Worried the FDTA might disrupt the muni market? Concerned about implementing new systems to stay compliant with reporting and disclosure requirements? Uncertain about how the changes will impact your government’s fiscal future? F&A and DebtBoook recently hosted an insightful webinar on “How Finance Leaders are Tackling Modernization,” where we dove into those questions. Our panel demystified common concerns about the FDTA, explored what it means for municipal finance, and shared the potential they see for making local governments work better.

You can watch the recording here. Keep reading for highlights from the discussion and download our free playbook for practical advice on implementation.

The main takeaways:

Good government is about being proactive, so plan ahead.

While FDTA implementation presents certain challenges (especially for small jurisdictions who lack the staff and/or tech capacity), it’s not an insurmountable obstacle. There are steps all finance leaders can take to prepare and use it as an opportunity to make finance a more strategic aspect of their government organization:

Ahmed Abonamah, CFO of Cleveland, encouraged finance officials and other muni stakeholders “to engage in the [SEC’s] notice and comment process, and do it in a constructive way.” Comment letters, no matter if they come from big jurisdictions or small towns, are an important way to inform the rulemaking and shape the final outcome, explained Abonamah who previously worked on the rulemaking process at the SEC. Also look to your professional associations, including the GFOA, for guidance.

Finance officials who are unsure about where to start, should consider connecting with “early implementers,” such as City Auditor, Megan Kilgore, and her team in Columbus, Ohio. IT work will be needed to execute the FDTA. Getting comfortable in modernizing IT systems, explained Kilgore, has put her City on a “natural trajectory” towards machine readable financials and revealed their ultimate benefits.

“Try and put yourself into the driver seat so that the FDTA is not perceived as happening to you, but as a way that you can better manage your local governments,” emphasized Kilgore. “Start planning for what you could do with this technology that will give you a little bit more time to focus on XYZ in your day.”

How the FDTA aligns with top priorities for city leaders:

Modernizing Systems and Services:
“The FDTA can be a move from operational to strategic,” said Tyler Traudt, CEO of DebtBook.

“One of the broadest objectives we’ve had is to modernize our systems A-Z. FDTA fits in well with what we are doing broadly at the City. We just unveiled a new citywide data portal. It’s essential in any efforts to modernize operations and use data in a meaningful way. The FDTA fits in well with this work,” said Abonamah, pointing to the example of how data insights helped Cleveland update its trash collection routes for the first time since 1938.

“For folks like the City of Columbus, we’re an income tax driven city, [and machine-readable financials allow us to] really try and predict how changes to our economy over time, with very intentional policy decisions, could actually move the needle,” described Kilgore.

Telling Your Story:
It’s about providing credible information to not just credit analysts and investors, but also to residents. “If we have data that’s easier to put together and parse out,” noted Abonamah, “it becomes easier for us to provide reliable information to the people that rely on us every day for very basic services.”

The story of your finances “is the story of you”, suggested Kilgore. That’s where the FDTA can be powerful in providing insights into “the bread and butter of local governments around the country… You’ll not only be able to query from the past, but also you’ll be able to work a lot faster to develop models that are meaningful to telling your story.”
This includes pulling together the necessary data points to generate compelling stories for grant applications as localities pursue new funding opportunities, such as the Inflation Reduction Act. “The IRA needs big ideas,” noted Kilgore. She explained that getting farther along in the FDTA timeline, it would have really empowered local governments’ ability to meet the moment.

Empowering Staff:
Using technology, including AI, to “alleviate the labor shortages …and to make tasks that feel really impossible, possible,” said Kilgore, “it can be a high-functioning way for local governments to be able to work within their means but be able to make more informed decisions.”

Tyler Traudt pointed to the recruitment and retention challenges many localities grapple with, especially as institutional knowledge is leaving organizations and (sometimes daunting) implementations of new systems put additional strain on remaining staff. “My hope is that through this process, the technology companies can come up with really impactful products for affordable prices, that are easy to implement, …so that we can recruit more professionals into the industry …to do the more strategic work… that is going to improve their careers and greatly benefit their organizations.”