Even if you are not inclined to dig into financial documents, please take a quick look at some key pages of the following documents:
McKinney ISD Financial Report for FY 2015. (93 pages).
To make this easy, first look at the cover page to give you a clue to the differences in professionalism. MISD doesn’t really have one. In fact, they do not produce a comprehensive audited report. To have a CAFR, you are required to have much more managerial and analytical information to help the layperson understand the contents. MUCH MORE.
Now go toward the back of the reports. The last three will have an entire section of statistical data: several schedules showing ten years of comparative data. I am a finance person and I simply can’t see the story in the numbers without comparative data. I spent a considerable amount of time for my last two blogs just to get some select data compared for the last five years. The CAFRs contain ten years of very helpful information.
In all fairness, many of these districts have moved from the basic required audited financial reports to CAFRs only in recent years. Perhaps we will see a MISD CAFR someday. But based on the efforts I’ve seen in recent months to be transparent, I’m guessing they are in no hurry.
Here’s the interesting part, you don’t tell the bondholders that you are sorry you don’t have comparative data and that you promise that you will be more forthcoming and helpful in the future. No! You produce much comparative data and ratios for at least the most recent five years. If you issue bonds regularly, which they do, then you already have a ton of the ten-year historical data. The work to produce a CAFR is lessened.
But, there is a part that takes a little work the first time. It is the MD&A, which stands for Management Discussion & Analysis. A little work and a willingness to interpret complex financial documents.
In fact, MISD just refunded bonds. The Official Statement is dated a month ago. This document is filled with legal language. Skip those parts for now and just look at the tables. It is rich with good information.
MISD may have a Sheep-Board and even an abundance of Sheep-Citizens. What you won’t ever find is a Sheep-Bondholder and the cast of players watching out for the bondholder, such as the bond rating agencies. As a side note, you would be amazed at the additional information in a modern O/S compared to the 1970s and earlier. They were very thin on analytical information. But after being asked repeatedly for certain information, the Finance Advisors realized they need to assemble the information that was going to be requested time and again. Also regulatory agencies have beefed up requirements all in the name of protecting the bondholder.
However, the bondholder just wants to make sure they get their interest paid and their principal back.
As a taxpayer, I want to see more comparative numbers without having to mine the data from multiple sources. There are plenty of examples of how the more truly transparent ISDs provide their information. Or just look at what the City of McKinney has been doing for years! Can MISD spell C-O-O-K-B-O-O-K? LFM