When Justin Marlowe published a “Guide to Financial Literacy” in 2014 to serve as an extension of his bi-monthly columns in Governing magazine, the Endowed Professor of Public Finance and Civic Engagement at the Evans School of Public Policy & Governance harbored modest aims. He thought it might find an audience among state and local officials. But Marlowe and the magazine’s publisher, Mark Funkhouser, did not expect those officials to use the Guide’s analytical framework as a template for performance audits and other work products. Yet, cities from coast to coast have seized the opportunity provided by Marlowe, Funkhouser, and the Guide to do just that.
In California, the San José auditor’s office has applied the Guide’s 10 measures to the financial condition of the country’s 10th-largest city. The city auditor’s report (covering the 2010-11 through 2014-15 fiscal years) asks three important questions: can the city pay its bills now, can the city’s revenues cover its expenses, and can the city pay its bills in the future? Marlowe argues that these are the questions municipalities must ask because public-finance experts recognize the fundamental point that the revenue options we have will not grow; they are what they are. He goes on to point out that sales and income taxes will only continue to shrink as a percentage.
According to the February 11 report, the city of San José’s general fund had been running a deficit for nearly a decade. The shortfall pre-dated the Great Recession and forced the city of 1 million people to “to reduce many City programs including a significant reduction in staff.” San José receives less tax revenue per capita than many of its neighboring cities, which form the rich and growing richer Silicon Valley, of which San José is the self-styled capital. With more than $1 billion in in deferred maintenance and infrastructure backlog and more than $3 billion in unfunded liability for pension and retiree health benefits, San José officials needed practical financial advice. For it, they turned to the “Guide to Financial Literacy” and used its measures to create the office’s first financial condition report.
Across the country in Massachusetts, the City of Lowell (with about 109,000 people, the country’s 255th-largest city) won its first "Excellence in Budget Reporting" Award from the Government Finance Officers Association (GFOA). The award denotes not only a thorough, comprehensive budget document, but one accessible to the general public. Lowell covered that by basing most of the material in the “Municipal Finances 101” section of its budget on the Guide.
More than 80,000 copies of the Guide have been distributed and more than a quarter-million have been downloaded. Marlowe responded to the popularity by releasing a second guide in 2015 and plans a third volume for later this year.