Article Features by Melissa Kuehne

Finance Advisory Committees: Tips and Traps

Melissa Kuehne is communications and development manager for the Institute for Local Government; she can be reached at

In today’s environment of the 24-hour news cycle, social media and “fake news,” cities throughout California are working hard to engage their communities and strengthen trust in local government. Residents increasingly question decisions made at all levels of government — particularly those related to use of taxpayer dollars and financial decisions. To help address such concerns, many cities are turning to finance advisory committees. 

These committees, composed of community members, aim to increase city government transparency and build accountability. Including the community in the decisionmaking process beyond participating in elections and city council meetings helps people better understand the types of decisions made at the local level, the trade-offs to consider and how city councils arrive at final decisions. 

“Involving residents in meaningful, inclusive and responsive ways benefits the city and the community alike,” says Tony Dahlerbruch, city manager of Palos Verdes Estates. “Advisory committees can serve as a conduit between the city and community, which leads to increased transparency and trust.” 

Avoiding Unintended Consequences: Issues to Consider

Finance advisory committees can yield many benefits, but they can also generate unintended consequences if not carefully designed and managed. Without clear direction and strict oversight, a city runs the risk of the finance advisory committee duplicating staff work and challenging the governance and authority of the city council. Such committees are most effective when they are a conduit for residents serving in an advisory capacity to the city council to share opinions and offer recommendations — and least effective when they duplicate the efforts of the city’s finance director and Finance Department.

Committees that duplicate efforts can also create competing priorities for staff. When the committee’s purpose and tasks are not clearly articulated, cities run the risk of committee members attempting to direct staff and drive projects. This potentially puts staff in an awkward situation where the committee issues directions that conflict with council-adopted goals and priorities and/or the directions of executive staff. 

The amount of staff time needed to manage the committee is another consideration. It’s likely that staff will need to respond to questions and requests from committee members and provide support for additional public hearings and meetings. Depending on the number of meetings and the committee’s needs, this can significantly strain already stretched city staff. 

Another problem can arise if the committee is given the authority to develop or recommend a budget because the committee may reach a conclusion that differs — perhaps radically — from the direction that the council deems to be the best option. This creates conflict between the council and the committee and, by extension, the residents of the community. In such a situation, if the council opts not to follow the committee’s direction, it can undermine the chances of achieving the primary goal of increasing trust between the city and community. 

Best Practices

To avoid these potential pitfalls, cities can take the following steps. 

Articulate a clear mandate from the city council about the committee’s mission and role in the decisionmaking process. This can avoid “mission creep” and support the efforts of staff and the council to keep the committee — as a whole and its individual members — focused and on task. 

Set clear roles and responsibilities. Providing clarity to committee members on their charge and the decisionmaking process is critically important. Committees are not in place to direct staff, duplicate staff efforts or make final policy or operational decisions. Their purpose is to serve in an advisory capacity to the city council, which in turn makes final policy decisions. If a committee crosses the line into the operations, activities and recommendations that are the responsibility of the council or staff, the council risks unintentionally abdicating its role, losing control and creating unnecessary controversy.

Adopt a standing committee resolution or code of conduct for the committee.
This helps formalize the committee’s role and responsibilities and provides a mechanism for staff and the city council to keep the committee on track.

Provide training and/or orientation for new committee members. Standing committees are subject to the Ralph M. Brown Act. Thus, it may be wise to provide training to committee members on the laws governing open meetings, AB 1234 ethics education and/or conflicts of interest. City officials may also want to consider conducting an orientation for new committee members that covers:

  • The role and responsibilities of the committee;
  • Applicable city ordinances and ethics laws;
  • Adopted codes of conduct; and 
  • Staff or council contacts. 

It may also be helpful to consider any unique qualifications and subject-matter knowledge or expertise that may be needed on the committee and to seek those skills in the recruitment process. When recruiting members for a finance advisory committee, the city may require applicants to have finance, investment or banking experience; however, such private-sector experience differs significantly from public-sector finance, and committee members will still require training and oversight.

“The City of Los Altos Hills provides training and orientation for all new committee members and has adopted a code of conduct for all appointed commissioners and committee members,” says Carl Cahill, city manager for Los Altos Hills. “This allows us to manage expectations and work more collaboratively with our advisory committees.” 

Appoint a city council and/or staff liaison. This individual can report back to the city council and/or executive staff, answer questions for the committee and help keep the committee focused on its mission. 

Clearly delineate the level of committee staff support to be provided. Make certain that adequate staff support will be provided for the advisory committee and be specific about the limits of such support.

Have a sunset provision or regularly review the committee’s purpose and mission. If the committee has a narrow scope of duties, it may be appropriate to limit how long the committee exists. Periodically reviewing the purpose or mission of a standing committee is also advisable. Has its charge been accomplished? Is its purpose still relevant or does it need to be re-examined?

Taking the Long View

“In general, it’s good to have more community participation in local government through advisory committees and other means,” says Rod Gould, retired city manager of Santa Monica. “However, problems arise when the committees aren’t provided the necessary training, clarity of direction, support and oversight to complete their mission or goals.” 

When carefully executed and properly functioning, finance advisory committees can build trust in local government, help a city understand the community’s values and priorities and foster leadership development. 

Cities also employ other means of engaging residents on fiscal matters. The Institute for Local Government offers a number of resources to help local governments successfully involve their communities in budgeting and finance issues and plan productive public meetings. See “Tools to Engage Your Community in the Budgeting Process” on page 9 for tips and approaches to that engagement. 

Photo Credit: Erhui1979.