Fiscal Indicators

Fiscal indicators help measure and describe prospects for fiscal health. Indicators can flag trends that warrant further evaluation and planning to avoid potential service reductions and declining reserves.

Assessing Financial Stability and Future Sustainability

The OC LAFCO Fiscal Indicators Program houses the financial data of Orange County’s cities and special districts and is intended through three key indicators (revenues, expenditures, and reserves) to depict their fiscal health. The Program is one of the key tools used by OC LAFCO in its conducting of MSRs.

To view the indicators for a city or special district, please use the drop-down access below.

fiscal indicators icon 01 - annual change in revenues
Annual Change in Revenues

Compares revenue growth to long-term inflation (historically about 2-3%) – Low revenue growth below inflation indicates a potential long-term problem keeping pace with inflationary cost increases. Declining revenues can be a symptom of the pandemic and/or weakening economic conditions.

oc lafco how fiscal indicators icon 02 - annual change in expenditures
Annual Change in Expenditures

Compares expenditure growth to long-term inflation. Expenditure growth consistently above inflation and/or above revenue growth indicates a potential structural imbalance and potential future revenue shortfalls. Excessive expenditures could require reserve drawdowns and service reductions.

oc lafco how fiscal indicators icon 03 - adequate operating reserves
Adequate Operating Reserves

Compares reserves that typically provide at least two months of operating funds (i.e., 16.7% of annual expenditures). Reserves are essential to manage cash flow during the year, handle contingencies and emergencies, provide a “rainy day” account for future economic downturns, and assure funding for asset repair/replacement and expansion of facilities and infrastructure. Absent reserve accounts, other metrics include unallocated fund balances or unrestricted net position as reported by agency audits. “Cash” does not always indicate unencumbered funds available for cash flow and contingencies. Additional reserves are usually required for capital improvements, pensions, and other purposes.