Cost-Saving Ideas: Capital Planning for Local Governments and School Districts

To effectively manage your local government’s capital assets, you must develop a long-term plan. The plan should address how you monitor and maintain assets and how much you can spend within your budget.

By developing a structured approach for assessing and funding capital assets, you can help avoid the unexpected, such as sudden road or building closures or cost overruns.


Benefits of Capital Planning

Multiyear capital plans allow you to:

  • Document procedures to help guide management in decision making;
  • Establish priorities and determine infrastructure needs;
  • Determine the cost effectiveness of maintaining existing assets versus acquiring new assets;
  • Develop a structured approach for making decisions to fund capital assets;
  • Identify which assets need attention in any given year; and
  • Inform the public and solicit input on future capital projects and purchases.

Developing a Capital Plan

When developing a long-range capital plan, you should think about these questions:

  • Who will be responsible for overseeing the plan's development and implementation?
  • How will an asset inventory and requests for capital assets be developed for the plan?
  • How many years should capital needs be projected?
  • Will property (such as buildings, land, vehicles and equipment) need to be acquired, constructed or reconstructed?
  • Who will be involved during the plan's development (for example, board members, department heads, the general public, special interest groups)?

After answering these and other questions, you should create a multiyear capital plan that details when and how capital purchases will be made and paid for. The plan should include:

  • An inventory of assets your municipality owns;
  • Identification of the new capital assets needed;
  • The priority in which assets are to be acquired, replaced or repaired;
  • Estimated costs of acquisition, replacement or repair;
  • The method by which assets will be financed; and

Together with your governing board, you should review the plan annually as a part of your budget process and make necessary adjustments, and monitor plan results over time to determine how well goals and objectives are being achieved.


Funding Capital Assets

Funding for capital projects can come from any combination of state or federal sources, local funds or the proceeds of debt.

State and federal funding sources include grants and low interest loans. Local funding sources include fund balances, reserve funds, annual budget appropriations and private sources such as gifts and donations.

For projects funded through borrowing, principal and interest payments must be budgeted each year.

Also, remember to consider the annual budgetary impact of capital acquisitions, some of which will require extra expenses such as wages, supplies, maintenance and insurance. Others may result in cost savings, such as lower maintenance or energy costs for replacement equipment, or revenue generation from user fees.


Legal Requirements

The financing and procurement of capital assets must be done in accordance with New York State statutes.

See our Legal Requirements page to find specific sections of the law related to capital asset management.


More Information

Our office has created several management guides that contain further information on capital assets and planning:

Updated 2016