Government of Nova Scotianovascotia.ca
gov.ns.caGovernment of Nova Scotia Nova Scotia, Canada
 
Municipal Affairs
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Frequently Asked Questions

  1. How were the municipal indicators developed?
  2. Why combine financial, demographic, and administrative indicators?
  3. Where does the data come from for both the municipal indicators and FCI?
  4. Why did some of the indicators changed?
  5. Why did some of the thresholds changed?
  6. How can I best use the Indicators?
  7. A number of the indicator scores for my municipality are green. Does this mean the Municipality’s financial health is strong?
  8. A number of the indicator scores for my municipality are red. Does this mean they are bankrupt?

How were the municipal indicators developed?

The municipal indicators were developed in 2002 as a joint project between the Province of Nova Scotia, the Union of Nova Scotia Municipalities (UNSM) and the Association of Municipal Administrators (AMA). The Financial Condition Index (FCI) is a result of further development by this partnership. 

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Why combine financial, demographic, and administrative indicators?

Both set of indicators together can provide a starting point for a more in-depth analysis of specific result or trend. For example, demographic factors can be helpful in further understanding certain financial indicator trends. Combining the set of indicators helps residents understand how their community is changing and the broader impact of this change.

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Where does the data come from for both the municipal indicators and FCI?

Every year municipalities submit financial information returns (FIR) and audited financial statements to the Province of Nova Scotia. The FIR is the main information tool used by the Department of Municipal Affairs to collect financial and statistical information. Most of the data for the indicators comes from the FIR report. The indicators also use data obtained from the Property Valuation Services Corporation, and Statistics Canada, as well as budget information provided by the municipality. Ensuring the accuracy of the data for comparative reporting takes time as DMA has to examine and verify the data provided is accurate prior to calculating the individual indicators.

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Why did some of the indicators change?

Measures will evolve over time, and it is a best practice to review your indicators to ensure you are maintaining a relevant set of measures.

DMA made a commitment that, after five years, the Financial Condition Indicators would be reviewed with the goal of enhancing the effectiveness, reliability and use of the indicators. The review noted high satisfaction and consistency with best practice. To improve on the effectiveness of the measures, municipal stakeholders made a few recommendations for improvements to formulas for calculating the required indicators. The recommended changes were implemented in this reporting year (2015-2016). Only five measures were modified or replaced.

  • The Combined Reserve Indicator replaced the prior 5-Year Contribution to Capital Reserves and 5-Year Capital Purchases indicators;
  • The Outstanding Operating Debt Indicator replaced the prior Outstanding Debt Indicator;
  • The prior Commercial Property Assessment Indicator was removed; and
  • There were minor changes in the calculation of the Debt Service and Operating Reserve indicators.

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Why did some of the thresholds change?

Thresholds also will evolve over time, and it is a best practice to review your thresholds to ensure you are maintaining consistency with jurisdictional and industry standards.

DMA made a commitment that after five years the thresholds would be reviewed with the goal enhancing their relevance. Changes were made to make the thresholds more meaningful and consistent with other jurisdictions.

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How can I best use the Indicators?

The reports provide municipalities with a common set of indicators. These indicators take complicated issues and concepts, and presents the information in a highly-summarized fashion. The Indicators provide valuable information as part of ongoing dialogue on broad concepts such as financial health and demographic changes. The data can help provide insight into how a community it is changing, as well as its ability to meet existing and future financial obligations.

The Indicators can increase awareness and knowledge of municipal performance among citizens, and strengthened public accountability. The indicators can enhance elected officials’ and administrators’ understanding of their own progress as municipalities can compare their results year-over-year or with the results of other municipalities. However, the indicators should not be looked at in isolation, as key details may not be included.

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A number of the indicator scores for my municipality are green. Does this mean the Municipality’s financial health is strong?

Green indicators represent situations where the municipality has been assessed as being low risk. The Indicators are designed as an early warning sign and provide a quick financial snapshot for each municipality. The assessment of the indicators is meant to be a catalyst for further discussion and analysis. It is not meant to be a comprehensive assessment of performance for a municipality.

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A number of the indicator scores for my municipality are red. Does this mean my municipality is bankrupt?

No. The FCI is simply a tool to provide a snapshot of a municipality’s financial indicators, and should be the starting point of a discussion rather than a final judgment. It is not a replacement for a professional financial audit, and can only point to potential high risk areas where further investigation might be required. The Indicators are designed as an early warning sign and provide a quick financial snapshot for each municipality. It is not meant to be a comprehensive assessment of performance for a municipality.

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