News in Cortland NY

Fiscal Stress Monitoring System

NYS Comptroller Fiscal Stress Report for City of Cortland

The NYS State Comptroller (OSC) began focusing on fiscal stress in 2012 after noticing a number of alarming trends among local governments. OSC auditors found that nearly 300 local governments had deficits in recent years, and more than 100 had inadequate cash on hand to pay their current bills. In response, OSC drafted the 'early warning' monitoring system last September and shared details of the proposal with all of the state's local governments and school districts for their review during a 60-day comment period. More than 100 local government and school district officials, as well as a number of affiliated organizations provided feedback.

The initial fiscal stress list was based on financial information provided to OSC by local communities as of May 31, 2013 (information from filed Annual Financial Update Documents or AUDs) and includes only municipalities with fiscal years ending on Dec. 31, 2012. In New York, all counties and towns, 44 cities and 10 villages have a Dec. 31 fiscal year end -a total of 1,043 communities.

The Fiscal Stress Monitoring System evaluates local governments on 23 financial and environmental indicators and creates an overall fiscal condition score. Indicators include cash-on-hand and patterns of operating deficits, together with broader demographic information like population trends and tax assessment growth. The scores are used to classify whether a community is in "significant fiscal stress," "moderate fiscal stress," "susceptible to fiscal stress," or "no designation." (The City received a “no designation”)

According to OSC, the municipalities found to be in stress share a number of common characteristics, such as low fund balance, a continued pattern of operating deficits and inadequate cash on hand to pay their bills. In addition to the 24 fiscally stressed municipalities, OSC reports that 18 communities have been listed as "under review" and continue to have their information vetted There are also 124 local entities that have been designated as "have not filed", meaning they have yet to submit necessary financial information due to the Comptroller's office. The remaining communities, including the City, have been classified as "no designation." This system measures the level of fiscal stress a municipality is facing. Please Note: A municipality's absence from the top three categories should not be viewed as substantiation of good financial condition by the Comptroller's office.

OSC has also released a report examining fiscal stress drivers and how municipalities can address fiscal stress. The report details the primary factors that could jeopardize local government finances, such as operating deficits, increasing fixed costs, poor economic conditions and long-term demographic shifts. It also identifies which classes and types of government are most likely to be designated as fiscally stressed. Additionally, the report reviews many of the steps local officials can take to avoid fiscal stress, which includes utilizing a number of resources provided by the Comptroller's office.

Later this year, OSC will provide updated information on the monitoring system for those municipalities that are under review or have yet to file. They will also release a separate scoring list for school districts and those cities and villages whose fiscal years end at various periods throughout the year.

As part of the fiscal stress initiative, OSC has created a new local government support program - Avoid Crisis Tomorrow with Fiscal Awareness Strategies Today or ACT FAST. This program can be initiated by a joint request from a local government's chief executive officer and governing board. The Comptroller's office would then complete an accelerated risk assessment to determine what level of service would be most beneficial to the requesting municipality or school district.

OSC has also created a new dedicated webpage where local officials can find a number of valuable resources. For example, each local government will have access to a self-assessment tool that will allow them to determine potential fiscal stress scores in future years. In addition, there are multi-year financial planning resources, capital planning templates, best practice guides and information on how to register for training events.