Nichols Applied Management - Products

By: Nichols Applied Management  09-12-2011
Keywords: financing, Applied Management

Municipal Fiscal Impact Model

The Nichols long-term financial planning model is a fiscal planning tool that simulates future financial conditions of a community over a defined projection period. Financial status is estimated through projections of expected future population and community development, which in turn drives changes in capital and operating expenditures, assessments, and tax rates. The intended application of the model is as a management tool by the community's financial planners to explore potential "what if" scenarios of possible future conditions and changes in policy.

The model was developed using Microsoft Excel for Windows. The model is comprised of a number of worksheets that are linked together in the order in which they will most commonly be used. The model may be applied in a number of different ways. One way is to make predictions from a single simulation. For example, a set of assumptions can be inputted into the model and the resulting impact on expenditures, taxes, and mill rates generated. While this is a legitimate use of the model, the user should be cautioned against undue reliance on the output given the level of aggregation and approximation inherent in the model.

A more effective way of using the model is to compare the results of different "runs" of the model employing varied assumptions. This method is the preferred and recommended usage, because it is not affected to the same extent by errors resulting from inaccurate assumptions. Examples of using the model to compare different "runs" employing varied assumptions could reflect a comparison of alternative service levels, the impact of a major development, slower population growth, higher than expected capital costs, or changes in financing approaches.

Nichols Applied Management has applied the model on behalf of a number of municipalities. Some customization of the model may be required to meet the specific circumstances and needs of the jurisdiction and the model must be calibrated using historical and current financial and operating data. The firm provides training in the use and updating of the model.

Keywords: Applied Management, financing,

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