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MRSC FOCUS › Finance Advisor October 2006
 
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MRSC has joined with Toni Nelson, Small Cities Specialist, State Auditor's Office, Gayla Gjertsen, Finance Director, City of Tumwater, and Mike Bailey, Administrator of Finance and Information Services, City of Renton, to bring you the "Finance Advisor" column. The "Finance Advisor" will feature a new article each month with timely local government finance information and advice you can use.*

Financial Analysis at Your Fingertips!

October 2006

By Mike Bailey, Administrator of Finance and Information Services, City of Renton

In this month’s Finance Advisor column we wanted to make sure you knew about a great financial research tool that is available to you as a local government official in Washington State. In fact, these tools are available to anyone who is interested (such as the media).

Even though I’ve been in this profession for many years, I did not realize that the original reason the “BARS” (Budgeting, Accounting and Reporting Systems) manual was developed was to help answer questions posed by the legislature about local government finance. I learned this when I was part of a team that helped to see this finally become a reality about five years ago. While local government was using the BARS manual account structure for our accounting and reporting, the information was never able to be summarized in a way to meet legislative needs. That has since been corrected and the result is the “Local Government Financial Reporting System (LGFRS)” available through the Washington State Auditor’s web site.

Though the initial screen has many choices, to get to the reporting system directly, select “Report Menu.”

  • Within the report menu, you will see that there are more choices. You can select the entities you want included in the reports (cities / counties, ports, transits or all of these). You can drill down further a little later on. You can also select from four different report types.
  • The “Summary of Resources and Uses” is a preformatted report that will allow you to select the funds and which to include, but little else.
  • The “Category with Years Across” will give you a table of accounts or entities for rows and the years reported on across. I use this format most often.
  • The “Category with Fund Types Across” is sort of the reverse of the above report. It only makes sense to use if you want multiple fund types in your report.
  • The “Operating/Capital/Debt Expenditures” will summarize by these categories for the funds you choose.

The format is pretty easy to use, but there are lot of help resources on the original LGFRS web site home page if you need them. The “instructions” link is a good place to look for ways to accomplish a particular research task if you need ideas.

I have used this tool extensively to help understand trends and data I’m seeing in my own city. For example, we have seen increases in Real Estate Excise Tax (REET) revenue. Is that true of others? I can run the “category with years” report and select the correct tax from the list of revenues. I want to look at all funds (as some entities may book this revenue to a capital fund, some to a debt service fund, etc.) I want to look at the last eight years (the system goes back to 1997) to see the trends. Sure enough, King County as a whole has seen REET double in the last eight years and increase by about 55% in the last two years!

I may want to see what other cities of the same size as Renton are spending on certain services on a per-capita basis. This is all part of the easy-to-use system (I’m sounding like a salesman now!). Select “counties/cities” from the report home page. Then select the “category with years across” report format. Select the cities you want to compare to in the next screen. I like to use the “population between” option and fill in 30,000 to 90,000 as comparable cities. Then select “all expenditures” from the accounts list, and “general fund” and “special revenue” funds from “fund” tab. (I always like to include the special revenue funds as many cities will account for general government activities such as parks in a special revenue fund. If you don’t include that fund type, you will miss these.) I select the “Functional Group by Entity” option of the report format and run the report. I see the results for my comparable cities broken down by major expense category.

To make this even more useful, here are a few more tips. You can compare more easily if you present this information on a “per-capita” basis (or the total amounts shown divided by the population of each entity included for each year presented). This is accomplished by simply selecting “per-capita” from the menu options at the top of the report screen. Now you can take the next step I usually take by downloading this report into Microsoft Excel. Again, you just select the “View as Excel” option in the report menu at the top of the screen. To tweak the report, be sure to use the “selection criteria” option from the menu on top as this will retain all your original choices and allow you to just change those you intend to (rather than starting over).

I hope this article wasn’t too complicated as that would defeat my purpose. I wanted to illustrate how easy this great tool is to use. It is unique in the country and should be a common stop for all of us interested in providing context to our own financial information. The site includes the most recent financial information available which unfortunately can be a bit out of date. For instance, when writing this I noticed that it is currently only showing data through 2004. I understand that by the time you see this, the 2005 data will be available on the site.

There has been some discussion about adding budget information, but that would be a significant change to the system and will take additional study and effort. For now, it remains one of the best ways to get financial information on local governments in Washington State. I hope you will give it a try.

Mike Bailey is currently the Administrator of Finance and Information Services for the city of Renton. Previously, he worked as the Director of Finance for the city of Lynnwood for six years. Mr. Bailey also served as president of the Washington Finance Officers Association and is the Vice Chair of the GFOA Budget Committee. An experienced CPA and GFOA budget reviewer, Mr. Bailey co-founded the annual Budget and Fiscal Management Workshops held each summer. Mr. Bailey conducts numerous workshops and has authored various articles on local government finance, including Effective Budgeting in Washington State Cities published by the Association of Washington Cities.

*The Articles appearing in the "Finance Advisor" column represent the opinions of the authors and do not necessarily reflect those of the Municipal Research & Services Center.