on these nine financial principles and how they are used to measure our financial health and include our 2017 Financial Condition Scorecard.