GFOA is always on the lookout for news items that will be useful for finance professionals, research that might help you do your job better, and legal and regulatory updates you need to know about. Check the GFOA news page for the updates and any relevant GFOA announcements, and see the GFOA Newsletter archive for back issues of our weekly electronic newsletter.
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On April 1, 2016, the Federal Reserve Board announced that it will adopt a final rule that would classify a very limited number of investment-grade, liquid, and readily marketable municipal securities as high quality liquid assets (HQLA). The Federal Reserve’s action follows its May 2015 to amend the 2014 Liquidity Coverage Ratio rule, which classifies foreign sovereign debt securities as HQLA while excluding investment-grade municipal securities in any of the acceptable investment categories for banks to meet new liquidity standards.
On March 28, 2016, the Municipal Securities Rulemaking Board (MSRB) announced that it is seeking public comment on a regulatory approach that would require municipal advisors to disclose information about the bank loans and direct purchases of their municipal entity clients to the MSRB’s Electronic Municipal Market Access (EMMA) website. GFOA has significant concerns with this proposal, including the following:
On March 22, Devin Nunes (CA-22) introduced the Public Employee Pension Transparency Act (PEPTA), HR 4822. This legislation is identical to previously proposed and ultimately unsuccessful versions of PEPTA introduced in the last two sessions of Congress. The act would require sponsors of state and local defined benefit plans to report plan liabilities to the Secretary of the Treasury annually in order to retain their federal tax-exempt bond status.
Congratulations to the entities that have received the Certificate of Achievement for Excellence in Financial Reporting in 2015 (for the fiscal year ended 2014 comprehensive annual financial reports, or CAFRs). The complete list of the winners has been posted on the GFOA website.
Public pension funding levels are up and costs to manage the plans are down, according to the 2015 National Conference on Public Employee Retirement Systems (NCPERS) Public Retirement Study. Public pension funding levels are at 74.1%, up from 71.5% the year before. Among the nearly 200 public retirement systems surveyed, the average cost to administer the plans was 60 cents for every $100 managed, down from 61.1 cents a year earlier.
Big Win for Marketplace Fairness Act in the Tenth Circuit Court of Appeals
The implementation of financial policies often yields strong, positive results for local governments over time. The City of Boulder, Colorado, is an example – the use of financial policies allowed the city to identify the best courses of action, establish parameters in which the government would operate, and develop standards to use in judging the government’s fiscal performance.
The death of Justice Antonin Scalia this weekend comes at a significant time, as the United States approaches a presidential election. Unsurprisingly, while some of the news coverage has focused on the substance of Scalia’s nearly 30-year career as a Supreme Court justice, much of it has focused on the challenges of replacing him.
Despite strong sustained opposition from GFOA and other groups representing local government, Senate leaders announced a legislative deal that would compromise local governments’ ability to deliver essential services to their communities.
Many governments struggle with striking the right balance between specialization and flexibility. There is no perfect answer to this challenge, but focusing on function is a promising place to start. Outdated organizational structures designed to accommodate older technology keep many organizations from building teams, departments, and organizational units in ways that maximize efficiency.
Following three rounds of settlements with underwriters and broker dealers under the Securities and Exchange Commission’s (SEC) 2014 Municipalities Continuing Disclosure Cooperation (MCDC) Initiative, the SEC’s Enforcement Division has begun reaching out to government debt issuers who participated in the program. As issuers receive calls and settlement proposals from the SEC in the coming weeks, the GFOA wants to alert membe
This week, GFOA unveiled a new resource center to help local governments support HR 2229 – the Municipal Bond Market Support Act of 2015, legislation to increase the bank-qualified debt limit from $10 million to $30 million. Bank-qualified bonds were created in 1986 to encourage banks to invest in tax-exempt bonds from smaller, less-frequent municipal bond issuers, and to provide those municipalities issuing $10 million or less in a calendar year with access to the lower-cost borrowing.
On February 1, the House voted to approve HR 2209, bipartisan legislation that would require federal regulators to classify all investment-grade, liquid, and readily marketable municipal securities as high quality liquid assets (HQLA). This important legislation is necessary to amend the liquidity coverage ratio rule approved by federal regulators last fall, which classifies foreign sovereign debt securities as HQLA while excluding investment-grade municipal securities in any of the acceptable investment categories for banks to meet new liquidity standards.
On January 22 the GFOA’s Executive Board approved five best practices and an advisory to provide guidance to government finance officers in the areas of budgeting, accounting, retirement benefits administration and debt issuance. A summary of each is provided below.
Since the recession of 2008, economic conditions have fluctuated between adequate and poor for the City of Elgin, Illinois, but it has been able to stabilize its bond rating through strong financial policies – most notably, those governing its general fund reserve levels. In fiscal 2009, on the heels of the largest economic downturn in recent history, Elgin’s revenue picture looked uncertain. The city had demonstrated sound financial stewardship but couldn’t escape the impact of broader, nation-wide, economic conditions.
As Congress and the White House return to discussions on comprehensive federal tax reform in 2016, GFOA is urging our members to help engage federal lawmakers regarding the need to preserve the tax exemption on municipal bond interest.
Most public finance professionals are carefully studying environmental and sustainability questions, but “getting it right” isn’t easy. Real-world, cost-first thinking means that prioritizing sustainability and resiliency in infrastructure will always be a challenge. Finance officers are generally accustomed to determining financial costs and benefits for capital projects rather than accounting for a project’s social and environmental impact.
The Tulsa Metropolitan Utility Authority (TMUA), like many of its peers, needed to identify revenue to replace its degrading system infrastructure. Over the years, the agency had become less effective, and while the water utility’s core services were strong, inefficient business processes had created stress points. The authority was looking at increasing water and wastewater bills, which would create hardships for lower-income households. It therefore began looking for ways to use performance management technology to link core utility services with support services.
In an effort to better prepare for catastrophes, whether natural or man-made, the City of Norfolk, Virginia, chose to add a chief resilience officer (CRO) to its staff. The goal of the position is to create a single resource within the organization to prepare the community for cataclysmic events like earthquakes and hurricanes, as well as addressing ongoing challenges like rising sea levels, drought, or poverty. It’s an idea that’s been adopted by a few other cities, including San Francisco, California.
The Government Finance Officers Association of the United States and Canada (GFOA) will host its 110th Annual Conference, “Sharing Solutions and Strategies,” May 22-25, 2016, at the Metro Toronto Convention Centre in Toronto, Ontario, Canada. Registration for the event is open on GFOA’s website.
The conference is expected to bring together thousands of public finance professionals through:
In June 2015, the City Council of Portland, Oregon, began exploring alternative financing options for environmentally responsible capital projects. The city aims to make use of a rapidly evolving market for green bonds to supplement its traditional financing methods. Portland and other issuers are defining their own policies and procedures, following the lead of the International Finance Corporation and World Bank.
In an effort to expand broadband connectivity statewide, the Commonwealth of Kentucky is in working out a partnership with a consortium of private firms to design and build a 3,200-mile fiber-optic system. The Kentucky Economic Development Finance Authority, acting as a conduit issuer, sold $230.05 million of 30-year tax exempt bonds for the project in August 2015. Fitch assigned the issuance a rating of BBB+ and Moody’s Investors Service gave it a Baa2.