GMA Financial Condition Project Nick Archer, Bright Agbo, Carmisha Primus, Breana James, Jamie Bond, Christopher Suggs, Anna McIntyre, Rebecca Sakyi

Various Methodologies Dozens of different methodologies are available to employ Financial Input Indicators Total revenues or revenues per capita Total or percentage of expenditures or expenditures per capita Financial Results Indicators Asset allocation efficiency Indicators of earning and profitability Financial Process Indicators Liquidity Net Position/ Change in Net Position Fund Equity or Fund Operating Surplus Borrowing Capacity

Various Methodologies Fiscal Condition Indicators Dozens of studies done, each using a different set of indicators Table shows number of ratios used in just nine other studies Notable studies not in table: Municipal Finance Officers Association methodology uses 29 indicators International City/County Management Association methodology uses 36 indicators Finding the right combination of ratios/indicators is an art No agreement on best practices for measuring financial health! Our analysis uses the Wang (2007) approach

Example: Wang Approach to Financial Condition Analysis Financial Condition can be found with a few measures: Cash Solvency Budgetary Solvency Long-Run Solvency Service Solvency

Ratios Cash Solvency Long-Run Solvency Budgetary Solvency Service Solvency

Overview to the Project

Data Gathering: Currently: 57 cities & ratio experimentation Gathered from CAFRs Goal: to produce an annual report on the fiscal condition of Georgia municipalities

Categories for Data Gathering Statement of Activities Information Statement of Net Position General Fund Revenues and Expenses Debt analysis Comparison to Budgets Asset Additions Fund Balances

Cities Analysis

Example Cities Crawford Oconee Buford Irwinton Cornelia

Cities Showing Improvement Cornelia Crawford Operating Ratio - Governmental 2016 1.43 2015 1.25 2014 1.30 Operating Ratio - Governmental 2016 1.03 2015 1.00 2014 .87 Operating Ratio - Enterprise 2016 1.00 2015 .69 2014 .59 Operating Ratio - Enterprise 2016 1.69 2015 1.63 2014 1.67

Cities with Indications of Decline Oconee Buford Operating Ratio - Governmental 2016 .56 2015 .62 2014 .63 Operating Ratio - Governmental 2016 .53 2015 .44 2014 .56 Operating Ratio - Enterprise 2016 1.43 2015 1.39 2014 1.34 Operating Ratio - Enterprise 2016 .31 2015 .34 2014 .37

Net Position and Current Ratios Oconee Irwinton Net Position - Governmental 2016 1.00 2015 2014 Current Ratio - Governmental 2016 39 2015 20 2014 63 Net Position - Enterprise 2016 .99 2015 2014 Current Ratio - Enterprise 2016 1 2015 2014

Cautions in the Use of Ratios Ratios alone are not adequate to provide sufficient information from which to judge the overall performance of the city Ratio analysis should be governed by common sense Ratios are not calculated using the same definitions