1. Lenny Moore, Montgomery County, MD Karin Smith, Heinfeld, Meech and Co. Victoria Lewis, Montgomery County, MD Andrew McCreery, Mount Lebanon, PA Moderator/Speaker: Speakers: Tuesday, June 2, 2015 10:20 – 12:00 2 CPE Getting the Word Out: How To Communicate Financial Information to Citizens

2. The Changing Environment of Financial Reporting Karin M. Smith, MBA, SFO, CFE Heinfeld, Meech & Co., P.C.

3. What is Transparency? o Merriam-Webster’s Dictionary defines transparent as “free from pretense or deceit, easily detected or seen through, readily understood, characterized by visibility or accessibility of information especially concerning business practices.”

4. Why do we need Transparency? Open and honest communication to stakeholders Clarity of financial picture of the Organization Public requests and inquiry Communicate how the Organization receives its funding sources and spends each dollar Build trust in your community

5. Current Strategies o CAFR o Budget Awards o Public/Citizen Financial Reports o Presenting audit reports o Public hearing/Public posting for budget adoptions o Presenting Annual Financial Report publically o Regular updates to Board/Council

6. Current Strategies, cont. o Community forums o Community budget process o Citizen committees o Websites – Budget posting – Financial information – Charts and graphical information

7. Financial Communication Principles Transparent Easy to understand Concise Accurate Complete Timely Available Comparative

8. What is a PAFR?

9. Background PopularAnnualFinancialReport The GFOA established the Popular Annual Financial Report (PAFR) program in 1991 Why is it called “Popular”? Definition: Suitable to common people; easy to comprehend Promotes the preparation of high quality financial reports Participants include state and local governments of various types and sizes http://www.gfoa.org/index.php?Itemid=60&id=37& option=com_content&task=view

10. What is a PAFR? Do not need to be an accountant to understand! Presents condensed financial data in easily understandable manner Unaudited and presented on non- GAAP basis Information derived from CAFR Designed for the general public

11. Who Issues Popular Financial Reports?

12. Who benefits from a the reports? Municipal Governments State Agencies School Districts

13. Why Issue a Popular Financial Report?

14. How Will We Benefit? Educate the community on the organization’s financial position Financial Position Report on sources of revenue in a community friendly, easy to understand manner Revenues Report on general fund expenditures and other funds wish to highlight Expenditures Educate community on primary and secondary tax rate calculations Tax Rates Municipal Government and State Agencies

15. How Will We Benefit? Showcase accomplishments and celebrations Accomplishments Summarize most requested information Requested Information Can be used to comply with reporting requirements in some entities’ charters Local Requirements Inform the community of future initiatives prior to an election Future Initiatives Municipal Government and State Agencies

16. How Will We Benefit? Report complicated school finance in a community friendly, easy to understand manner Complicated Financials Report on how schools are funded in a community friendly, easy to understand manner Revenues Explain where tax dollars are spent (dollars in the classroom, grant funds, etc.) Expenditures Educate community on primary and secondary tax rate calculations Tax Rates School Districts

17. How Will We Benefit? Showcase accomplishments and celebrations Accomplishments Summarize most requested information Requested Information Requirement to report bond, capital override, maintenance and operations override expenditures each year Statutory Reporting Inform the community of future initiatives prior to an election Future Initiatives School Districts

18. Financial Statements vs. Popular Reporting

19. We Already Have a Financial Statements… CAFRs and Financial Statements are completed in order to meet reporting requirements Difficult for average person without financial background to interpret More information than most people interested in Information that it contains is not user friendly due to the use of technical language, different accounting bases and numerous schedules

20. Financial Statements vs. Popular Reports Financial Statements and CAFR Single year with trend in the statistical sectionPAFR Trend information presented in the body Adds “context” to data by allowing for descriptions of government programs Allows for flexibility

21. CAFR vs. Popular Reports 1/16”1” CAFRPopular Reports

22. PAFR Requirements Clearly advise readers of the availability of the CAFR Financial information must be derived from actual GAAP data in the CAFR Provide narrative/graphic analysis to explain items of potentially significant interest or concern Disclose if information is from only selected funds Disclose if all component units are not included Certificate of Achievement for Excellence in Financial Reporting may not be reproduced in PAFR

23. What awards programs are available for Popular Financial Reports?

24. PAFR Awards Program o Created by GFOA in 1991 to recognize governments producing high-quality reports o Criteria for grading not as structured as for CAFRs o Room for creativity with PAFRs o Opportunity to communicate with the public When done correctly, a PAFR can serve as positive advertisement for the entity

25. PAFR Grading Criteria o Separated into two categories: – Eligibility Requirements Must-have items – Report Characteristics Four separate categories and an overall category Graded on a scale of 1 (poor) to 5 (excellent)

26. PAFR Grading Criteria Report Characteristics Reader Appeal (10%) Understandability (25%) Distribution (7.5%) Other (7.5%) Summary (50%)

27. Karin M. Smith, MBA, SFO, CFE (602) 277-9449 x327 karins@heinfeldmeech.com

28. FINANCIAL TRANSPARENCY IN MONTGOMERY COUNTY, MD 2015 RECIPIENT GFOA AWARD OF EXCELLENCE Victoria Lewis Lenny Moore

29. MONTGOMERY COUNTY GOVERNMENT 2015 AGENDA Open Data in Montgomery County Why did we decide to do this? Financial Transparency Vision and Path spendingMontgomery Demonstration How Can You Get Started?

30. 30 What is Open Data? Open Data is public information in a digital, user-friendly format. Forrester Research Open Data Plays a Key Role in Advancing Better Governance Transparency enables accountability and strengthens public trust. Toni Preckwinkle, Board President, Cook County, Illinois WHAT IS OPEN DATA?

31. MONTGOMERY COUNTY GOVERNMENT 2015 OPEN DATA ACT Bill 23-12: Open Data Act – DECEMBER 2012 Provide a centralized site to publish County data Publish Maryland Public Information Act Responses Compile and publish a multi-year Open Data Implementation Plan

32. MONTGOMERY COUNTY GOVERNMENT 2015 DATAMONTGOMERY OVERVIEW dataMontgomery Today: Variety of Datasets Representing Multiple Departments: Employee Salaries Traffic Violations Budget, Spending and Contract Data 500+ datasets in publishing plan

33. MONTGOMERY COUNTY GOVERNMENT 2015 DATAMONTGOMERY CAPABILITIES Find answers: Search overall site or filter within a dataset Analyze data: Create Charts, Graphs and Maps Disseminate Information:

34. MONTGOMERY COUNTY GOVERNMENT 2015 WHY DID WE DECIDE TO DO THIS? 2014 OPERATING BUDGET DATA: Less than 2000 views 2015 Spending Data: 275 Views The data was complicatedThere wasn’t enough detail Where’s the “big picture?Information was not easily accessible We built it, but people just didn’t come…….

35. MONTGOMERY COUNTY GOVERNMENT 2015 FINANCIAL TRANSPARENCY VISION Montgomery County is progressing from just showing our budget and spending data to providing a way to: Promote Understanding Educate the resident on how we do things Improve Access Guided views and access to raw data Increase Interaction Data analysis Collaboration

36. MONTGOMERY COUNTY GOVERNMENT 2015 FINANCIAL TRANSPARENCY SUITE OVERVIEW Open Budget Complex budget data presented in a guided manner spendingMontgomery Multi-dimensional view of spend data contractsMontgomery Contract Spending and Vendor Information

37. MONTGOMERY COUNTY GOVERNMENT 2015 PATH TO FINANCIAL TRANSPARENCY Resident PanelIterative Mock-ups Finalize Data Schema Product Testing Benchmark Existing Transparency Sites User Persona Focus Groups Create DatasetsData Verification Define User Personas ScopingScreen Development Data Preparation TestingLaunch

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45. MONTGOMERY COUNTY GOVERNMENT 2015 IF YOU CAN CREATE A SPREADSHEET… 3 STEPS TO FINANCIAL TRANSPARENCY Step 1: Create spreadsheet created to match data standard Step 2: Publish to an open data portal Step 3: Link dataset to guided website

46. MONTGOMERY COUNTY GOVERNMENT 2015 HOW CAN THIS HELP YOU? Data Standards for publishing financial data Reproducible processes  Publish data  Protect data  Present data Participating in a national model Since the initial launch, 20+ governments at city, county and state levels are all mirroring this approach.

47. spendingMontgomery … connecting residents with public data

48. MONTGOMERY COUNTY GOVERNMENT 2015 What it is: Payments to Vendors – our “Checkbook” Guided View of County Spending 1 million rows and 26 columns of data distilled into a user-friendly view of County spending What it is Not: “Actuals” as in Budget to Actual Comparison Stylized presentation of audited expenditures Source to view imaged invoices and checks spendingMontgomery

49. MONTGOMERY COUNTY GOVERNMENT 2015 Key Business Considerations 1.Defining Scope Operating Only Capital Project spending by Project “GL Actuals” vs “A/P Detail” History Best source for the data 2.Who? Finding SME & Dedicated Team Members 3.Defining confidential or sensitive data and what to do with it.

50. MONTGOMERY COUNTY GOVERNMENT 2015 KEY BUSINESS CONSIDERATION: Time vs Resource vs Quality Quandary Legacy Presentation-- Spending Disclosure Information available via dataMontgomery, Financial Reporting, etc Discussion with Others Most Efficient Starting Point for Initial Implementation Defining Scope

51. MONTGOMERY COUNTY GOVERNMENT 2015 KEY BUSINESS CONSIDERATION: Geek vs Bean Counter Need to understand IT platforms, data extraction, etc. Need to understand content Need resource with availability and ability to manage a technology project Who? Solution: Financial Analyst and former PMP reporting to A/P Manager Future Qual: Small Team-- A/P, Gen Actg, and IT

52. MONTGOMERY COUNTY GOVERNMENT 2015 KEY BUSINESS CONSIDERATION: Challenges Fully Transparent vs Fully Liable If fully transparent, how to protect sensitive or confidential data? Decentralized Environment Confidential / Sensitive Data

53. MONTGOMERY COUNTY GOVERNMENT 2015 Solution Identify Confidential Fields Centralized Finance role  Identify laws/regulations  Review Chart of Accounts 3-way Partnership - Program Owners/Legal Counsel  Refine conclusions re data & fields  Department-level certification Protecting Confidential Fields KEY BUSINESS CONSIDERATION: Confidential / Sensitive Data Continued

54. MONTGOMERY COUNTY GOVERNMENT 2015 CONFIDENTIAL DATA Examples Vendor names: Payments based on financial eligibility Social services/health Rental assistance Loans Public safety purchases Bullet proof vests Ammunition Corrections – gang members employment to gain access Invoice numbers: Payee name for some social service payments Address for battered women’s shelter repairs

55. MONTGOMERY COUNTY GOVERNMENT 2015 Ongoing Process Data Updates  Systematic, maintainable & flexible New Confidential Accounts / Activity  Flag new COA & vendors, individual payments Annual Confidential Data Review  Department certification process KEY BUSINESS CONSIDERATION: Confidential / Sensitive Data Continued

56. Navigating spendingMontgomery

57. MONTGOMERY COUNTY GOVERNMENT 2015 SUCCESS FACTORS The Right Team Focus on Your Audience Use Plain Language Systematic Updates Engage with Your Internal and External Stakeholders Manage Expectations

58. MONTGOMERY COUNTY GOVERNMENT 2015 Step 1: Create spreadsheet created to match data standard Step 2: Publish to an open data portal Step 3: Link dataset to guided website GET STARTED!

59. MONTGOMERY COUNTY GOVERNMENT 2015 RESOURCES dataMontgomery : http://data.montgomerycountymd.gov Open Budget : http://montgomerycountymd.gov/openbudget spendingMontgomery: http://spending.data.montgomerycountymd.gov Questions? Call 311 Stay in touch on Twitter :@dataMontgomery Victoria Lewis Victoria.Lewis@MontgomeryCounty MD.gov Lenny Moore Lenny.Moore@MontgomeryCountyM D.gov

60. QUESTIONS?

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63. MONTGOMERY COUNTY GOVERNMENT 2015 MULTI-FACETED VIEW OF SPENDING

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76. Local Government Perspective Comprehensive Annual Financial Report and Annual Report Fiscal year end presentation of preceding fiscal year end and historical information Capital Improvement Program Short and long term capital planning needs for development of current budget and long term financing Budget Primary financial policy document for elected officials, managers, directors and citizens Annual Financial Presentations

77. Spreadsheets, spreadsheets and more spreadsheets!!! How do smaller jurisdictions expand their financial presentations to more effectively present information to citizens? Correlate long- term planning documents Expand on cost or revenue drivers Examine financial impacts through scenarios Interactive and dynamic financial information

78. Correlate long-term planning documents After the completion of the 2013 Comprehensive Plan (10-Year community planning document), it was the goal of the municipality to integrate the Comprehensive Plan with the Capital Improvement Plan. Goal The Comprehensive Plan document is prepared with a lot of citizen engagement. In order to keep the ideas and goals at the forefront, the municipality decided to integrate the two documents where applicable. Reason Mt. Lebanon, PA

80. Will YOUR pension get you here?

81. Expand on cost or revenue drivers Illustrate the pressure put on the general fund to fund pensions. Goal The Township administration felt it was important to highlight the components of pension funding. We chose to highlight it through the budget document. At one time, state funding covered all the required contributions on an annual basis. That is certainly not the case anymore and the gap is widening. It was important to show stakeholders (citizens, staff, bargaining groups) the trend and impacts on the general fund. Reason Upper St. Clair Township, PA

83. How many people have this chart in their financial statements?

84. Expand on cost or revenue drivers Highlight the demographics of one of the two main revenue sources (earned income tax) of the Township. Goal During the recession of 2008/2009, the Township was concerned about the effects of the recession on EIT receipts. In order to highlight the potential impact, the finance department examined the demographics and found…. Reason Upper St. Clair Township, PA

85. Of the 16,225 earned income tax returns filed on average from 2006 to 2008, 7.8% of the taxpayers contributed 58% of the total receipts.

86. Did this presentation matter? 2010 Budget – $7.595M 2010 Actual - $7.088M Budget Variance – ($507,000) Examining 2010 EIT Demographics Total Returns – 17,138 Variance with prior year by demographic Income $0-$150,000 – $21,000 Income $150,001 and above – ($484,000) IMPACT OF PRIOR CHART – Those making $500k or more (184 in 2010 and 189 in 2009) had a negative variance of $676,000 from 2009 to 2010.

87. Examine financial impacts through scenarios Examine the real estate tax millage impact depending on a given set of assumptions during an ad hoc committee process. Goal In 2014, the Mt. Lebanon Commission organized a committee to examine the feasibility of pay-as- you-throw (PAYT), a metered refuse collection system. A part of the committee’s examination was the impact on the tax structure. Reason Mt. Lebanon, PA

89. Pretty nice facility? How do you present the budgetary impacts of a new facility like this?

90. Examine financial impacts through scenarios Examine the real estate tax millage impact depending on a given set of assumptions during the budget process. Goal During the 2010 budget process (Fall 2009), the Township had to budget for a newly opened Community Recreation Center (CRC). There were many assumptions made for membership rates/demographics and facility costs in addition to all the other budgetary concerns of a normal budget process. In brief, the CRC had a planned deficit to be covered by the General Fund in 2010, but how big was it going to be and how much was the general fund going to be on the hook for??? Reason Upper St. Clair Township, PA

92. Interactive and dynamic financial information Increase financial transparency through citizen engagement activities and interactive financial reporting. Goal The municipality has received the GFOA PAFR and CAFR awards for 21 and 38 consecutive years, respectively. Our community expects the highest level of financial transparency. We are currently piloting an interactive financial presentation software that will allow citizens and taxpayers the ability to run ad hoc reports on annual data. Reason Mt. Lebanon, PA

95. Andrew McCreery, CPA Municipality of Mt. Lebanon (412) 343-3949 amccreery@mtlebanon.org

96. Please provide feedback on the session o Quick Text Feedback 1.Step 1 - Text “GFOA” to 22333 2.Step 2 - Did the session meet your expectations for being high quality and relevant to your job? Exceeded Expectations– Text “T13EXC” Met Expectations – Text “T13MET” Did Not Meet – “T13NOT” o To provide more detailed evaluation on the session or full conference go to www.gfoa.org/evals