Stockton, California is in the early stages of their bankruptcy and a local grand jury polled current city council members about their understanding of public finance. Does the latest round of public servants have any knowledge municipal finance? No, sadly the San Joaquin County Grand Jury discovered that there was little understanding of the city finances that the council oversees and that they could easily repeat prior mistakes. Local ABC affiliate, News10, reports (emphasis mine):
It has been widely reported how Stockton mismanaged its finances into bankruptcy court. The grand jury also questions the current council and council members’ ability to manage important financial issues.
“The Grand Jury’s concern is the limited grasp of municipal finances. While a few [council members]) indicated they had taken college-level courses in finance, or attended workshops, none indicated they were proficient in the matter,” read the report.
Here are city officials who have been seriously burned by financial problems and they have basically no more knowledge than their predecessors. Depressingly this lack of knowledge is true of many American municipalities and a critical reason that the SEC’s new rule for municipal advisers must have very strong fiduciary requirements for professionals who advise communities on bond offerings and other debt projects. Municipal advisers are the only outside professionals who will have a legal duty to protect the interests of their client, a municipality.
Here’s a little background on municipal advisers, since the issue has floated off the radar: