Quantum leap

May 3, 2023

City of Flint and CLOSUP work toward transparency in municipal financial reporting

By Daniel Rivkin

When City of Flint CFO Rob Widigan looks at his required annual financial reporting to the state of Michigan, he sighs. His department needs to compile the accounts, which are saved as a PDF document, and separately copy certain numbers into at least six different types of filing. It's a time-consuming process that also severely limits the reports' accessibility and usefulness for many stakeholders.

"Let's face it, our annual audits provide essential information for understanding local fiscal health. But if you ask me, it is about time we modernize and digitize municipal financial reporting," he says.

When I heard that the University was working on this, I thought, 'It's an audit, how exciting can it be?' When I checked it out, I saw that it was a quantum leap in financial reporting"

Rob Widigan

For the past 18 months, the Center for Local, State, and Urban Policy's (CLOSUP) Fiscal Health Project has been helping them do just that. Flint is piloting a new, transparent, searchable data standard called XBRL technology, which is an open international standard for digital business reporting, used by companies, regulators, and governments around the world. In conjunction with XBRL US and with funding from the Mott Foundation, CLOSUP is working with the city to code its financial information into the open data format. It is a painstaking process, but once implemented, will save time and effort for city employees, for the state Treasury, for researchers and analysts, and for the general public.

Stephanie Leiser and Tom Ivacko
Stephanie Leiser and Tom Ivacko

"When I heard that the University was working on this, I thought, 'It's an audit, how exciting can it be?' When I checked it out, I saw that it was a quantum leap in financial reporting," Widigan says. That's when he reached out to CLOSUP.

The long-term vision for XBRL would be for a government entity to enter the data once and then be able to use it multiple times. It will create efficiencies, according to faculty member Stephanie Leiser, Fiscal Health Project lead.

CLOSUP Executive Director Tom Ivacko adds, "The Flint Water Crisis makes Flint an obvious place to try to increase transparency and try to help the city's efforts to become a leader in local government financial management."

Could the financial crises of Flint and Detroit have been avoided if XBRL had been in place? Leiser won't go that far, but she notes that at least all stakeholders would have had better access to data and information, so the red flags would have been easier to detect.

Widigan hopes that local governments will be able to communicate better with all of their stakeholders—the state government, philanthropic partners, and community organizations. "The point is that we are going to have digital, transparent data that anybody who is a guru about local government finance, or knows nothing about local government finance, can say, 'I can see exactly where my tax dollars go.'"

While Flint may be ahead of other local governments, they are all far behind the private sector. As the pilot program continues, which also includes the governments of Ogemaw County and Pine River Township, Michigan's Treasury is establishing a task force to look into implementation of the new standard, which still could be years away. Additionally, a new Federal law will require digital reporting like XBRL provides for municipal bond markets.

Ivacko states, "The stars are aligning. Our first goal is to help the jurisdictions in Michigan. This is going to happen nationwide, and Michigan can be in the driver's seat, and we want to be in a position to help local governments ensure their needs are met."

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