EFFECTIVE POPULAR REPORTING Presenters: Meagan Jordan, Old Dominion University Lenora Reid, City of Suffolk

1. EFFECTIVE POPULAR REPORTING • Presenters: • Meagan Jordan, Old Dominion University • Lenora Reid, City of Suffolk • Partially based on research by Juita-Elena Yusuf and Meagan Jordan and grant from Governmental Accounting Standards Board

2. Popular Reporting Defined • Separate reporting of financial and performance information to a citizen audience, with the explicit goal of increasing transparency and accountability. • Report distributed to citizens and other interested parties who lack background in public finance and who need or desire a simpler, less detailed overview of the government’s financial activities. • These citizens may not be familiar with traditional budget documents or audited financial reports.

3. Types of Popular Reports Popular reports may include: • General purpose financial statements • State-of-the-city reports • Corporate-style annual reports • Summarized financial statements • Financial trends reports, budget summaries • Narrative descriptions of efforts and accomplishments • Popular annual financial reports • Citizen-centric reports

4. Citizen-Centric Reporting AGA – Advancing Government Accountability “The AGA’s initiative to encourage governments to provide meaningful and understandable information about the financial condition and performance of the government to its citizens has cumulated in a four page citizen centric report” • The report ultimately answers the question, “Are we better off today than we were last year?” • The Association of Government Accountants (AGA) offers a Certificate of Excellence in Citizen-Centric Reporting. • The AGA developed a program that will assist governments in providing an easy to read, understandable, and visually appealing report to its citizenry. • In governmental agencies, the top officials report to the citizens.

5. Citizen – Centric Reporting • Therefore, it is imperative that the citizens understand their role in government and are able to be a part of the decision making within the organization. • The AGA recognized the need for citizens to have information available to them that is easy to understand. • Lack of information that is understood by the citizens lead to misunderstandings and distrust of the governing body of the government.

6. Declining Citizen Trust in Government Source: American National Election Studies http://www.electionstudies.org/nesguide/toptable/tab5a_3.htm

7. Perceptions of Government Financial Information Source: AGA 2010 Survey

8. Popular Reporting, Transparency and Accountability • Most budget documents and financial statements (e.g. CAFR) not readable and understandable by citizens • Results in information gap • Popular financial reporting is key to transparency and accountability for government finance • Mechanism for communicating key financial issues faced by the government entity and its fiscal condition

9. Public Participation in Budgeting and Financial Management • Public budgeting and fiscal policy decision processes are an important opportunity for meaningful citizen participation • Research suggests that public participation in budgeting increases legitimacy and support for budgeting decisions • But meaningful citizen participation requires informed citizens • Government financial information are available to citizens, but not necessarily accessible • Readable • Understandable • Meaningful and relevant

10. Challenges for Transparency and Accountability • Budget and financial documents are accessible, but information about budgeting or financial issues are not accessible • Budget and financial documents are difficult to understand, not readable at average citizen level • Not transparent • Difficult for citizens to be informed of budget and financial issues • Difficult to hold government accountable

11. Citizen Participation in Key Financial Reporting Processes • Local Governments prepare annual financial statements entitled the Comprehensive Annual Financial Report • Citizen participation – none • Local Governments also prepare an annual operating budget • Citizen participation – welcomed • Budget hearings are advertized • Budget public forums are held • Local Governments also prepare other reports in which citizen participation may be requested. • Attempts to increase citizen participation in the budget process and other processes is met with what measure of success? • The information is not always understood by the average citizen • Lack of participation / attendance • There is still a need for transparency and accountability

12. PFR as a Tool for Transparency and Accountability • Popular financial reports as a tool for informing and educating the public of budget and finance issue • If properly designed, can be useful to improve transparency and accountability

13. Research Question • Broad research question: How can popular reports be used effectively as tools for transparency, accountability, and public participation? • Answer the research question by addressing multiple perspectives • Government perspective • Citizen perspective

14. SUPPLY SIDE: THE GOVERNMENT PERSPECTIVE

15. Survey Overview • Two web surveys (one for cities and counties, another for states) • Designed to obtain information on type of popular reports used, logistics of preparation and distribution, reasons for adoption • Cities and counties • Summer 2010 • 57 cities and counties • States • Summer 2011 • 13 states

16. Extent of Popular Financial Reporting by Local Governments • 77% of responding local governments issue some type of popular financial reports • 85% of responding state governments issue some type of popular financial reports

17. Types of Popular Reports Issued

18. Departments/Functions Involved in Developing Popular Reports

19. Distribution Methods

20. Reasons for Popular Reporting

21. Reasons for Lack of Implementation • Already provide citizens with sufficient information • “We found that these reports were rarely used by the public” • “There are a variety of different reports that are available to the public that provide some elements of a popular report” • Lack of resources – financial, time, personnel • “They have not been a priority in terms of our other tasks and demands on our resources” • “It is the lack of resources that is the obstacle” • Most state and local governments see the benefits, most are limited in their ability to do so due to resource constraints

22. Summary of Government Surveys • Popular financial reports more widely adopted than previously believed. • But, are citizens aware of their existence? • Popular reports are organization-wide undertakings (not just budget and finance) • Mostly driven by information, transparency, and accountability reasons • Lack of adoption primarily due to lack of resources

23. Local Government / Resource Constraints to Implementation • Personal experience in working with local government • Local governments see the need for increased transparency and have the desire to fill that need • Lack of resources is the reason for the lack of implementation • Lack of human resources (limited staff) with competing priorities • Lack of financial resources to prepare and distribute the report to the citizens

24. CONTENT ANALYSIS OF LOCAL GOVERNMENT POPULAR REPORTS

25. Methodology • 21 popular reports from local governments that participated in the ‘state of practice’ survey • Popular Annual Financial Report (PAFR) • Citizen Centric Report (CC) • Analysis of content and format based on literature on fiscal transparency and guidelines suggested by GASB, GFOA, and AGA

26. Content Guidelines • 23 guidelines + 1 (PAFR) + 2 (CCR) • Five categories: • Comprehension • Access • Financials • Appearance • Community focused

27. Content Scores • OVERALL (n=21) • Average score = 18.67 • Standard deviation = 2.58 • PAFR (4=17) • Average score = 19.71 (out of possible 24) • Standard deviation = 1.31 • CCR (n=4) • Average score = 14.25 (out of possible 25) • Standard deviation = 1.71

28. Content Scores by Category • AVG S.D. • COMPREHENSION 16.33 3.08 • ACCESS 19.67 1.53 • FINANCIALS 15.86 4.71 • APPEARANCE 17.75 2.63 • COMMUNITY FOCUSED 11.33 3.79

29. Frequency of Selected Guidelines

30. Important Elements of Effective Popular Reports?

31. Summary of Content Analysis • Transparency is in the details • Discussion of the information provided • Key for comprehension and transparency • Photos/pictures • Non-finance related but with illustrative purpose • Providing additional financial information • Information in charts, graphs, tables • Capital projects, debt, bond rating, tax or millage rates, financial statements

32. Citizen-Centric Report – Content • The AGA has specific content guidelines for each page of the 4-page report • Page 1: Strategic Objectives; • What the organization is chartered (required) to do; • Demographics – to include information about the community (per capita income, number of government workers, unemployment, people-coming and going, firms – coming and going) • Table of Contents • All information should be presented on a per capita basis

33. Citizen - Centric Report – Content Guidelines • Page 2: How the Government is Doing – A Performance Report on Key Missions and Services • Governments should request input from the citizens regarding the measures the citizens would like to see reported. This information should be requested prior to the development of the report. • Report on nonfinancial outcomes for three or more of the government’s key services that are most relevant to the citizens • The key missions and/or services reported on should include comparisons to past years’ outcomes, to targets, and to similar jurisdictions, where applicable. • The AGA provides some examples of mission or services that may be included. • This page should also include a statement requesting the citizens to provide input on what they would like to see in the report.

34. Citizen - Centric ReportContent Guidelines • Page 3: The cost for servicing the citizens and how those cost are paid • The government should include revenue and cost data for major areas • This information could be married with the performance measures from the prior page • The preparer should take advantage of the opportunity to use pie charts and/or graphs for ease of understanding and visual appeal • Cost and revenue information included on this page may be compared to the previous year data. • This page should contain a statement indicating the results of the government’s independent audit. • This page should contain a link to the financial statements or information to assist the reader in obtaining a copy of the financial statements.

35. Citizen – Centric Report – Content Guidelines • Page 4: Challenges Moving Forward • What’s Next? • Future Issues? • The preparer may include items specific to the community and/or infrastructure items • Optional Items to be included: • Calendar of upcoming events • Request input from the reader – ask the reader if they like the information in the report and what they would like to see included.

36. Citizen – Centric ReportDesign Guidelines The AGA provides Design Guidelines for the Citizen-Centric Report • Visual Appeal and Readability • The report should be visually appealing to the reader • The report should include pictures, charts and graphs • The report should include the government’s seal and logo on the front • The report should not include technical language and acronyms • Physical Layout • A consistent column grid should be used • Each page should have the same margin width and the same number of columns • A header or footer, if used, should be consistent throughout the report to keep it cohesive • White space, if used, should be kept to the outer edges of the main content

37. Citizen – Centric ReportDesign Guidelines • Colors • The color palette should be limited to two or three unique colors. • Overly bright or clashing colors should not be used. • Images and Graphics • Images and photos used should take into consideration the distribution method of the report. • Tables and charts or graphs should be consistent throughout the report (i.e. size, color, labels). • Type and Fonts • Fonts should be limited to two font families • Font size should be no smaller than 10-point size

38. Citizen – Centric ReportDistribution of the Report The AGA provides suggestions on getting the report in the hands of the citizens. • Distribution Methods • Organization’s website • Local newspaper • Print and mail copies to citizens • Media release • Distribute copies to • Chamber of commerce • Local libraries • Government buildings • Coffee shops • Endless possibilities for distribution

39. Citizen – Centric ReportCertificate of Excellence in Citizen-Centric Reporting The AGA offers a Certificate of Excellence in Citizen-Centric Reporting. In order to obtain the certificate of excellence, entities must: • Prepare and distribute a high quality • Meet the program’s high standards of content, visual appeal, readability, distribution and timeliness in reporting • Certificate of Achievement in Citizen-Centric Reporting is presented to entities falling short of the requirements for excellence.

40. Citizen – Centric ReportingJudging Guidelines • The following 10 elements must be included in the report in order for the entity to be eligible for the Certificate of Excellence • How the entity is organized/operates • Key accomplishments / key missions and service / selected performance measures • Bar and/or pie charts incorporated for revenues and expenditures • Statement regarding an independent audit / results • Future challenges • Request to hear from the citizens • Report is free of accounting and other technical language • Report must contain pictures

41. Citizen – Centric Reporting Judging Guidelines – Cont’d • Report must be distributed • Report must be issued in a timely manner • First Year – must be submitted within six months and a clean audit • Second Year – must be submitted within 4 months and a clean audit • Fourth Year and beyond – must be submitted within three months and a clean audit • Program Cost • There is no cost to participate in the program • Application Process • 5 copies of the completed report or the link to a website where the report is posted should accompany the application and submitted to the AGA.

42. Citizen – Centric ReportingCity of Suffolk, Virginia (Application)

43. Citizen – Centric ReportingCity of Suffolk, Virginia

44. Citizen – Centric ReportingCity of Suffolk, Virginia

45. Citizen – Centric ReportingCity of Suffolk, Virginia

46. Citizen – Centric ReportingCity of Suffolk, Virginia

47. Citizen – Centric ReportingCity of Suffolk, Virginia • Deciding What to Include in the Citizen – Centric Report • Personal Experience

48. Citizen – Centric ReportingCity of Suffolk, Virginia

49. Citizen – Centric ReportingCity of Suffolk, Virginia

50. DEMAND SIDE: THE CITIZEN PERSPECTIVE