Giving Citizens Numbers They Can Understand
'Citizen-centric' financial reporting is a way for governments to improve transparency and accountability. It isn't hard, so why aren't more jurisdictions doing it?
As Jonathan Walters pointed out recently in Governing, hardly anyone understands Comprehensive Annual Financial Reports, the audited financial statements that governments produce. This is a problem that auditors and accountants long have struggled to deal with. On the one hand is the urge to be complete and accurate and to hedge or qualify every assertion, which leads to hundreds of pages of mind-numbing detail. On the other hand is the need to report financial information in ways that allow citizens to hold their governments accountable.
The Association of Government Accountants (AGA) has tried to deal with this through its "citizen-centric" financial reporting initiative. In 2006, the AGA came up with a formula for distilling the most important financial and performance information about a jurisdiction into a four-page document. About a hundred or so jurisdictions now are doing citizen-centric reporting, including huge governments such as the state of Texas and smaller ones such as Scottsdale, Ariz. In an era when journalists and public officials are united on the need for transparency, it's surprising that more governments have not embraced citizen-centric reporting.
Brent Stockwell, Scottsdale's director of strategic initiatives, says citizen-centric reporting is working well for his city, giving it a way to synthesize and streamline information that it already has produced and providing the basis for a deeper conversation with citizens. The report is, he says, a beginning and not an end.
Texas was one of the early states to adopt citizen-centric reporting, producing its first report in 2008. Phillip Ashley, who directs the effort out of the state comptroller's office, was familiar with the program because he'd been involved with the AGA for years and thought citizen-centric reporting would align well with Comptroller Susan Combs' emphasis on transparency. Besides, he points out, citizen-centric reporting doesn't take a lot of effort: A couple of staffers pull the information from other reports the office does.
The AGA's guidelines for content and design of citizen-centric reports are very specific. They call for the first page to present the mission of the jurisdiction and demographic information. Page two should provide performance measures on key mission or service areas, and citizens should be consulted in deciding what service areas should be reported on. Page three is to present the costs of services and the sources of revenue to pay those costs, and page four should present the major challenges for the jurisdiction going forward.
Several federal agencies, five states, about a dozen cities, eight counties and a small hodgepodge of other governmental units have posted completed reports on the AGA's website. Despite the AGA's fairly rigid guidelines, the reports vary widely in form and content. Some seem to be not a lot more than standard government propaganda, while others provide useful information in a manner that is clear and accessible without being dumbed down.
One of the best reports is Nevada's, which is produced by state Controller Kim Wallin. I was especially impressed with the fourth page, entitled "What's Next? Future Challenges and Economic Outlook." A section on that page, labeled "Intergovernmental Financial Dependency and Related Risks," details the amount of money the state gets from the federal government and points out that federal funds will likely be shrinking. Clearly Wallin doesn't think Nevadans need their government financial information sugar-coated.
The concept of citizen-centric reporting is sound, the need is clearly there and the accountants driving this thing are passionate about it. One tireless advocate is Johnson County, Kan., Auditor Bill Miller, who is chairman of AGA's accountability workgroup. He says that the governments that are doing citizen-centric reporting see the value of it and that the idea is making headway. I'm not so sure about that, but I hope Miller's right.