On April 7, 2018, Alex Hathaway, a research associate with the Center for State and Local Finance, made a panel presentation at the Western Social Science Association Conference in Austin, Texas. His presentation on fiscal transparency in the Southeast expanded on research supported by the Volcker Alliance\u27s multiyear project on state budgeting practices. Jesseca Lightbourne and Bart Hildreth, along with pubic finance fellows Emily Franklin and Bethel Habte, contributed to the paper

Franklin, Emily

Habte, Bethel

Hathaway, Alex

Hildreth, Bart

Lightbourne, Jesseca

English

ScholarWorks @ Georgia State University

Georgia State University ScholarWorks @ Georgia State University CSLF Working Papers Center for State and Local Finance 4-7-2018 Fiscal Transparency across the States: A Volcker Alliance Paper Jesseca Lightbourne Georgia State University Alex Hathaway Georgia State University Emily Franklin Georgia State University Bethel Habte Georgia State University Bart Hildreth Georgia State University Follow this and additional works at: https://scholarworks.gsu.edu/ays_cslf_workingpapers Recommended Citation Lightbourne, Jesseca; Hathaway, Alex; Franklin, Emily; Habte, Bethel; and Hildreth, Bart, "Fiscal Transparency across the States: A Volcker Alliance Paper" (2018). CSLF Working Papers. 14. https://scholarworks.gsu.edu/ays_cslf_workingpapers/14 This Article is brought to you for free and open access by the Center for State and Local Finance at ScholarWorks @ Georgia State University. It has been accepted for inclusion in CSLF Working Papers by an authorized administrator of ScholarWorks @ Georgia State University. For more information, please contact scholarworks@gsu.edu. Fiscal Transparency across the States:A Volcker A lliance Paperby Jesseca Lightbourne, A lex Hathaway, Emily Franklin, Bethel Habte and Bart HildrethAlex HathawayCenter for State and Local FinanceApril 7, 2018Overview• Review of the transparency literature• Methodology• Results• ConclusionsAlex Hathaway23 Alex HathawayReview of the Transparency Literature• Theory• Benefits• Drawbacks• Best practicesReview of the Transparency Literature• Little research at state level, with non-expert focus• Theoretical framework– Principal-agent problem• Benefits– Improved accountability, trust, and fiscal performance• Drawbacks– Vulnerability to interest groups– Misinterpretation of information• Best practice guidelines– Show underlying assumptions– Timely, accessible, understandable information– Auditing component4 Alex HathawayAlex Hathaway5Methodology• Data collection• Transparency index• Regression modelMethodology: Data Collection• Transparency defined in terms of whether a non-expert (citizen/voter) or investor can get an accurate view of the structural health of a state• Timely and complete information– Executive proposal, legislative analyses/review, forecasting document, fiscal outlook– CAFR not a timely document• Accessible and understandable information– Easily found on state website(s)– Regularly produced– Format includes detailed narrative explanations6 Alex HathawayMethodology: Data Collection (cont.)• Data from Volcker Alliance project (FY16) and NASBO’s Budget Processes in the States– Multiyear revenue and expenditure forecasts?– Detailed forecasting rationale?– Tax expenditures?– Debt projections?– Explicitly disclose structural problems?– Consolidated website or group of related sites?– Performance measures inform executive proposal?• Incorporated in transparency index– Scale from 1 (low) to 9 (high)7 Alex Hathaway8Methodology: Descriptive Statistics of Regression Variables• Dependent variable– Transparency index• Credit Rating– Moody’s– Scaled 0-10• Budget cycle– Annual=1– Biennial=0• State Senate Turnover– Number of seats• Controls– Population– Average annual income– Unemployment rate• Regression looks at association of state-level fiscal and institutional factors on transparency.Alex HathawayAlex Hathaway9Results• Transparency index scores• Score mapping• Best practices• Regression model10Results: Transparency Index ScoresAlex Hathaway11Results: Transparency Index ScoresAlex Hathaway12State of California — The 2017-18 Budget: California’s Fiscal Outlook, p.52Best Practice Example: California’s Fiscal OutlookAlex HathawayBest Practice Example:West Virginia’s Executive Budget Report13State of West Virginia — FY 2018 Executive Budget Report (Volume I), p.5Alex Hathaway14Regression Results: Associations with Transparency• Positive association– Expenditures– Surplus per cap– Credit rating– Income• Negative association– Revenue• Not statistically significant– Debt– Budget cycle– Senate turnover– Population– UnemploymentAlex HathawayAlex Hathaway15Conclusions• State results• Objectivity• Future researchConclusions• Every state has room to improve its transparency practices– Public access alone does not constitute fiscal transparency• Information should be:– Accessible– Understandable– Timely• Objective transparency indicators– Identify states that best use transparency strategies– Common characteristics– Understand why some states are more transparent than others• Future Research– Use model to explore the extent to which transparency affects the environment in which officials make decisions about resource allocation16 Alex HathawayThank You!Special thanks to the Volcker Alliance and the other southeastern research teams:University of Kentucky (Merl Hackbart & Rhonda Trautman)Florida International University (David Guo)17Alex Hathawaynhathaway2@gsu.eduAlex Hathaway

Fiscal Transparencyacross the States:A Volcker Alliance Paper

Georgia State University

Fiscal Transparency across the States: A Volcker Alliance Paper

Georgia State University 
ScholarWorks @ Georgia State University 
CSLF Working Papers Center for State and Local Finance 
4-7-2018 
Fiscal Transparency across the States: A Volcker Alliance Paper 
Jesseca Lightbourne 
Georgia State University 
Alex Hathaway 
Georgia State University 
Emily Franklin 
Georgia State University 
Bethel Habte 
Georgia State University 
Bart Hildreth 
Georgia State University 
Follow this and additional works at: https://scholarworks.gsu.edu/ays_cslf_workingpapers 
Recommended Citation 
Lightbourne, Jesseca; Hathaway, Alex; Franklin, Emily; Habte, Bethel; and Hildreth, Bart, "Fiscal 
Transparency across the States: A Volcker Alliance Paper" (2018). CSLF Working Papers. 14. 
https://scholarworks.gsu.edu/ays_cslf_workingpapers/14 
This Article is brought to you for free and open access by the Center for State and Local Finance at ScholarWorks 
@ Georgia State University. It has been accepted for inclusion in CSLF Working Papers by an authorized 
administrator of ScholarWorks @ Georgia State University. For more information, please contact 
scholarworks@gsu.edu. 
Fiscal Transparency 
across the States:
A Volcker A lliance Paper
by 
Jesseca Lightbourne, A lex Hathaway, Emily Franklin, 
Bethel Habte and Bart Hildreth
Alex Hathaway
Center for State and Local Finance
April 7, 2018
Overview
• Review of the transparency literature
• Methodology
• Results
• Conclusions
Alex Hathaway2
3 Alex Hathaway
Review of the Transparency Literature
• Theory
• Benefits
• Drawbacks
• Best practices
Review of the Transparency Literature
• Little research at state level, with non-expert focus
• Theoretical framework
– Principal-agent problem
• Benefits
– Improved accountability, trust, and fiscal performance
• Drawbacks
– Vulnerability to interest groups
– Misinterpretation of information
• Best practice guidelines
– Show underlying assumptions
– Timely, accessible, understandable information
– Auditing component
4 Alex Hathaway
Alex Hathaway5
Methodology
• Data collection
• Transparency index
• Regression model
Methodology: Data Collection
• Transparency defined in terms of whether a non-
expert (citizen/voter) or investor can get an accurate 
view of the structural health of a state
• Timely and complete information
– Executive proposal, legislative analyses/review, forecasting 
document, fiscal outlook
– CAFR not a timely document
• Accessible and understandable information
– Easily found on state website(s)
– Regularly produced
– Format includes detailed narrative explanations
6 Alex Hathaway
Methodology: Data Collection (cont.)
• Data from Volcker Alliance project (FY16) and 
NASBO’s Budget Processes in the States
– Multiyear revenue and expenditure forecasts?
– Detailed forecasting rationale?
– Tax expenditures?
– Debt projections?
– Explicitly disclose structural problems?
– Consolidated website or group of related sites?
– Performance measures inform executive proposal?
• Incorporated in transparency index
– Scale from 1 (low) to 9 (high)
7 Alex Hathaway
8
Methodology: Descriptive Statistics of Regression Variables
• Dependent variable
– Transparency index
• Credit Rating
– Moody’s
– Scaled 0-10
• Budget cycle
– Annual=1
– Biennial=0
• State Senate Turnover
– Number of seats
• Controls
– Population
– Average annual income
– Unemployment rate
• Regression looks at association of state-level fiscal and institutional factors on transparency.
Alex Hathaway
Alex Hathaway9
Results
• Transparency index scores
• Score mapping
• Best practices
• Regression model
10
Results: Transparency Index Scores
Alex Hathaway
11
Results: Transparency Index Scores
Alex Hathaway
12
State of California — The 2017-18 Budget: California’s Fiscal Outlook, p.52
Best Practice Example: California’s Fiscal Outlook
Alex Hathaway
Best Practice 
Example:
West Virginia’s 
Executive Budget 
Report
13
State of West Virginia — FY 2018 Executive Budget 
Report (Volume I), p.5
Alex Hathaway
14
Regression Results: Associations with Transparency
• Positive association
– Expenditures
– Surplus per cap
– Credit rating
– Income
• Negative association
– Revenue
• Not statistically significant
– Debt
– Budget cycle
– Senate turnover
– Population
– Unemployment
Alex Hathaway
Alex Hathaway15
Conclusions
• State results
• Objectivity
• Future research
Conclusions
• Every state has room to improve its transparency practices
– Public access alone does not constitute fiscal transparency
• Information should be:
– Accessible
– Understandable
– Timely
• Objective transparency indicators
– Identify states that best use transparency strategies
– Common characteristics
– Understand why some states are more transparent than others
• Future Research
– Use model to explore the extent to which transparency affects the 
environment in which officials make decisions about resource allocation
16 Alex Hathaway
Thank You!
Special thanks to the Volcker Alliance 
and the other southeastern research teams:
University of Kentucky (Merl Hackbart & Rhonda Trautman)
Florida International University (David Guo)
17
Alex Hathaway
nhathaway2@gsu.edu
Alex Hathaway


Fiscal Transparency
across the States:
A Volcker Alliance Paper

Georgia State University ScholarWorks @ Georgia State University CSLF Presentations Center for State and Local Finance 4-7-2018 Fiscal Transparency across the States: A Volcker Alliance Paper Jesseca Lightbourne Georgia State University Alex Hathaway Georgia State University Emily Franklin Georgia State University Bethel Habte Georgia State University Bart Hildreth Georgia State University Follow this and additional works at: https://scholarworks.gsu.edu/ays_cslf_presentations Recommended Citation Lightbourne, Jesseca; Hathaway, Alex; Franklin, Emily; Habte, Bethel; and Hildreth, Bart, "Fiscal Transparency across the States: A Volcker Alliance Paper" (2018). CSLF Presentations. 1. https://scholarworks.gsu.edu/ays_cslf_presentations/1 This Article is brought to you for free and open access by the Center for State and Local Finance at ScholarWorks @ Georgia State University. It has been accepted for inclusion in CSLF Presentations by an authorized administrator of ScholarWorks @ Georgia State University. For more information, please contact scholarworks@gsu.edu. Fiscal Transparency across the States:A Volcker A lliance Paperby Jesseca Lightbourne, A lex Hathaway, Emily Franklin, Bethel Habte and Bart HildrethAlex HathawayCenter for State and Local FinanceApril 7, 2018Overview• Review of the transparency literature• Methodology• Results• ConclusionsAlex Hathaway23 Alex HathawayReview of the Transparency Literature• Theory• Benefits• Drawbacks• Best practicesReview of the Transparency Literature• Little research at state level, with non-expert focus• Theoretical framework– Principal-agent problem• Benefits– Improved accountability, trust, and fiscal performance• Drawbacks– Vulnerability to interest groups– Misinterpretation of information• Best practice guidelines– Show underlying assumptions– Timely, accessible, understandable information– Auditing component4 Alex HathawayAlex Hathaway5Methodology• Data collection• Transparency index• Regression modelMethodology: Data Collection• Transparency defined in terms of whether a non-expert (citizen/voter) or investor can get an accurate view of the structural health of a state• Timely and complete information– Executive proposal, legislative analyses/review, forecasting document, fiscal outlook– CAFR not a timely document• Accessible and understandable information– Easily found on state website(s)– Regularly produced– Format includes detailed narrative explanations6 Alex HathawayMethodology: Data Collection (cont.)• Data from Volcker Alliance project (FY16) and NASBO’s Budget Processes in the States– Multiyear revenue and expenditure forecasts?– Detailed forecasting rationale?– Tax expenditures?– Debt projections?– Explicitly disclose structural problems?– Consolidated website or group of related sites?– Performance measures inform executive proposal?• Incorporated in transparency index– Scale from 1 (low) to 9 (high)7 Alex Hathaway8Methodology: Descriptive Statistics of Regression Variables• Dependent variable– Transparency index• Credit Rating– Moody’s– Scaled 0-10• Budget cycle– Annual=1– Biennial=0• State Senate Turnover– Number of seats• Controls– Population– Average annual income– Unemployment rate• Regression looks at association of state-level fiscal and institutional factors on transparency.Alex HathawayAlex Hathaway9Results• Transparency index scores• Score mapping• Best practices• Regression model10Results: Transparency Index ScoresAlex Hathaway11Results: Transparency Index ScoresAlex Hathaway12State of California — The 2017-18 Budget: California’s Fiscal Outlook, p.52Best Practice Example: California’s Fiscal OutlookAlex HathawayBest Practice Example:West Virginia’s Executive Budget Report13State of West Virginia — FY 2018 Executive Budget Report (Volume I), p.5Alex Hathaway14Regression Results: Associations with Transparency• Positive association– Expenditures– Surplus per cap– Credit rating– Income• Negative association– Revenue• Not statistically significant– Debt– Budget cycle– Senate turnover– Population– UnemploymentAlex HathawayAlex Hathaway15Conclusions• State results• Objectivity• Future researchConclusions• Every state has room to improve its transparency practices– Public access alone does not constitute fiscal transparency• Information should be:– Accessible– Understandable– Timely• Objective transparency indicators– Identify states that best use transparency strategies– Common characteristics– Understand why some states are more transparent than others• Future Research– Use model to explore the extent to which transparency affects the environment in which officials make decisions about resource allocation16 Alex HathawayThank You!Special thanks to the Volcker Alliance and the other southeastern research teams:University of Kentucky (Merl Hackbart & Rhonda Trautman)Florida International University (David Guo)17Alex Hathawaynhathaway2@gsu.eduAlex Hathaway

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Fiscal Transparency across the States: A Volcker Alliance Paper

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