Using the Financial Indicators Database for Policy Analysis

Article excerpt

When Clark County School District officials in Nevada were preparing to enter labor arbitration early in 1993, one of the negotiating points concerned the components of year-end fund balance. To enhance their position in the approaching arbitration, the school district negotiators wanted to know how they compared to other school districts. They collected information through telephone calls to about a dozen other school districts of approximately equal size, but they needed a larger sample. It was clear that gathering such data through individual telephone calls required an inordinate amount of time and effort. They found an easier way: they used the Government Finance Officers Association's (GFOA's) Financial Indicators Database.

A Unique Resource

The Financial Indicators Database contains an extensive array of data obtained from GFOA's collection of thousands of comprehensive annual financial reports/component unit financial reports (CAFRs/CUFRs) for municipalities, counties and school districts. The reports in the database are for fiscal years 1989, 1990 and 1991. Thus, the database is a unique resource that local governments or school districts and other governmental entities can use to evaluate their own financial indicators in relation to those of other governments. Such comparisons offer finance officers and other policy makers a more solid basis than traditional "rules of thumb" for decision making.

The origin of the Financial Indicators Database lies with GFOA's Certificate of Achievement for Excellence in Financial Reporting Program. The certificate program, established in 1945, is designed to encourage governments and governmental entities throughout the United States to prepare and publish high-quality CAFRs/CUFRs. Although the GFOA also sponsors a Canadian Award for Financial Reporting (CanFR), through a program begun in 1991, the documents submitted to the CanFR program are not included in the database. To submit its CAFR for consideration in the certificate program, a government must have an unqualified audit opinion from an independent auditing agency certifying that the financial TABULAR DATA OMITTED statements contained in the CAFR are in accordance with generally accepted accounting principles (GAAP) for state and local governments with no material misstatements.

The GFOA receives more than 2,000 CAFRs/CUFRs each year in connection with the certificate program. These reports, representing a broad spectrum of governments across the country, are subjected to an extensive formal review process in order to earn the Certificate of Achievement for Excellence in Financial Reporting. Approximately 94 percent of the CAFRs submitted are awarded the certificate each year.

Consistent Data from Year to Year

The Financial Indicators Database is a long-term project with a consistent, year-to-year data structure that provides information extracted from the CAFRs/CUFRs submitted to the certificate program. Data gathered from reports for fiscal years ending in 1989 launched the Financial Indicators Database, and databases for 1990 and 1991 fiscal year CAFRs now exist. Data from fiscal year 1992 CAFRs are being processed for the next annual database.

The unique feature of the GFOA database is that it is based exclusively on data taken from CAFRs prepared in conformity with GAAP. With the exception of certain statistical information, all data have been subject to audit by independent auditors.

The database, reflecting the categories of the certificate program, reports separately on municipalities, counties and school districts. As a significant portion of larger governments participate in the certificate program, the database for municipalities contains financial information on a large sample of these governments. Of U.S. municipalities with a population of more than 100,000, approximately 67 percent participate in the certificate program; with a population of 50,000 to 100,000, 56 percent participate; with a population of 25,000 to 50,000, 43 percent; and with a population of 10,000 to 25,000, 26 percent. …

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