The Use of Online Technological Resources for Enhanced Disclosure

Legal Landscape for Muni Disclosure –Municipal securities exempt from registration requirements of 1933 Act and reporting requirements of 1934 Act –Municipal securities not exempt from anti-fraud provisions –SEC Rule 15c2-12 indirectly regulates municipal issuers When underwriting, dealers must ensure that municipal issuers agree to provide information to MSRB on a continuing annual basis Issuers enter into continuing disclosure agreements to satisfy that requirement

Types of Continuing Disclosures under 15c2-12 –Annual financial and operating data –Audited financial statements (if available) –Event-based notices –Notification of late filings or failure to file required information –Typically a filing deadline and once-per year undertaking

Where can you find disclosure information? –Before July 1, 2009 Nationally Recognized Municipal Securities Information Repository (NRMSIRs) –Standard & Poor’s Securities Evaluations –DPC Data Inc. –Bloomberg Municipal Repository –FT Interactive Data Corp State Information Depositories (SIDs) Central Post Office –July 1, 2009 & After EMMA

Criticisms of Municipal Market Disclosure –More frequent and complete financial information from corporations –Concerns of “culture” of non-compliance –Absence of uniform disclosure protocols –Lack of publicly available information MCDC Initiative

Appetite for Voluntary Disclosure –EMMA now accommodates voluntary disclosures for bank loans and alternative financings –Price discovery tool and trade data on EMMA website –Increasingly sophisticated investor portals on municipality websites

Benefits of Increased Disclosure –Liquidity –Greater market access –Stronger market demand –Decreased volatility

Ohio’s Checkbook Initiative –Drill-down, detailed information is more current than audited financial statements –Supplementary to required disclosures –Provides high level of context for spending data –State checkbook: –Local government checkbooks –Pension fund checkbooks

Moving towards Continuous Disclosure Charlie Francis Director, Government Finance Solutions, OpenGov Use of Online Technological Resources for Enhanced Disclosure © OpenGov, Inc

Charlie Francis has more than forty years of local government financial management experience in both the public and private sector, including twenty years of experience as a Chief Financial Officer. Charlie Francis Director & Subject Matter Expert in Government Finance Solutions © OpenGov, Inc

Framework For Determining A U.S. Local Government Rating Indicative Rating ›Institutional framework ›Economy ›Management ›Financial Measures –Budgetary flexibility –Budgetary performance –Liquidity ›Debt and contingent liabilities Overriding Factors ›Positive overriding factors ›Negative overriding factors

Institutional Framework Fiscal policy framework System support Intergovernmental funding

Economy Demographic Economic Wealth and Income Economic Development

Management Revenue and expenditure assumptions Budget amendments and updates Long term financial planning Long term capital planning Investment management policies Debt management policies Reserve and liquidity policies

Financial Measures Budgetary flexibility Budgetary performance Liquidity

Debt & Contingent Liabilities Debt burden Pension liabilities Other post-employment benefits.

What Entities Are Doing Now Colorado

Next Generation for Continuous Disclosure

Q & A

MUNICIPAL DISCLOSURE INVESTOR PERSPECTIVE Nicole Byrd 2016 NFMA Board

National Federation of Municipal Analysts ( Founded in 1983 Not-for-profit 501 (c)(6) organization Represents analysts from all facets of the industry Roughly 1,400 current members

NFMA Goals Educational enrichment Improved disclosure Promote professionalism in credit analysis Advocacy role

Municipal Disclosure Survey Better understand member views of the state of disclosure Provide member data to support NFMA responses regarding disclosure Released survey a few months ago 200+ NFMA members responded

About 25% of respondents are satisfied with current level of disclosure

But…EMMA has greatly improved access to disclosure

Importance of disclosures to NFMA members

Comments on disclosure, themes More timely disclosure More uniformity/consistency in presentation of financial information Ability to extract data (currently pdfs or worse) Availability of unaudited interim financials (nothing new, what currently exists) Disclosure of activities/events that impact credit quality (e.g. new debt, whatever form) Consistent view on what constitutes a material event Improve clarity of notices (plain English) Notice of material event resolution Make information available publicly (rating agencies vs. investors)

No content below the line State Debt Management Network Webinar – October 27 th, 2016 Robin Prunty Head of Analytics and Research US Public Finance Copyright © 2016 by S&P Global. All rights reserved.

No content below the line Agenda Private & Confidential 31 1.Discuss our recently published article - “How Quality And Timeliness Of Information Is Incorporated in the U.S. Public Finance’s Rating Process” published 10/26/16. 2.Discuss how ratings may be affected by lack of timely information 3. How disclosure is viewed from a credit perspective

No content below the line How Quality And Timeliness Of Information Are Incorporated Into the U.S. Public Finance Rating Process Private & Confidential 32 1)What is the policy relating to information quality? S&P Global Ratings monitors and updates public credit ratings on an ongoing basis. We require sufficient information in both quality (received from a reliable source on a timely basis) and quantity to maintain our ratings. 2)How does S&P Global Ratings obtain information utilized during the rating process? S&P Global Ratings relies on issuers and their agents and advisors for the accuracy and completeness of the information submitted in connection with credit ratings and the surveillance of credit ratings. We typically expect to receive such information within three months of initial request, but this timeline could be shorter or longer if circumstances warrant.

No content below the line How Quality And Timeliness Of Information Are Incorporated Into the U.S. Public Finance Rating Process Private & Confidential 33 3) If information is not received on a timely basis can the rating be affected? “S&P Global Ratings may raise, lower, suspend, place on CreditWatch, or withdraw a credit rating, and assign or reverse an outlook at any time, in S&P Global Ratings’ sole discretion.” 4) How is timely information from an obligor viewed from a credit perspective? For USPF issuers and obligors, we view proactive disclosure and dissemination of information as a positive management characteristic.

No content below the line Thank you Robin Prunty Managing Director T:

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