GovFi Prize

What if there were resources to support, recognize, and reward academic writing in public finance?  There now is such financial resourcing for four specific questions. GFOA will award a limited number of $500 contracts based on initial proposals for each of the questions below.  Articles are required to be produced for a future edition of the Public Finance Journal publication to be eligible for the $500 in start-up funding.  One (1) researcher or research teams will be selected from among those articles given the initial $500 contracts and accepted for publication in the Public Finance Journal, and agree to all terms to have your article published in PFJ and participate in a future GFOA Conference panel or Webinar.  The GovFiPrize award will be the amount listed below minus the initial total $500 awards.

Question 1

Is the 80-20 Rule Operative for Financial Analysts’ Use of Financial Reports? (Prize amount: up to $8K)

The 80-20 rule says that 80% of outcomes result from 20% of all causes. Applied to financial reporting, this could mean that some fraction of the information contained in the financial report satisfies the vast majority of the questions professional analysts (e.g., those who preform analysis as/for bond market participants) have about a local government. GFOA wants to know: what are the most common questions professional analysts have about local governments and what information are they most commonly using from financial reports? We also want to know the extent to which the most commonly used information satisfies the financial analysts total informational needs? Or put another way, what percent of the outcome (financial analysis complete) results from the most commonly used information?

Question 2

What is the Cost of Compliance with GAAP Accounting and Reporting Standards? (Contract amount: up to $8K)

GAAP accounting standards often require governments to collect, prepare, and report information that they otherwise would not. This adds a new or marginal cost to finance administration that would otherwise not exist. GFOA wants to know: What is the marginal cost to comply with new reporting standards, including staff time, consulting time (including external auditors and other accounting service providers), software and any other relevant costs? We are interested in total costs, include staff time, software upgrades, and consultant support, after the standard is “live”. We are also interested in seeing data from a random selection of governments or at least reasonably representative of the range of capabilities that local governments have to implement new standards.

Question 3

How can the processes for intergovernmental countercyclical fiscal aid be improved? (Contract amount: up to $8K)

Experience from the Covid-era fiscal policies has called into question presumptions about the effectiveness of intergovernmental fiscal aid.  The traditional federal system for injecting countercyclical fiscal stimulus into the economy has typically been hindered by the “policy-implementation lag.” Process delays arguably impair the macro-economic efficacy of the intergovernmental aid system. Some states cut taxes after receiving federal funds, often with unintended consequences in later years.  Significant funds were expended after a cyclical economic recovery had already taken hold, which arguably helped fuel inflation. The time-consuming process -- of securing Congressional approval, adopting functional federal regulations for program administration, soliciting and reviewing funding applications, and awarding third-party construction bids -- warrants a timely top-to-bottom re-examination for potential improvements.  GFOA wants to know:  In cases where the federal government provides direct aid to local governments, what realistically can be done at the Congressional and federal regulatory levels to expedite countercyclical aid to produce better macroeconomic results?  Is a federal “maintenance of taxing effort” by states appropriate?  Should state and local “rainy day” funds play a larger, even mandatory, role?  Could artificial intelligence expedite the application processes? What might be a preferable back-end process to date specific offerings to more quickly discontinue federal aid when the economy is recovering?  At which level(s) of government would specific changes in process improve the macroeconomic benefits of public-sector countercyclical fiscal policies?

Question 4

How can the profession make long-term financial planning more common?  (Contract amount: up to $8K)

GFOA recommends that all governments prepare and maintain a Long-Term Financial Plan (LTFP) that projects revenues, expenses, financial position, and external factors for all key funds and government operations at least five years into the future.  However, according to the GFOA only 40% currently utilize a LTFP.  GFOA wants to know: What are the barriers to governments in using a LTFP?  What measurable differences are present for those governments that utilize the tool versus those that do not (ratings, audit findings, external recognitions)?  And, most importantly, what could be done, outside of legal mandates, to induce a change in strategy and financial planning to convince more governments to develop and use a LTFP.

Question 5

What is good financial reporting worth? (Contract amount: up to $8K)

Governments develop reports and data to better understand and evaluate the operations and impact of their work.  This data can take many forms and include many different metrics.  Some of the reports produced by government are required by mandates, either internal or external, contained in laws, bond covenants, ordinances, legal rulings, or policies.  Good financial reporting is a management or legal tool, but what is the monetary value of good financial reporting?  For the purpose of this question, GFOA would like to focus on Annual Reporting.  GFOA wants to know: What is the true benefit to government in good annual financial reporting?  Where is the measurable return on annual reporting to governments that do not issue debt?  When a government issues debt is there a demonstrable difference in rates, fees, or number of bids based on quality of annual reports?  What is the incentive for governments to complete good annual financial reporting beyond the legal compulsion to do so?    When financial reports are used to by investors in municipal debt to measure an manage their risk, who benefits more from good financial reporting: the government completing the reports or investors?

Question 6

Resiliency (Contract amount: up to $8K)

Resiliency in infrastructure is a topic of conversation, but without consensus.  Governments understand that something needs to be done to marry existing and new infrastructure to provide better outcomes for taxpayers, but it is unclear who should set or fund this agenda.  GFOA wants to know:  What percentage of infrastructure at all levels of government must be used as part of the adaptation plan versus being replaced?  What is the right level of government to set resiliency standards and agenda for governments?  How should capital planning evolve to accommodate resiliency as a key component of Capital Improvement Plans?  What should governments be ready to disclose and report on relative to resiliency relative to private financial markets?

The final product for the satisfaction of the $500 start up funds is the journal article for PFJ along with your data as per open research standards suitable for replication. If more than one submission, the final contract award will be determined by the governance committee of the PFJ and be eligible for the additional contract award (in this case $8k) minus the number of start-up $500 fund awards given out at proposal stage.  Any articles submitted may be be published in the Public Finance Journal. In fact, GFOA would prefer to publish articles from multiple researchers on the same question.  Social science is hard and answers from research are rarely definitive, so having multiple perspectives on the same question is good.  GFOA may also publish summaries of the articles in its other mediums.

Timeline

1. Abstract proposal due: TBD
2. Decisions on the abstract: TBD
3. Full paper due to the co-editors for initial review: TBD
4. If accepted (after completion of editorial review process), the anticipated publication date: TBD