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GFOA Newsletter
April 13, 2017
Using Mutual Funds for Cash Management Purposes

GFOA has endorsed the use of money market mutual funds by public cash managers in the past, but a constant or stable net asset value (NAV) is not guaranteed, and investors of public monies should be aware of this risk. Portfolio safety, liquidity, diversification, and professional management are desirable features of these investment vehicles; however, liquidity may be impaired by the floating NAV.

GFOA therefore recommends that state and local governments restrict their use of mutual funds for cash management purposes exclusively to: 1) money market mutual funds that are invested in Treasury, federal government agency, or first-tier categories and possess the highest ratings available from at least one nationally recognized ratings agency; and 2) short-term bond funds that receive the highest credit quality ratings and the lowest risk ratings available.

When analyzing risk, governments should consider their local investment policy, and the fund prospectus (including points such as portfolio, risk characteristics, duration, and total expense ratio). Cash managers should also continue to monitor characteristics that may change over time, including restrictions on redemptions, fees, and holdings.

GFOA’s best practice, Using Mutual Funds for Cash Management Purposes, provides further recommendations.

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Association News
Improve Your Communication Skills at GFOA’s 111th Annual Conference

GFOA’s Annual Conference, May 21–24, at the Colorado Convention Center in Denver, Colorado, will feature many opportunities for finance officers to hone their leadership and management skills. Sessions focused on project management, managing teams, recruiting and identifying new employees, and how to improve communication will allow you to advance in your career and become a more valuable asset to your organization’s leadership team. GFOA recognizes the need to develop finance officers as organizational leaders and this is a key strategy to help create sustainable and financial resilient organizations.

If you’re not yet signed up to participate in this year’s event, there’s still time! Interested in sending junior staff to participate? Take advantage of the one-day rate registration fee on May 22 or 23. Click here to register. Don’t miss an opportunity to apply for a first-time annual conference attendee scholarship. Read more about the scholarship here. Please note that all 50 scholarships are committed for the States of California and Colorado.

If you have any questions about the Annual Conference, contact GFOA.


Thank you to those who are already registered for the Annual Conference.

Keep watch to receive an e-mail from badges@gfoa.org the week of April 17 to confirm your name badge details. Please add this e-mail address to
your allowed sender’s list.

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2017 GFOA Scholarships Awarded

GFOA’s Scholarship Committee met recently to award the 2017 scholarships to undergraduate and graduate students preparing for careers in state and local government. Congratulations to all the recipients.

The recipient of the $14,000 Daniel B. Goldberg Scholarship is Megan N. Erwin, who will graduate in May 2017 with a Master of Public Affairs degree, with concentrations in Public Finance Administration and Policy Analysis, from Indiana University, School of Public and Environmental Affairs, in Bloomington, Indiana. The scholarship is funded by the Girard Miller Foundation.

The recipients of the two awards for the Frank L. Greathouse Government Accounting Scholarship are Hannah F. Chu and Magali Moralez. Each recipient will receive a $9,000 award. The scholarship is funded by the Government Finance Officers Association.

  • Hannah F. Chu will graduate in May 2018 with a Bachelor of Science in Business Administration and a concentration in Accounting from California State University, Sacramento, California. 
  • Magali Moralez will graduate in August 2017 with a Bachelor of Business Administration/Master of Professional Accounting degree from West Texas A&M University in Canyon, Texas.

The recipient of the $9,000 Minorities in Government Finance Scholarship is Dora Ama Okai, who will graduate in the spring of 2018 with an Executive Master of Business Administration degree from the University of San Francisco in California. The scholarship is funded by Tyler Technologies.

The recipients of the four awards for the Government Finance Professional Development Scholarship are Christopher Carlos, CPA, Michelle M. DeNeui, Tiffany Leigh Jacobs, and Robert D. Symanski. Each recipient will receive a $9,000 award. The scholarship is funded by the Government Finance Officers Association Scholarship Reserve.

  • Christopher Carlos, CPA, will graduate in the fall of 2018 with a Master of Science degree in Accountancy from the State University of New York, Polytechnic Institute in Utica, New York.
  • Michelle M. DeNeui will graduate in August 2018 with a Master of Professional Accountancy from the University of South Dakota in Vermillion, South Dakota.
  • Tiffany Leigh Jacobs will graduate in the fall of 2019 with a Master of Public Administration from Old Dominion University in Norfolk, Virginia. 
  • Robert D. Symanski will graduate from Boston College, Carroll School of Management in Boston, Massachusetts, in the spring of 2019 with a Master in Business Administration degree.

Go to GFOA’s Scholarship webpage to read more about this year’s recipients. If you have questions about GFOA’s Scholarship program, please contact Peg Hartnett.

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New IRS Issue Price Rules Go Into Effect June 7

The value at which a bond’s price is determined at issuance is important to issuers of tax-exempt governmental debt because it is essential for determining the yield of a tax-exempt bond issue for arbitrage compliance purposes. It is also important for matters of compliance when a certain threshold is determined for the use of the proceeds—such as bank-qualified debt or voter-authorized debt. The final IRS issue price regulations are significantly different from prior regulations, which determined issue price by a reasonablly expectation standard, established as the “first price at which a substantial amount of the bonds is reasonable expected to be sold to the public.” This definition will change to the price at which bonds are actually sold to the public and it applies to bonds issued on or after June 7, 2017.

Ultimately, the documentation to accompany the debt issue, including underwriter certifications, notice of sale, and pricing wires will be required to establish issue price and should be discussed between the issuer, the issuer’s municipal advisor, bond counsel, and the underwriter in advance of the sale. GFOA encourages state and local governments to consult bond counsel as to how these changes may impact upcoming bonds sales. Stay tuned in the next couple weeks for a member alert on the final rules and likely impact to issuers.


Learn Best Practices in School Budgeting with GFOA’s Latest Guide

GFOA’s Best Practices in School Budgeting provides for a comprehensive budget process framework that emphasizes academic and finance collaboration to best align resources for desired student outcomes. The framework represents the culmination of a multi-year effort led by GFOA, with input from numerous school district officials and other experts in education finance, to develop guidelines for better budgeting, tailored specifically for school districts.

The best practices are organized around five major phases:

  1. Plan and Prepare
  2. Set Instructional Priorities
  3. Pay for Priorities
  4. Implement Plan
  5. Ensure Sustainability

Also included are recommendations on how to develop a strategic financial plan and a budget document that communicates not only the district’s financial plan but also student learning objectives. To help assess and improve programs, services, and the budget process, information on incorporating continuous improvement principles are embedded throughout the framework.

GFOA’s Best Practices in School Budgeting  is intended to be used with GFOA’s Alliance for Excellence in School Budgeting Program and Award for Best Practices in School Budgeting.

Read more and order a copy. If you are interested in receiving quantity discounts, contact GFOA

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GFOA Files Comments on MSRB Rule G-34

On March 31, 2017, GFOA filed comments as requested by the MSRB on draft rule amendments to Rule G-34 that would require for a dealer to obtain CUSIP numbers for new issue securities sold in private placement transactions and also require municipal advisors that are not dealers to be subject to the CUSIP requirement.

In the comments, GFOA emphasized a major and overriding concern “that the proposed rulemaking could dampen the bank loan and direct purchase markets, putting issuers in the unfavorable position of either not using a financing structure that is in their best interest, or having to pay more for those financings.” Instead, GFOA suggested that the MSRB spend effort and resources enhancing the EMMA system with regard to bank loan information, and continue to work with GFOA and other market participants to identify EMMA improvements that would accommodate the transactions being listed on an issuer’s homepage when Form G-32 is filed. 

News Links
New Website Covers State and Local Government Topics

A new website dedicated to state and local government issues provides interesting and useful articles and videos. Many GFOA Newsletter readers are familiar with Katherine Barrett and Richard Greene from their writing, research, and analysis of topics of importance to state and local government, including their management columns for Governing magazine.

The site’s first multi-media feature uses a slide show about budget transparency in the early part of the 20th century, and the B&G Report blog covers a wide range of topics, including water leaks, engagement among state employees, and tax collection. A post about GFOA’s Smarter School Spending Program heralds “the lack of dogma in the approach and the focus on local decision-making based on local needs.”

Read More.
Business Incentives Database Helps with Conclusions about Effectiveness

While business incentives such as tax credits are a widely used tool for creating jobs and strengthening local economies, there isn’t much research showing exactly how much they cost and how they are used. Pew Trusts helped fund a new database of the incentives offered by 33 states and 47 cities to new or expanding businesses in select industries from 1990 through 2015. Analysis indicates that:

  • Incentives are worth 30% of the state and local business taxes that these companies owe.
  • The value of incentives is increasing, although the increase is slowing.
  • The use of incentives varies significantly by state, and “states that impose higher business taxes do not necessarily offer more incentives to compensate, nor do states with lower business taxes necessarily offer smaller incentives as a result.”
  • Policymakers could be made more effective by targeting industries that pay high wages, employ more workers, and spend more on research and development. 
Read More.
City Identification Database Allows Governments to Make Good Comparisons

Cities tend to ignore their role in the larger context—that is, how they compare with other cities, according to Forbes. Similarly, cities often have a hard time finding appropriate peers for benchmarking, which can create misleading comparisons, “pushing some cities to seek a policy path that was easily achievable and successful for one city, but a difficult task leading to failure for another.” The Peer City Identification Tool, developed by the Community Development and Policy Studies department of the Chicago Federal Reserve, helps with this problem, allowing cities to identify other areas that face similar challenges and, perhaps, find the ones that have developed appropriate policy responses. The tool contains public data from 300 U.S. cities and is organized by equity, which examines economic and social measures of inequality; resilience, which measures labor characteristics; housing, which examines factors related to the housing supply and market; and outlook, which compares general demographic and population dynamics.  

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Improve Your Negotiating and Conflict Management Skills

Many of us shy away from conflict, but managers can’t avoid it. The Kellogg School of Management at Northwestern University provides some useful tips for improving your negotiating skills and managing conflict in the office:

  • Where possible, reframe problems as cultural issues to help clarify an employee’s viewpoint.
  • Help diffuse tensions by making the effort to view the argument from a neutral, outside perspective.
  • Improve your negotiations by managing your emotional response; trying to understand your colleague’s behavior can help.
  • Don’t ask if a point is negotiable; just start negotiating.
  • Studies show that bright lights increase aggression.
Read More.
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Editor: Marcy Boggs  |  Executive Director/CEO: Jeffrey Esser

The GFOA Newsletter (ISSN 1051-6964) is published weekly by
the Government Finance Officers Association of the United States and Canada.
Correspondence regarding editorial and/or business matters should be sent to
GFOA, 203 N. LaSalle St., Suite 2700, Chicago, IL 60601-1210. Phone - 312/977-9700 FAX - 312/977-4806.


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