December 2011 | Government Finance Review 57

The people who

manage and monitor

the performance of an

organization’s financial

planning framework

are the ultimate

factor for success.

However well-planned an orga-nization’s financial planning framework might be, the peo-

ple who manage and monitor its per-formance are the ultimate factor for success. Hanover County’s goal is to create sustainable teams to oversee its financial planning framework. In Hanover County, Virginia, officials from the county and schools, as well as elected officials, sit next to the finance officer and chief administrative official at finance meetings. Focus area experts also help make the decisions, explain-ing their effects on service levels.

The county is identifying key focus areas tied to its countywide strategic plan and putting financial stewardship representatives on every focus-area team. This common foundation allows the county to adopt the same strate-gic focus across all departments and agencies. Having similar financial goals and strategies for all the divisions that make up the organization enhances the entire jurisdiction’s financial results, resiliency, and use of teamwork.

SUSTAINABLE TEAMS

Many organizations form teams peri-

odically for specific initiatives. Hanover

County’s approach is unique because

it forms sustainable teams for opera-

tional, strategic, and financial goals

(see Exhibit 1). The financial planning

framework is successful because it is

built on existing relationships. Senior

leaders like the chief administrative

official and school superintendent lead

by example, holding joint meetings on

budget strategies and strategic plan-

ning that are also attended by finance

and human resource leaders. These

leaders sit side by side and discuss bud-

get goals, frame communications, and

plan for long-term financial stability.

Similarly, senior leaders from region-

al authorities and other elected offi-

cials talk with the chief administrative

official about financial and strategic

goals. The chief administrative official

and the sheriff work on both admin-

istrative and public safety initiatives.

The sheriff supports the budget, as the

chief administrative official supports

emergency events. And these relation-

ships extend beyond the senior leaders

to the finance officers and other staff,

The People Side of a Financial Planning FrameworkBy Kathleen T. Seay

solutions

Exhibit 1: Hanover’s Structural Planning Framework

Vision

Schools County

StrategicTeams

58 Government Finance Review | December 2011

and to state agencies, which subsidize

local funding. Government staff doesn’t

tend to work regularly with elected

and appointed officials, but this is the

people side of the financial planning

framework for success.

Finance officials use existing relation-ships to bring key participants together for short- and long-term financial plan-ning. Finance continuously assembles teams and solicits input for implement-ing the county’s five-year financial plan. Identifying successful solutions to financial challenges is a shared respon-sibility. Operational savings and oppor-tunities for redeploying resources are identified through existing partnerships — school officials share budget short-falls that result from declining revenues and additional revenues in periods of positive growth, and elected officials openly discuss revenue projections and solutions in quarterly revenue forecast meetings. Each member of the team contributes his or her knowledge about the economic climate, leading indica-tors, and consensus-based outcomes.

EMPOWERING EMPLOYEES

Hanover’s culture of financial plan-ning reflects its values:

n Integrity. Hanover County is forth-right about its finances. For example, when senior leaders identified the effects of the recession, they were open and honest with department heads and financial partners, asking for their help right away.

n Accountability. All employees share the responsibility for the suc-cesses of their peers and for custom-er service to the community.

n Respect. All employees know that

their ideas are heard. Decisions are

not made top-down, and feedback

from employees at all levels is val-

ued.

n Inclusiveness. The same individu-

als who were at meetings to discuss

budget challenges before the reces-

sion are still at the table to iden-

tify cost saving measures and staff

moves.

These values show the financial

ownership each employee feels — the

numbers are everyone’s responsibility.

In many jurisdictions, the entire work-

force can repeat the organization’s mis-

sion, vision, and values statements,

but when employees also know the

numbers, they work tirelessly to help

shoulder the burdens and successes.

The people side of a financial plan-

ning framework is what makes it work

in both good times and bad. The coun-

ty’s employees are its greatest asset for

the future and its most valued resource

during periods of declining revenues.

In Hanover County, examples of the

team environment are also demonstrat-

ed by elected and appointed boards

that work together.

THE BENEFITS OF TEAMWORK

In many other organizations, key per-

sonnel are experts in their fields, but

they often leave the financial planning

framework to the finance department.

In Hanover County, it is expected that

the core competencies of county lead-

ers will include financial planning for

their departments or focus areas. The

numbers are everyone’s responsibility.

Departments have the skills to man-

age themselves independently — each

leader has attended the LEAD (an

international non-profit organization

focused on leadership and sustainable

development) or SEI (the International

City/County Management Association’s

leadership institute) training — and

they use these tools to engage other

departments and resources through-

out the county. The organization may

appear to be decentralized, but is in

fact bonded by communication and

respect for what each area brings to

the table.

Teamwork for financial planning

comes naturally when localities rou-

tinely work together, leading to many

successes for Hanover County. One

example is the county’s response to

the recession. County employees,

along with school and elected officials,

responded quickly to declining rev-

enues. Departments addressed deficits

in their year-end financial returns, and

many offered service-level adjustments

for future budgets. Meetings were held

to offer shared solutions and accept

shared pain.

To prevent workforce reductions,

county leaders redeployed employees

to bridge vacant positions for expen-

diture reductions. They carefully

reviewed existing employees’ job skills,

looking for opportunities to put them

into open positions. Employees from

community development and general

administration departments covered

seasonal Parks and Recreation posi-

tions and frontline customer service

positions in other departments. Other

examples include a mechanic who had

been trained for public safety positions

and redeployed to Fire/EMS, and build-

ing inspectors who renovated county

buildings. It worked because employ-

ees had shared goals and a common

message. The unrelenting recession

December 2011 | Government Finance Review 59

has required Hanover County to make

further use of the redeployment strat-

egy in the current fiscal year.

The county’s response to citizen

engagement is another example of sus-

tainable teamwork. During an election

year, when many statistics are ana-

lyzed, the county, schools, and elected

officials all share the same message

with the community because they have

been at the table together as a part

of routine strategic planning. Citizens

appreciate that county leaders demon-

strate financial stewardship that voters

can rely on despite changes in the

elected body.

Strategic planning has been a pro-

cess of continuous improvement. When

Hanover County received the 2010 U.S.

Senate Productivity and Quality Award

(the oldest continuous state program of

its type, predating the National Baldrige

Program), the application was complet-

ed by formal collaborative teams. The

teams were assigned across functions

and included everyone from key part-

ners at schools and at social services,

which had previously won the award,

to other management team members

who do not traditionally work together.

Their results serve as a template for

teams that are established for other

board initiatives.

The most recent project addressed in

this manner is the countywide strategic

plan, which will guide the develop-

ment of strategic plans for key service

areas that are identified by the man-

agement team. The department heads

and other senior leaders were formed

into seven teams. The teams defined

key terms used in the recently revised

and adopted county mission, vision,

and values. The focus areas each team

identified for the countywide strategic

plan included human services, public

safety, education, economic develop-

ment, and community services.

Hanover County has also had a 5-year

financial plan for its general fund since

1989. The plan is an integral part of

the budget process and has been used

as a foundation for initiatives related

to the current fiscal reality as well

as strategic planning (see Exhibit 2).

The departments, finance officers, and

chief administrative officials use the

5-year plan as a basis for budget discus-

sions and as a tool for measuring the

impacts of short-term and long-term

recovery strategies.

INTEGRATED DASHBOARDS

Each department uses integrated

dashboards that show performance

measures, linking results with county

financial and strategic goals, and pro-

vides monthly reports about financial

performance and progress on board

initiatives. The dashboards and other

financial tools and action plans are

posted to the county’s collaboration

system for input and decision making.

Hanover County currently uses more

than 100 collaboration software sites for

financial and strategic goals; one of the

sites financial planning uses is Revenue

Forecasting, which is accessed by the

assessor, commissioner of revenue,

treasurer, and the economic develop-

ment and finance offices. Other exam-

ples are sites the fiscal contacts in each

department use to access and submit

financial information related to grants

management, procurement, financial

reporting, and comprehensive annual

financial reports.

The finance officer is responsible

for establishing models and financial

reporting products that internal cus-

tomers can use for business needs and

external reporting. Many of the models

Hanover County uses are fed by input

from its departments. The county’s

response to declining real estate val-

ues is an example. Enhanced revenue

forecasting models include a dynamic

model for commercial real estate that

summarizes information provided by

Exhibit 2: The Process for Hanover County’s 5-Year Financial Plan

Hanover County5-Year

Financial Plan

Seats at the Table

Elected Officials

Finance Committee

Schools

Regional Authorities

Administration and Staff

Finance Officials

Process Steps

Strategic Plans

Action Plans

Dashboard/Performance Measures

60 Government Finance Review | December 2011

the community development and eco-

nomic development departments, and

the assessor. The commercial real estate

model assumes the estimated commer-

cial value of construction applications

and building permits and estimates

commercial growth based on expected

timelines for completion and tax levy.

Another example is the models used for

training equity, which incorporate data

provided by human resources. The

training equity model integrates the

needs of both the budget and human

resources departments. It divides the

workforce into training bands, with

funding allocations based on the grade

and certification necessary to perform

the job function.

Since financial planning strategies are based on financial policies, Hanover County makes available its financial policies for accounting, audit, fund balance, debt, budget, revenue, and travel. The policies and regulations out-line procedural expectations, but the work by promoting financial steward-ship as a goal for each of the county’s strategic focus areas. The policies are also shared as a best practice with the county’s financial partners in schools, regional jail, and regional library.

FINANCIAL TEAMWORK

The workforce talent and funding reserves from good years, which that talent has made possible, have helped Hanover County make it through the recession. Now, the county also needs to recognize the next phase of this eco-nomic cycle, which will be all about sustainability and using resources to continue the county’s excellence. All of this can be accomplished while preserving key services within existing tax rates.

Because of the recession, the coun-

ty’s workforce will be reduced for the

fourth straight year in fiscal 2013, and

virtually all county and school divisions

will have fewer staff members than

they did just a few years ago. In fiscal

2010 and 2011 combined, the county

and schools have saved $8.1 million in

personnel cost from positions that have

been eliminated or left vacant, and by

maximizing work hours. The county

has used these savings to minimize

service-level impacts, reducing services

only after careful thought and delibera-

tion with staff, elected officials, and the

public. The county also saved money

by buying buildings and office condos

so departments could to move out of

leased space; because of the low inter-

est rate environment, cash and debt ser-

vice funding sources were more cost-

effective than rent payment streams.

An analysis of 10-year trends has shown

that priority-area services accounted

for 82 percent of the increase in the

general fund budgeted expenditures

from 2000-2010. Increases primarily rep-

resent personnel costs resulting from

increased or mandated service levels.

CONCLUSIONS

At 82 percent of the state average, Hanover County compares favorably to its peers on a general government administration cost per capita ratio. County officials realize that the people side of a financial planning framework is not measured by the investment of dollars but by leadership and strategic focus. The county is using strategies that return it to budgets from prior years, along with decreased service levels, but the financial planning framework remains strong under these constraints because the county can rely on an experienced workforce that is engaged in its financial strategies and outcomes. As a result, the entire organization can focus on what is important to the com-munity, supported by departments that effectively collaborate on innovative approaches to work with new eco-nomic realities. y

KATHLEEN T. SEAY is director of finance and management services for Hanover County, Virginia.

Exhibit 3: Menu of Dashboards, Financial Tools, and Action Plans