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Abstract: 

The Municipal Finance Journal serves the state and local government finance community by publishing articles that advance the municipal market. To further this goal, we publish edited panel presentations from selected meetings of professionals involved in this market. As we mark 10 years of working with the National Federation of Municipal Analysts (NFMA), we are pleased to start a similar arrangement with the National Association of Independent Public Financial Advisors. NAIPFA members specialize in the provision of financial advice on bond sales and related fiscal planning to issuers, and must be independent of the underwriting of municipal securities. Two sessions at the recent NAIPFA conference produced particularly relevant articles. Ken Schermann of the Governmental Accounting Standards Board discusses a user’s perspective to the new financial reporting standards known as Statement 34. He highlights the requirements for a long-term perspective and a narrative explanation to the financial statements, and confirms that the fund perspective, so critical to revenue bonds, is not lost in the movement towards treating the governmental entity as an economic unit. While attorney Al Rutledge specifically addresses the liability of public finance advisors for fraud and professional negligence allegations, his loss prevention and management lessons have value to most everyone in a variety of situations. He suggests that agreements and contracts between debt issuers and financial advisors contain arbitration clauses. Professors Bill Simonsen, Mark D. Robbins and Bernard Jump address the absence of a comprehensive cost of capital measure that includes all the costs associated with a bond sale. They proffer the ‘internal financing rate’ as a more appropriate cost metric for issuers because it includes costs of issuance and the net impact of capitalized interest and debt service reserve funds. They report favorable results in a test against the standard ‘true interest cost’ measure. Based on experience as assistant treasurer with the New York City Municipal Finance Authority and now in public finance underwriting, Joanne Feld examines the use of variable rate demand obligations for issuers of water and sewer debt. She identifies the key features and makes suggestions for issuers interested in such financing. In the tax law development column, Attorney Linda Schakel discusses legislation from the completed session of Congress.

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Affiliations:  1: Wichita State University.