Government Finance Officers Association Research Articles

Budgeting System and Economic Development Outcomes

Although public budgeting is considered one of governments’ most crucial policy statements for economic development outcomes, scholarly works that explain the linkages between the two are scant. Drawing on the budgeting system for theoretical context, this article examines the perception of local administrators on the effects of three budgeting practices—planning, budgeting, and evaluation —on economic development outcomes. It utilizes survey data from the ICMA’s 2014 Economic Development Survey and U.S. Census Bureau and logistic regressions to examine the determinants of four economic development outcomes—tax base, job creation, quality of life, and environmental sustainability. The results show that planning impacts sustainability, budgeting influences tax base, environmental sustainability, and job creation. Lastly, evaluation has consequences for the quality of life, tax base, and job creation. The study emphasizes how differing perceptions of budgetary practices shape economic development outcomes, highlighting the necessity of a system approach. It identifies critical leverage points within the budgeting system, where targeted actions can significantly influence multiple economic development outcomes. The study contributes to the Government Finance Officers Association’s (GFOA) Best Practices for economic development.

Bridging the Divide

The creation of Public Finance Journal (PF) is the culmination of several years of discussion about how best to address the divide between practitioners’ research needs and academic scholarship. PF’s origin is predicated on the expectation that for a professional discipline such as public administration and the subfield of public budgeting and finance, in particular, there needs to be an easily accessible forum for the dissemination of ideas and solutions. This journal would not be possible without the support of the Government Finance Officers Association, the oversight committees, the editorial board, and those helping with the journal’s management. We are excited about the inaugural edition, where we have reviews of three important books, three thought-provoking research articles, and an article that surveys current research needs in the budget and finance field as expressed by faculty and practitioners.

Flawed charts in pension fund popular reports

PurposeThe purpose of this study was to investigate how pension funds use charts in popular reports. Popular reports communicate a fund’s financial health to non-technical audiences, and often contain charts, tables, and other graphical elements. Do these graphics meet audiences’ information needs and align with chart best practices?Design/methodology/approachThis study focused on the 60 retirement funds receiving a 2021 popular report award from the Government Finance Officers Association. The author analyzed each graphic’s topic and design.FindingsMost funds presented key topics (such as funding rate and portfolio return), but they generally lacked helpful benchmarks or peer comparisons. A total of 30% of reports had one or more broken charts, where their visual elements did not match the underlying data. A total of 70% of the reports contained at least one badly designed chart. These design flaws included non-zero (truncated) axes, hidden non-zero axes and misleading 3D perspectives.Originality/valueTo the best of the authors’ knowledge, this paper is the first to examine chart quality in pension fund popular reports.

Getting a Grant is Just the First Step: Administrative Capacity and Successful Grant Implementation

This study examines the link between the pace of utilizing the awarded intergovernmental grants and the administrative capacity of recipient government organizations. Past research focused on the relationship between higher administrative capacity and obtaining grants. However, there is a lack of attention to how capacity affects grant funds utilization, which is critical for achieving societal impact. To address this issue, the study analyzes the Coronavirus Relief Fund (CRF) established by the CARES Act to aid state and local governments with COVID-19-related expenses. The study justifies and performs multiple regression analyses using data from various sources, including the U.S. Department of the Treasury, the U.S. Census Annual Survey of Public Employment and Payroll, and the Government Finance Officers Association. The study discovered that financial administrative capacity was positively linked to the proportion of funds spent early in the CRF program rollout, a finding that withstood scrutiny when employing various measures of administrative capacity. However, the connection between capacity and spending tapered off toward the end of the program rollout, potentially due to workload stabilization, increased program clarity from the federal government, capacity-building by recipients, and the use of external experts. The findings of this study carry significant implications for both research and practice, underlining the necessity of studying the implementation stage of government grant programs and investing in building administrative capacity within recipient organizations.

Copy Once or Twice? Isomorphic Pressures and Special District Fiscal Reserves

Both general purpose local governments and special districts accumulate and drain fiscal reserves to prepare for and respond to financial uncertainty. Whether or not fiscal reserves behavior are subject to isomorphic pressures is an emerging question in the literature. While multiple papers have provided evidence of a single isomorphic pressure, no paper has separately tested for three distinct isomorphic pressures in the fiscal reserves literature. With a panel dataset of Kentucky school districts from 2004 to 2019, this article uses descriptive and inferential methods to provide evidence of coercive, normative, and mimetic isomorphic pressures. Collectively, these findings not only build the literature on special districts but call into question the role of normative pressures from the Government Finance Officers Association and coercive pressures from state-imposed fiscal reserve rules.

Local Government Forecast Practices: Time Horizon and Budgetary Influence

Over the past thirty years, four surveys have analyzed local government forecast practices, with the most recent being over a decade old. This article builds on the prior surveys with a novel 2018 survey dataset from the Government Finance Officers Association to examine the factors related to the adoption of a particular forecast time horizon and the perceived influence of forecasts on the final adopted budget. Estimates of ordered logistic regressions with predictive margins indicate that certain budget processes and the length of time since a government adopted a new budget process are associated with forecast practices.

지방정부 형태가 재무정보공개에 미치는 영향분석: 미국지방정부 사례를 중심으로

미국의 지방정부는 시장-의회 정부형태가 독점적 지위를 누리고 있는 우리나라와 달리, 지역주민들이 자신들의 의사에 따라 여러 가지 정부형태를 선택할 수 있다는 독특한 특징을 지니고 있다. 본 연구는 미국의 대표적인 지방정부 형태(form of government)인 시장-의회(mayor-council) 형태와 의회-매니저(council-manager)형태가 지방정부의 재무정보 공개 수준에 미치는 영향을 분석하였다. 이를 위하여 본 연구는 미국 지방정부의 정부형태를 독립변수로 설정하고, 지방정부의 재무공개수준을 나타내는 변수로 Government Finance Officers Association(GFOA)의 재무정보공개 프로그램 인증서(Certificate of Achievement for Excellence in Financial Reporting Program)의 획득 여부 및 누적 개수를 종속변수로 설정하여 로짓과 음이항 회귀 분석을 실시하였다. 분석 결과, 시장-의회 정부형태는 의회-매니저 정부형태에 비해 정부의 재무정보공개 수준에 음(-)의 영향을 미치는 것으로 나타났다. 또한, Nelson과 Svara(2010)가 제시한 일곱가지 정부형태 분류법에 의해 지방정부를 재분류하여 재무공개 수준에 영향을 미치는 요인을 분석했을 때, 의회-매니저 정부형태 하의 시장 선출방법이 재무공개 수준에 유의미한 영향을 미치는 것으로 나타났다. 이러한 분석 결과는 미국의 시장-의회 정부형태와 동일한 정부형태를 가진 우리나라 지방정부 구조에 정책적 시사점을 제시하며, 지방자치법 전부개정안의 통과로 탄력을 받게 된 자치분권에 관한 다양한 논의를 정부형태에 대한 논의로까지 확장해볼 가치가 있다는 점을 함의한다.

The effects of high-quality financial reporting on municipal bond ratings: evidence from US local governments

ABSTRACT While credit rating agencies mention that a government factor is one criterion for assessing municipal bond ratings, current studies on credit ratings offer relatively little evidence as to how the government factor affects municipal bond ratings, compared to socioeconomic and financial factors. By utilising the award of the Certificate of Achievement for Excellence in Financial Reporting Programme of the Government Finance Officers Association as an indicator for high-quality financial reporting, we find that the quality of financial reporting is one important factor that determines municipal bond ratings. We also demonstrate that the repeated actions of providing high-quality financial reporting are valuable for municipalities by enhancing market credibility and thus improving ratings. The positive impact of high-quality financial reporting is greater for municipalities which have just begun to give a signal of providing transparent financial information to the market than municipalities which have already built market credibility for a long time.

Self-Report Accuracy in Local Economic Development Programs

Local economic development programs are primarily aimed at increasing employment and tax revenues. Data on these programs are collected through self-report surveys conducted by the International City Managers Association and others. This study evaluates predictors of accurate self-reporting. Using agency theory as a theoretical framework, the study measures the quantity of internal reporting components and the quality of financial reporting and evaluates how these are associated with accurate self-reporting. As a control, the condition of the local economy is also evaluated. The findings indicate a statistically significant relationship between the quality of financial reporting and the strength of a local economy with accurate self-reporting. Recommendations to improve research in this area are for the Government Finance Officers Association and the International City Managers Association to work together, with the former creating standards for reporting on local economic development programs and the latter aligning its survey with these standards.

Financial information transfer in municipal government

PurposeThe purpose of this paper is to investigate how trust, honesty and transparency impact the willingness and timeliness of communicating financial information between Government Finance Officers (GFOs) and members of the municipal boards they serve.Design/methodology/approachSurvey data was collected from professionals who work with municipalities to ensure government resources are properly managed. Nonparametric local-linear regression was used to analyze the data.FindingsEvidence suggests that trust in the board, GFO preference for honesty and greater transparency of the municipality influence the timeliness of communication. There is evidence that when the GFO and board members have a working relationship built on trust and the GFO has a preference for honesty, the GFO is more willing to share positive information with the board. In addition, there is evidence that with greater transparency and trust in the board, there is a reduction in the time of sharing positive information in situations where there is little discretion in disclosing and less willingness to share information.Research limitations/implicationsA principal limitation of this study is the small sample size. In addition, the study was conducted using only participants from the pool of members of the Government Finance Officers Association of Texas. As an exploratory study, the survey included a minimal number of questions to gather data from actual GFOs and included only six possible scenarios. The time constraint resulted in a reduced number of questions related to the models used. Other limitations include the potential of missing variables, factors or perceptions related to scenarios not presented in the survey instrument.Practical implicationsThe findings suggest that with greater transparency, there is less time between the event and the GFO communication to the board providing the opportunity to improve the effectiveness of the decision-making process.Originality/valueThis study is the first to explore the effects of increased transparency on the level of communication between the GFO and the board.

The Effects of Tax and Expenditure Limitations (Tels) on Municipal Fiscal Outcomes during A Period of Fiscal Distress

We propose to expand the theoretical understanding of cutback strategies by investigating the effects of institutional constraints on fiscal outcomes during a period of severe fiscal distress. To test our research hypothesis, this study focuses on a cross-section of municipalities throughout the U.S. during and shortly after the 2008–09 recession. Using multiple data sources from the Government Finance Officers Association (GFOA) and American Community Survey (ACS), we employ a panel data from 2008 to 2011 which covers the period of the Great Recession to best capture cutback strategies during a period of severe fiscal distress. We observed differences in fiscal outcomes based on the severity of the municipal TELs. Municipalities constrained by more stringent TELs received more intergovernmental aid, incurred higher debt service expenditures and experienced less net capital investment during the most recent recessionary period. These findings support the argument that TELs, which are often neglected in discussions of cutback strategies, should be given greater consideration. This study helps shed light on the theoretical and empirical investigations of cutback strategies by offering the concept of institutional constraints and its impact on cutback strategies.

A Glimmer of Optimism in Government Savings Accumulation? An Empirical Examination of Municipal Unassigned Fund Balance in Florida

Few would question that the Great Recession and its aftermath have proved challenging for government financial management. This depressed economic environment has renewed interest in research involving the accumulation and use of the unassigned fund balance. In this study, we use data on Florida cities to examine the factors affecting the unassigned fund balance before, during, and after the Great Recession. According to our findings, building and maintaining savings at high levels have become routine for Florida cities, irrespective of their government form and the economic conditions they face. This research also provides evidence that Florida cities adapt their savings accumulation strategy, depending on the level of unassigned fund balance they are targeting. As a result, Florida cities consider different factors when accumulating unassigned fund balance above, rather than within or below, the minimum range suggested by the Government Finance Officers Association.

The Efficacy of public Participation in municipal Budgeting: An Exploratory Survey of officials in Government finance officers Association's Award-Winning Cities

Municipal reformers often call for more public participation in the budget process. However, few studies have surveyed the viewpoints of budget practitioners on the efficacy of public involvement in municipal budgeting. In this paper, we report a survey administered by e-mail to budget directors in cities that won the Government Finance Officers Association's (GFOA) distinguished budget presentation award in 2011. The survey is based upon the research of Berner (2004) and the theoretical framework developed by Ebdon and Franklin (2006). We find that budget directors in the sampled cities view traditional participation methods, such as the public hearing, as the most effective, compared to more interactive and participatory methods. This viewpoint stands in contrast to the scholarly literature's normative arguments and empirical evidence that meaningful public input must be solicited early in the budgeting process through interactive methods.

Despite Increasingly Formal Financial Management, Relatively Few Michigan Local Governments Have Adopted Recommended Policies

This report presents findings on the presence and use of formal financial planning and management policies in Michigan local jurisdictions, based on statewide surveys of local government leaders in the Spring 2014 wave of the Michigan Public Policy Survey (MPPS). The survey asked a series of questions about policies that are recommended in order to foster best practices in financial management according to the Government Finance Officers Association (GFOA), a leading non-profit organization that promotes professional management of governments.

Relevance of GASB No. 34 to Financial Reporting by Municipal Governments

SYNOPSIS The Governmental Accounting Standards Board issued Statement No. 34, creating a new accrual-based financial reporting model. This study examines whether information from this model is associated with the default risk (a proxy for fiscal distress) of municipal governments and whether this information is incremental to that provided by the fund-based, modified-accrual reporting model. Ordered logistic regressions are used to analyze financial data from 2005 for a sample of 409 municipalities that participated in the Government Finance Officers Association award program. This study extends the work of Plummer et al. (2007) to municipal governments. In addition to the financial position indicator variable (total net assets/total revenues) examined by Plummer et al. (2007), this study provides evidence of the relevance of three other financial indicators (change in net assets/total net assets; total liabilities/total assets; and current assets/current liabilities). We also find that these accrual-based indicators provide information incremental to the fund-based model and that one fund-based measure (total fund balances/total fund revenues) also provides information incremental to the accrual indicator. These results are consistent with perceptions of regulators and others who expect accrual accounting to be a better measure of the economic costs of running a government than the traditional fund-based model. Data Availability: Contact the authors.

Roles of Public Unions on the Adoption of Economic Compensation for U.S. Government Employees with Disabilities

Do public unions and collective bargaining promote the adoption of disability benefits policy for public employees? Are public employees with disability discriminated against in terms of accommodations and economic compensation, especially disability pension benefits? These questions need to be answered to improve work environments for employees with disabilities. While the numbers of public employees with disabilities have increased due to various reasons, such as legal environment changes(e.g., Americans with Disabilities Act), this study conducted an empirical data analysis using longitudinal PENDAT(pension data) data, which were collected by the Government Finance Officers Association (GFOA) of State and Local Government Employee Retirement Systems in the United States. According to the study results, public employee union representation and collective bargaining in the public sector are positively and significantly associated with economic compensation(i.e., pension benefits) of U.S. government employees with disabilities.

The Uncertain Future Of Accountability Reporting

If governments do not report accomplishments relative to costs, citizens will be uninformed. The Governmental Accounting Standards Board is encouraging Service Efforts and Accomplishments reporting but it is being opposed by the Government Finance Officers Association (GFOA) and others. Analysis, reported here, of performance reports submitted to the Association of Government Accountants for peer review indicates participating governments are effectively addressing most, but not all, of the concerns raised by the GFOA. Future research and innovative practice are needed to facilitate better linking of costs to performance and finding practicable ways to independently validate cost and performance claims.

Less is more: exploring citizen-based financial reporting in local government

The purpose of this exploratory research is to identify key motivations, administrative costs, and instrumental benefits of translating data-rich budgets into user-friendly reports for citizens. This research draws from interviews with chief financial officers in local governments that are recognized by the Government Finance Officers Association for preparing additional financial reports that appeal to a citizen-based audience. Candid discussions and thoughtful reflections of respondents demonstrate that chief financial officers play a leading role in determining the style and extent to which financial information is communicated to external audiences. The research suggests that adopting this form of financial reporting, however, does not necessarily have an impact on citizen participation in the budget process. Recommendations from the point of view of the research participant are presented for practitioners interested in implementing citizen-based financial reporting. The research concludes with a discussion of the state of practice of citizen-based financial reporting of the research sample and areas for future study.

The Government Finance Officers Association

The Government Finance Officers Association

E-Government as an Instrument of Fiscal Accountability and Responsiveness

Fiscal transparency and citizen participation in budgeting processes are widely promoted as means toward the ends of democratic accountability and responsiveness in the allocation and use of public funds. In the past decade, academics and practitioners enthusiastic about e-government have emphasized the potential for using information technology to enhance democratic governance. Putting these two streams of public administration theory and practice together, the authors developed criteria for assessing e-budgeting efforts and applied them to a sample of Web sites operated by state and local governments. Although practitioners are ahead of academics in exploring the potential of e-government for improving fiscal accountability and responsiveness, practice lags behind the relevant basic recommendations of the Government Finance Officers Association. This finding leads to research and practice agendas aimed at enhancing the use of e-government to enhance fiscal transparency and participation.