Financial Sustainability Index

The Financial Sustainability Index is a companion document to the Financial Sustainability Framework. Both the Framework and the Index are built around six Leadership Strategies and eight Institutional Design Principles that underpin a financially sustainable local government. Our research identified fiscal stress as a long-term continuing issue for government. The Framework and Index are tools that local government can use to achieve their policy goals while dealing with this long-term condition. The Framework described, in detail, the Strategies and Principles, as well as tactics that governments can employ to put them into practice.

The Financial Sustainability Index can be used by local government leaders to start a conversation with people inside and outside of the government about how well the government is doing in building and maintaining a governance and decision-making system that produces financially sustainable choices. The objective of the Index is to help the people with a stake in the ongoing financial health of their government discuss how better, more sustainable financial decisions can be made—the objective is not to render a judgment on the financial quality of the government. Of course, governments with better governance and decision-making systems could still experience financial difficulties, but an array of case study and experimental evidence suggests that such governments are less likely to experience financial problems or will at least be able to solve those problems more effectively. You can read about these experiments and case studies in the Financial Sustainability Framework.