Page 83 - Southlake FY24 Budget

Environmental Factors affect localities in two ways. Firstly, they create demand. Secondly, they provide
resources. The question most associated with the analysis of this category in regards to its impact on
financial condition is, “Do these factors provide enough resources to pay for the demands they create?”

Organizational Factors are the government’s response to changes in environmental factors. Theory
assumes that any government can maintain their strong financial condition if it makes an appropriate
organizational response to adverse conditions by reducing services, increasing efficiency, raising taxes, or
taking some other appropriate action. It also assumes that public officials have perfect information of the
problem, understand the gravity of the situation, and know how to act in response. City Profile

The question most associated with the analysis of this category in regards to its impact on financial
condition is, “Do legislative policies and management practices provide the opportunity to make the
appropriate response to changes in the environment?”

Financial Factors reflect the condition of the government’s internal finances. They are in some regards a
result of the influence of environmental and organizational factors. Financial factors will eventually show
signs of cash or budgetary problems if there is a problem in regards to the previous two factors. The
question most associated with the analysis of this category in regards to its impact on financial condition
is, “Is government paying the full cost of operating without postponing costs to a future period when
revenues may not be available to pay these costs?”

Tools of the Financial Trend Monitoring System
The primary tools of the FTMS are the financial indicators. They represent a way to quantify changes
in the FTMS factors. Many aspects of financial condition cannot be measured explicitly; however,
quantifying the indicators and plotting them over a period of years can allow decision-makers to monitor
and evaluate the City’s financial performance. These indicators do not provide answers as to why a
problem occurs or how to solve it but do allow for an informed response. The following pages include
a number of charts displaying indicator data that is designed to track the financial condition of the
City across a period of time. These charts examine data ranging from population growth to the use of
revenues and expenditures per capita, all of which help to identify warning signs in the City’s fiscal health
that could lead to future trouble. By keeping an eye on these important indicators, the City can carefully
monitor the financial trends, and make any necessary adjustments in long-range planning to ensure future
economic stability.

How is the Financial Trend Monitoring System used?
The City maintains a database of monitored trends that are updated and reviewed annually as a part of
the budget process. By reviewing historical actuals over an extensive period of time, long ago forgotten
financial impacts may be reviewed for validity to current economic conditions and variables. Department
staff also utilizes FTMS data to inform their departmental business plans.

FY 2024 City of Southlake | Budget Book 83