Financial Policies: Travel, Expense Reimbursement, Credit Cards, and More

Financial management of public resources is serious business. It is an important responsibility of each public agency, and doing it well benefits the agency itself, its employees, and the community it serves. To that end, MRSC has partnered with the State Auditor’s Office (SAO) Center for Government Innovation to expand the Financial Policies Tool Kit we first launched two years ago.

We have just published new guidance on Credit Card Use Policies and Travel and Expense Reimbursement Policies (including guidance on meals), in addition to our previous guidance focusing on asset management, cost allocation, debt, fund balance/reserves, and investments. Each page provides detailed information, legal requirements, and “key questions to consider” to help your jurisdiction formulate the right policy for its unique values and needs. We have also included a number of sample forms from cities, counties, and special purpose districts, including travel authorizations, expense reimbursement forms, and lost receipt affidavits.

I often say, “financial policies actually already exist.” Ideally, they are thoughtfully and carefully developed and then adopted by the agency’s policymakers. If not, then they are informal and just “the way we’ve always done it.” By discussing, debating, and then adopting a policy, the agency’s policymakers can be intentional about defining the limits and/or methods for managing the public’s resources.

Some policy topics are essentially mandatory. For example, in order to implement a credit card use program, the first step (according to RCW 43.09.2855) is for the local government legislative body to “adopt a system;” or in other words, establish a policy. Most policies, however, are just good public management. For example, how much money should be kept on-hand in the event of something unforeseen? We call this “fund balance” or “reserves.” By discussing the merits of one approach or another (number of weeks of typical expenditures, a certain percentage of annual revenues, etc.) and then adopting a policy, each budget process can use that guidance without further complicating an already challenging responsibility.

How to Decide What Policies to Develop or Review

Start by reviewing the MRSC Financial Policies Tool Kit. The topics we chose to provide guidance on come from our own research regarding the inquiry topics we’ve received, as well as research by SAO staff on the issues they’ve discovered through their audit work.

Pick out a topic that seems most important to your particular organization and start there.

If you have existing policies, consider creating a schedule to review them and keep them current. A change in elected officials may have resulted in some changes in opinions about certain policy topics. One approach I’ve used is to review the list at the beginning of each budget cycle with the elected officials. It is a quick way to determine which policy they may have an interest in reviewing and remind everyone that these policies exist.

I always liked to listen to the discussions that were occurring at the council meetings (in my case it was a city council, but it could be a commission meeting or a board of directors). Did the conversations get into an area where a policy already existed? Were they aware of the existing policy and how it may help them with the current discussion? Was the discussion consistent with the existing policy? Take this opportunity to bring up the existence of a policy on the subject. You can suggest they either follow the policy (and benefit from the previous thinking), change the policy (if the latest issue seems to suggest that is appropriate), or intentionally deviate from the policy because the circumstances warranted it.

How to Get Started

After deciding which policy topic to start with, review our research and policy guidance. It is based on years of experience in a wide variety of settings as well as research of best practices. Here are some “getting started” suggestions:

1. Staff and policymakers agree on which policy topic to start with. Since we recommend that policies be adopted by the elected officials, it will be important to start with those topics that they see as the highest priorities.
2. Staff develops an initial draft of the policy. We have provided numerous example policies from a wide variety of entities. They have been reviewed for completeness, being current, and adhering to best practices. However, don’t just copy them — Instead, use them to help prompt your thinking about the best approach in your organization. Mark them “draft” so that you don’t confuse anyone as to their status at this point (and so as not to give the impression to elected officials that you’ve already made the decisions).
3. Schedule a study session, workshop, or whatever type of meeting is more informal for your elected officials to review the drafts. Be sure to get them copies well ahead of the meeting so they have the opportunity to review prior to the discussion. Facilitate the discussion about the options and choices that your elected officials will want to discuss.
4. Bring back a “final” version to a business meeting of your elected officials for their final consideration and adoption. In my case, since it was policy guidance, these policies were adopted by resolution at the city. Use whatever form of policy adoption is consistent with your organization. Be sure the think about how to maintain and provide access to the current versions of policies within your organization. Increasingly, this access can be found on a local government’s “intranet,” where members of the organization have access to it. You can also post policies on your agency's public-facing webpage(s).

Adopting financial policies helps to advise the organization and the community you serve that you take these matters seriously. Policymakers should adopt policy. The investment of time and effort will pay dividends for years to come.

To view all of our financial policy guidance in one place, visit MRSC’s Financial Policies Tool Kit.