ADURA
Budgeting and the Anishinabek Nation Fiscal Agreement
- Jide Afolabi
The Anishinabek Nation Fiscal Agreement (ANFA), specifically clause 4.5, commits each signatory First Nation to maintaining a system of program and financial accountability that is consistent with standards generally accepted for governments and public institutions.
In the broadest of terms, that would mean the passing of a Financial Administration Law, as well as the adoption of various policies and practices that strengthen financial operations.
One such practice concerns the preparation of annual budgets.
In the broadest of terms, that would mean the passing of a Financial Administration Law, as well as the adoption of various policies and practices that strengthen financial operations.
One such practice concerns the preparation of annual budgets.
In fact, sub-clause 4.6(c) of the ANFA commits signatory First Nations to creating “annual budget estimates of revenues and expenditures”.
1. The Financial Management Board
The First Nations Financial Management Board (FMB) has been supporting First Nations in undertaking the work of good fiscal administration for almost two decades.
In fact, the realization of the fiscal administration objectives of the ANFA dovetail rather nicely with the work of the FMB, such that the FMB’s substantial array of tools can be adopted in order to fulfill the objectives set out in the ANFA.
In fact, the realization of the fiscal administration objectives of the ANFA dovetail rather nicely with the work of the FMB, such that the FMB’s substantial array of tools can be adopted in order to fulfill the objectives set out in the ANFA.
As a result, a First Nation that has undertaken or is undertaking the defined steps set out by the FMB is ahead of the curve on the implementation of the fiscal objectives of the Anishinabek Nation Governance Agreement - and without any penalty such as a reduced fiscal offer to account for prior adoption.
2. Your Financial Administration Law
Of the many tools made available by the FMB, a key one is the template Financial Administration Law, which includes provisions on budgeting.
At its simplest, a budget would simply identify anticipated revenues as well as anticipated expenditures.
Both revenues and expenditures would be segregated into significant categories.
For example, revenue from a different government - such as Canada - for health programming could be one significant category, while revenue from a joint venture with a solar panel manufacturing company could be another significant category.
A budget would also project a surplus or a deficit for the upcoming fiscal year.
At its simplest, a budget would simply identify anticipated revenues as well as anticipated expenditures.
Both revenues and expenditures would be segregated into significant categories.
For example, revenue from a different government - such as Canada - for health programming could be one significant category, while revenue from a joint venture with a solar panel manufacturing company could be another significant category.
A budget would also project a surplus or a deficit for the upcoming fiscal year.
Over the course of that fiscal year, it would be important to ensure that actual expenditures fit within the categories set out in the budget.
3. Council's Responsibilities
The FMB’s template law ascribes significant responsibilities to Council with regard to the financial administration of a First Nation.
Thus, Council is responsible for budget approvals, and for adjustments to budgetary amounts, which are limited to extraordinary circumstances that lead to unexpected changes in revenues or expenses.
Additionally, for those times in which a draft budget projects a deficit, Councils must ensure that the long-term or multi-year financial plan of the First Nation outlines how and when the deficit will be addressed.
By way of a related responsibility, Council must plan appropriately to ensure the deficit does not harm the credit-worthiness of the First Nation - that is, that it does not result in increased borrowing costs or a disqualification of the First Nation from future loans or grants.
Further, Council is responsible for the creation of laws, policies, and procedures to ensure, among other matters, that citizens of the First Nation can access budgetary and other financial information.
Thus, Council is responsible for budget approvals, and for adjustments to budgetary amounts, which are limited to extraordinary circumstances that lead to unexpected changes in revenues or expenses.
Additionally, for those times in which a draft budget projects a deficit, Councils must ensure that the long-term or multi-year financial plan of the First Nation outlines how and when the deficit will be addressed.
By way of a related responsibility, Council must plan appropriately to ensure the deficit does not harm the credit-worthiness of the First Nation - that is, that it does not result in increased borrowing costs or a disqualification of the First Nation from future loans or grants.
Further, Council is responsible for the creation of laws, policies, and procedures to ensure, among other matters, that citizens of the First Nation can access budgetary and other financial information.
The ANFA goes further in stipulating that - as is similar for other governments in Canada - the budget, along with the end-of-year financial statements of the First Nation, be publicly accessible via the internet. That is already the case for many First Nations.
4. New Thinking
Budgeting is, of course, not new for First Nations.
What may be new in some instances is the requirement to see the budget in a new light - as a process undertaken pursuant to the law of the First Nation itself.
What will also be new, in light of the flexibility of the funding accessible through the ANFA, is the ability to exercise a greater degree of discretion within the budgetary process.
Signatory First Nations are able to decide on both the design and the quantum of funding of programs covered by the Anishinabek Nation Governance Agreement, as well as programs indicative of the First Nation's priorities.
What may be new in some instances is the requirement to see the budget in a new light - as a process undertaken pursuant to the law of the First Nation itself.
What will also be new, in light of the flexibility of the funding accessible through the ANFA, is the ability to exercise a greater degree of discretion within the budgetary process.
Signatory First Nations are able to decide on both the design and the quantum of funding of programs covered by the Anishinabek Nation Governance Agreement, as well as programs indicative of the First Nation's priorities.
Budgets put together for the incremental realization of the objectives of a First Nation, rather than simply to fit within the program parameters of external funders, can be a powerful developmental tool.