Governmental Financial Condition Analysis, P11.4210
Spring 2011, January 27 - March 10, 2011. Thursday 6:45 pm – 8:25 pm
Location: LL139 Bobst
Instructor:
Dr. Yousuf Rahman, Adjunct Professor of Public Administration
Professional Affiliation: Assistant Director, Economics Division
New York City Office of Management & Budget (OMB), 75 Park Place, NY, NY 10007
(212) 788-6002, email: rahmany@omb.nyc.gov
Prerequisites:
The Wagner core Statistics, Micro-economics and Finance courses or equivalent.
BRIEF DESCRIPTION
This course covers the theories, and analytical methods for performing financial condition
analysis of state and local governments. Topics include the analysis of revenues, expenditures,
debt, pensions, and internal resources. Class discussion is an essential part of the course. You
should read the assigned material before the class in which it is assigned. Some of the reading
and test assignments assume basic understanding of statistics and regression analysis. The two
required texts are helpful in forming the conceptual foundation for the course. However, I will be
drawing extensively from my experience and research to develop a more concrete
methodological framework. Therefore attending class and taking class notes are going to be
essential for passing this course. Additional reading material and handouts will be distributed
in the class. If you miss a class, make sure you get the notes from one of your fellow class mates.
REQUIRED TEXTS (Both texts are only available at the NYU bookstore)
Martin Ives, Assessing Municipal Financial Condition, Copyright 2006 by: Martin Ives and
David R. Hancox Croton-on-Hudson, New York 10520, Albany, New York 12208,
ISBN 0-9711897-4-9.
Robert Berne and Richard Schramm, The Financial Analysis of Governments, Englewood Cliffs,
NJ: Prentice-Hall, 1986.
COURSE REQUIREMENTS
Mid-Term Take Home Assignment (20 points): Must be submitted to me in the class two
weeks following the class the assignment is distributed. There will be a penalty for late
submission and assignments will not be accepted after the assignment answers are discussed in
the class.
Final paper (80 points): Deadline for submission: You may hand it to me in person on April 7
(Thursday), between 6pm and 6:30pm at the lower level of the Bobst Library, or mail it to my
OMB address, in which case it must reach me by April 7th. If you are planning to mail your
assignment let me know from before. Do not email, fax or leave your assignment in my NYU
mailbox. Deadline for late submission of the final paper is April 29, 2011. Late submissions
(between April 8 and April 29) will be penalized by downgrading of grades. Final papers will
not be accepted after April 29. For incompletes, The Wagner School's rules will apply.
Class Quizzes: There will be several In-Class Quizzes to assess your progress. You must bring a
calculator in class.
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COURSE OUTLINE
Introduction, Framework for Financial Condition Analysis: The Economic Base and
Structure & Revenue Analysis
January 27 & February 3
- Robert Berne and Richard Schramm, The Financial Analysis of Governments, Chapter 1: Introduction,
Chapter 3: Framework and Methods for Financial Analysis, and Chapter 4: Revenue Analysis.
- Martin Ives, Assessing Municipal Condition, Chapters 1 – 4 & 6.
- Federal Reserve Bank of New York, Buffalo Branch, “Economic Diversity and New York State,” in The Regional
Economy of Upstate New York, Winter 2002.
Download from: http://www.ny.frb.org/research/regional_economy/upstate/winter2002.pdf
- Yesim Yilmaz, Sonya Hoo, Matthew Nagowski, Kim Rueben, and Robert Tannenwald, “Measuring Fiscal
Disparities Across the U.S. States: A Representative Revenue System/Representative Expenditure System
Approach, Fiscal Year 2002”, New England Public Policy Center at the Federal Reserve Bank of Boston,
Workding Paper 06-02, November 2006. Read pages 1 – 11.
Download from: www.urban.org/UploadedPDF/311384_fiscal_disparities.pdf
- Howard Chernick, “Fiscal Capacity in New York: The City Versus the Region,” National Tax Journal, vol 51, no 3
(September 1998), pp 531-40. [Available from my blackboard]
- Elizabeth McNichol, Phil Oliff, and Nicholas Johnson, “States Continue to Feel Recession’s Impact,” Center on
Budget and Policy Priorities, December 16, 2010. Download from: http://www.cbpp.org/files/9-8-08sfp.pdf
- Christopher W. Hoene & Michael A. Pagano, “City Fiscal Conditions in 2010”, in Research Brief on American
Cites, National League of Cities, October 2010. Download from :
http://www.nlc.org/ASSETS/AE26793318A645C795C9CD11DAB3B39B/RB_CityFiscalConditions2010.pdf
Expenditure Analysis
February 10 & February 17
- Robert Berne and Richard Schramm, The Financial Analysis of Governments, Chapter 5, Expenditure Analysis
- Martin Ives, Assessing Municipal Condition, Chapter 7.
- J.S. Akin and G.E. Auten, "City Schools and Suburban Schools: A Fiscal Comparison," Land Economics, Vol.
52, No. 4, November, 1976, pp. 452-466. [Available from my blackboard]
- Yesim Yilmaz, Sonya Hoo, Matthew Nagowski, Kim Rueben, and Robert Tannenwald, “Measuring Fiscal
Disparities Across the U.S. States: A Representative Revenue System/Representative Expenditure System
Approach, Fiscal Year 2002”, New England Public Policy Center at the Federal Reserve Bank of Boston,
Working Paper 06-02. Read pages 11- 32.
- Thomas Dohrmann and Lenny T. Mendonca, “Boosting Government Productivity,” McKinsey Quarterly,
November 2004. Download from:
https://www.mckinseyquarterly.com/Boosting_government_productivity_1514
- Citizens Budget Commission, “Managing for Results in New York City Government: A Review of Current
Practices, November 30, 2006. (This is optional reading for further discussion on efficiency measures).
Download from: http://www.cbcny.org/Final%20M&M%20White%20Paper.pdf
Debt Analysis and Management
February 24
- Robert Berne and Richard Schramm, The Financial Analysis of Governments, Chapter 6, Debt Analysis.
- Martin Ives, Assessing Municipal Condition, Chapter 8.
- Citizens Budget Commission, “In the Danger Zone – A Comparative of New York State’s Long-Term
Obligations,”
March 2010. Download from: http://www.cbcny.org/sites/default/files/REPORT_DangerZone_03092010_1.pdf
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- Citizens Budget Commission, New York's Public Authorities: Promoting Accountability and Taming Debt
September 5, 2006, Download from: http://www.cbcny.org/Authorities%20Book%209-06.pdf (Optional
Reading)
-W. Bartley Hildreth and Gerald J. Miller, “Debt and the Local Economy: Problems in Benchmarking Local
Government Debt Affordability,” Public Budgeting and Finance, winter 2002, pp 99-113. [Available from my
blackboard]
If you want to pursue this topic further, an excellent introductory book is: Public Securities Association,
Fundamentals of Municipal Bonds, (New York: Public Securities Association).
Pension Analysis and Management
March 3
- Robert Berne and Richard Schramm, The Financial Analysis of Governments, Chapter 7, Pension Analysis.
- Martin Ives, Assessing Municipal Condition, Chapter 9.
- James H. Dulebohn, "A Longitudinal and Comparative Analysis of the Funded Status of State and Local Public
Pension Plans," Public Budgeting & Finance, Summer 1995, pp. 52-72. [Available from my blackboard]
- Government Accountability Office, “State and Local Government Pension Plans – Current Structure and Funded
Status”, Statement of Barbara D. Bovbjerg, Director Education, Workforce, and Income Security, July 2008.
GAO-08-983T. Download from: http://www.gao.gov/new.items/d08983t.pdf
-Alicia H. Munnell, Jean-Pierre Aubry, and Laura Quinby, “The Funding of State & Local Pensions 2009 - 2013,”
Center for State & Local Government Excellence, April 2010. Download from:
http://www.slge.org/vertical/Sites/%7BA260E1DF-5AEE-459D-84C4876EFE1E4032%7D/uploads/%7B61B5DCFC-7F3A-452C-9CB9-43ED74BABC41%7D.PDF
- Alicia H. Munnell, Richard W. Kopcke, Jean-Pierre Aubry, and Laura Quinby, “Valuing Liabilities in State &
Local Plans”, Center for State & Local Government Excellence, June 2010, Download from:
http://www.slge.org/vertical/Sites/%7BA260E1DF-5AEE-459D-84C4876EFE1E4032%7D/uploads/%7B55604FA7-2FB9-4C49-94F3-C8D0AEA9556C%7D.PDF
Internal Resource Analysis & Wrap-Up Session
March 10
- Robert Berne and Richard Schramm, The Financial Analysis of Governments, Chapter 8, Internal Resource Analysis, Chapter 9, Summary and Conclusions, and Chapter 10, A Final Case Example.
- Martin Ives, Assessing Municipal Condition, Chapter 5 through p. 279 & Chapter 9, Appendix B, pp 294-302..
- Russell S. Sobel & Randall G. Holcombe, "The Impact of State Rainy Day Funds in Easing State Fiscal Crises
During the 1990-1991 Recession," Public Budgeting & Finance, Fall 1996, pp. 28-48. [Available from my
blackboard]
- Elaine Maag and David F. Merriman, “Understanding States’ Fiscal Health During and After the 2001 Recession”,
State Tax Notes, August 6, 2007.
Download from: http://www.taxpolicycenter.org/UploadedPDF/1001135_states_fiscal_health.pdf
- Bob Zahradnik and Nick Johnson, “State Rainy Day Funds: What to Do When it Rains?” Center on Budget and
Policy Priorities, January 31, 2002. Download from: www.cbpp.org/1-31-02sfp2.htm
- Daniel G. Thatcher, “State Budget Stabilization Funds”, National Conference of State Legislators, Spring 2008
revised September 2008. Download from: http://www.ncsl.org/programs/fiscal/rdf2008.htm
- Elizabeth McNichol and Brian Filipowich, “Rainy Day Funds: Opportunities for Reform”, Center on Budget and
Policy Priorities, April 17, 2007. Download from: http://www.cbpp.org/4-16-07sfp.pdf
- Tax Policy Center, “State Rainy Day Fund Regulations 2008”, Published January, 2009. Download from:
http://www.taxpolicycenter.org/taxfacts/Content/PDF/state_rainy_day.pdf
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