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.
States tax collections saw robust growth in the first half of 2013 but significant softening in the second half. Preliminary figures for the first quarter of 2014 indicate even slower growth of tax revenues, according to the latest State Revenue Report from the Rockefeller Institute of Government.
The 2008 financial crisis prompted many state and local governments to make changes to their defined benefit pensions, most often raising employee and employer contributions and reducing benefits for new employees.
A pension plans actuarial assumption is an assumption the plan makes, based on demographic and economic information, about the investment return the plan is likely to make over future years. Public-sector pension fund investment return assumptions have been the focus of growing attention in recent years, with critics saying the current low interest rates and volatile investment markets require pension funds to take on too much investment risk to achieve their assumed rate of return.
Below are links to view the GFOA President's Address and the GFOA Incoming President's Address at the 2014 Annual Conference in Minneapolis.
Robert W. Eichem, Chief Financial Officer, City of Boulder, Colorado, became GFOAs new president at the associations annual business meeting in Minneapolis, Minnesota, on May 20, 2014.
Also at the business meeting, the associations members elected a new GFOA president-elect and five new members-at-large, who will each serve a three-year term beginning immediately.
In early May, President Obama signed the Digital Accountability and Transparency Act of 2014 (Public Law No. 113-101), which amends the eight-year-old Federal Funding Accountability and Transparency Act to make federal agency spending data "with more specificity and at a deeper level than is currently reported" available to the public, according to the administration.
The Securities and Exchange Commission (SEC) has given final approval to a rule which takes effect July 1, 2014, defining the term municipal advisor (MA), and has produced supplementary Frequently Asked Questions about the rule. The SEC Municipal Advisor Rule specifies activities which will be covered by the Dodd-Frank Acts imposed fiduciary duty of a municipal advisor to its government client, may result in the need for underwriters to receive new written representations from issuers, and may limit the manner in which underwriters and other professionals interact with issuers. While the Rule does not regulate issuers directly, there are numerous indirect implications.
The House of Representatives is considering a permanent extension of the Internet Tax Freedom Act (H.R. 3086). The GFOA strongly opposes this measure because it would cost states and localities millions of dollars in revenue in the coming years, as more services that are subject to traditional taxation transition to the Internet.
As Congress returns home to their congressional districts for the month-long August recess, the GFOA and its state and local coalition partners are gearing up for what is expected to be a busy fall session, with federal action on comprehensive tax reform and the Marketplace Fairness Act projected to increase. GFOA members can help ensure positive outcomes for maintaining the tax exemption on municipal bond interest and enactment of the Marketplace Fairness Act (HR 684) by meeting with their Senators and members of Congress over the month-long August congressional recess.
Recently, the White House announced that 8 million Americans have signed up for private health coverage under the Affordable Care Act. Approximately a third are younger than 35 years old, and the costs of the expansion are reportedly less than expected; for instance, the administration predicts that Medicare and Medicaid costs in 2020 will be $180 billion less than 2010 estimates. Many governments are looking for more information about complying with the act and making sure their health-care benefit is sustainable.
On March 12, 2014, the House Judiciary Committee held a hearing on Exploring Alternative Solutions to the Internet Sales Tax Issue, during which committee members discussed core issues that they would like to address in developing House legislation that would enable state and local governments to collect taxes on online retail sales. The hearing was significant in that it was the first action that the House Judiciary Committee has taken on this issue since the Senate overwhelmingly passed the Marketplace Fairness Act (S 743) in May 2013.
On March 10, 2014, the SEC announced a new program aimed at compelling government bond issuers to self-report violations of federal securities laws. While the SEC is prohibited from regulating government issuers under federal law, the commission can file enforcement actions against municipal issuers for misrepresentations about the prior compliance of bond offerings with continuing disclosure obligations.
According to a report from Pew Research that describes nine groups of Americans to reflect patterns of engagement with public libraries, public library users and proponents are not a niche group 30% of Americans aged 16 and older are highly engaged with public libraries, and an additional 39% fall into medium engagement categories.
The Municipal Securities Rulemaking Board has launched a Putting EMMA to Work for You campaign to raise mid-sized municipal issuers awareness of the importance of communicating with investors and complying with their disclosure obligations. The Electronic Municipal Market Access website is a resource for evaluating municipal finance options, complying with disclosure requirements and communicating with investors.
In what industry participants have termed a game changer, the Orange County Employees Retirement System, working in collaboration with investment professionals from other public pension plans, has created an innovative platform that will provide small and mid-sized public pension plans with superior access to the industrys leading private equity partnerships. Bundling public pension assets through an unprecedented joint procurement process opens new doors to achieving superior portfolio returns in what heretofore has been an inefficient and costly asset class for many.
For the 100 largest public employee pension systems in the country, cash and security holdings totaled $3,191.5 billion in the fourth quarter of 2013, reaching the highest level since the survey began collecting data in 1968, according to the U.S. Census Bureau. Cash and security holdings had a quarter-to-quarter increase of 4.2%, from $3,061.6 billion last quarter, and a year-to-year increase of 12.5%, from $2,836.8 billion in the fourth quarter of 2012.
Sprawl versus compact development its a complicated dichotomy, and a crucial argument in the study of sustainable urban development. Measuring Sprawl 2014, a new study from Smart Growth America that analyzes development patterns in U.S. metropolitan areas and counties, is looking to see which communities are more compact and connected and which are more sprawling, and examining how index scores relate to life in that community.
The Center for State and Local Government Excellence and the Center for Retirement Research at Boston College have partnered to develop the Public Plans Database, which contains comprehensive financial, governance, and plan design information for 126 state and local defined benefit plans, along with additional data on state defined contribution plans. The database represents more than 85% of total state and local government pension assets and members.
Beginning in mid-May, the U.S. Treasury Department will increase its monitoring of state and local government bond issuers through a new unit. The new Office of State and Local Finance will monitor and report on municipal issuers and market factors and conditions that contribute to stress in the municipal market, including public pensions. The office will also organize and propose federal policy solutions to address their concerns in these areas. Leading the office will be Kent Hiteshew, who is leaving his current position as Senior Managing Director of J.P. Morgans Housing Finance Group.
Many municipal governments can use Medicare to lower their OPEB costs, according to Moodys Investors Service. As retiree health costs increase with the aging of the workforce, retirement benefits present an increasing credit risk for many U.S. municipal governments.
Local governments are in a better position to make innovations to the procurement process than states, according to GovTech. New York City has initiated reforms aimed at shortening the procurement cycle and bundling similar contracts, while Oakland County, Michigan, developed a program that allows other governments to use its technology.
State departments of transportation are spending more money building new roads than maintaining the ones they have, despite the fact that financial liabilities are mounting and conditions are not improving for Americas drivers, according to Repair Priorities 2014, the latest report by Smart Growth America and Taxpayers for Common Sense analyzing road conditions and spending priorities in all 50 states and the District of Columbia.
Research from the Congressional Budget Office indicates that there are slight benefits to public-private partnerships in highway construction. The CBO concluded that private financing will increase the availability of funds for highway construction, but only in cases in which states or localities have chosen to restrict their spending by imposing legal constraints or budgetary limits on themselves.
Despite Detroits well-publicized woes, many see the city as a good place to start a business, according to the New York Times. Many groups are employing innovative methods of rebuilding the city, including a transplanted entrepreneur and writer whose project, Write a House, is providing free houses (for $500 a month) to writers. Another group, Young Detroit Builders, will remodel the homes, paid in part by crowdfunding and a matching grant from a non-profit.
The GFOAs Certificate of Achievement for Excellence in Financial Reporting program has reached a major milestone 4,000 submissions. Its an impressive rate of growth, up from 800 submissions 20 years ago.