Telling Stories and Building History
January 5, 2016
In the course of my work, I attend many conferences in our field, including the big national’s like GFOA, ICMA, as well as many regional events. In 2015 I noticed a distinct pattern flowing through many training sessions and informal discussions: storytelling in reporting
The concept of “storytelling” has caught fire as a tool to communicate the complex information we need to present to decision makers in useful ways by combining specific financial facts with supporting narratives. Succession planning, preserving institutional knowledge, and coping with a shrinking workforce are all subject to conference attention and they increase the need for explanatory narrative. Our professional standards are evolving to improve all kinds of reporting to support the governing process by supplying history, context, and meaning, as well as current numbers.
The media, consultants, and think-tanks are also emphasizing storytelling. There is a long piece circulating on the Internet now by the Volcker Alliance called Beyond the Basics. Best Practices in State Budget Transparency. It includes this passage:
“Literature on budgeting and the authors’ interviews with fiscal experts suggest that the state budget process should include these features:
- Policies that govern budget processes and presentation should be clearly stated, including policies for the use of reserves, such as rainy day funds, that feature explanations of how money should be added or taken from the fund;
- The budget document should communicate key fiscal and policy decisions, issues, and tradeoffs;
- Revenue and expenditure information should be presented consistently to facilitate comparison between fiscal years;
- Budgets should provide trend data to illustrate how the state’s demographics, economy, and finances—including revenues and expenditures—change over time;
- Budget items should be defined consistently. For example, any capital budgets should clarify the difference between maintenance and major modification or construction; and
- The budget should provide information on the accuracy of past revenue and spending forecasts.”
This is a lot of material to include in an already information-packed and bulky budget document. As I look at this list, I am both pleased at how well I addressed many of these items in my work, and dismayed at some of my misses. I can check off most of this list, but know I did not do what I could have with demographic context, economic data, and budget variance analysis.
In our shop we thought of the budget and the Comprehensive Annual Financial Report (“CAFR”) as two sides of the same puzzle. I have to look at the contrast between the above and an article in Governing on December 3, 2015 by Katherine Barrett and Richard Greene, Dumbing Down Financial Reports, Missing Meeting Minutes and More, where they noted that a shorter Popular Annual Financial Report (“PAFR”) was a useful summary of the CAFR:
“Year-end financial reports are really important to government officials and budgeters, but they’re usually pretty hard for most everyone else — including, sometimes, legislators — to read. One way to help make the best use of these is to issue a “popular” report as well. These documents are generally filled with easy-to-understand charts and graphs, avoid financial jargon, and are far shorter and less detail-laden than traditional year-end reports.”
So we might ask, what are we supposed to do: Make our reporting even longer and more exhaustive or dumb it down? Of course the chorus of advisors are happy to say “both.”
As a finance professional, the numbers automatically come first for me, and it is hard to move forward until I know they are right. But as a business, and then government leader, I learned everyone else just assumed the numbers were right. They wanted to know what the numbers meant. Of course the budget is about where we were going, which was very interesting to most, and the CAFR about where we had been, which was much less interesting. Unless you were a bondholder, banker or auditor. Then you cared less about future promises than you did about the organization’s actual history.
In 2016, the emphasis on the story will continue to grow. As we come out of the Great Recession with rebounding revenues burning a hole in everyone’s pockets, we are going to find that the “hangover” of delayed maintenance, deferred raises and postponed projects will always be larger than the increase in available revenues. The numbers will be easily believed, while explaining the trade-offs that are needed will be the more difficult story. We asked each interest group to be patient, to help the government survive the recession. They expect something back now that times are better. Accurate, concise and clear narratives must surround the numbers, and explain the balancing act between finite resources and unlimited needs.
We should remember, and take some satisfaction in knowing, that every Staff Report, Budget Message and Management Discussion and Analysis, and Footnote we write tells our organization’s story and documents the decisions made today. Taking the time and putting the energy into these narratives creates value that lives on long into the future, as these threads combine to build the historical tapestry that will inform the next generation and carry the work forward.
Mike McCann moved into government service in Ukiah, then Monterey CA, after beginning his career in corporate (ADP, Wells Fargo Bank, Blue Shield of CA), not-for-profit (Blue Shield of Ca, Mendocino Private Industry Council), and start-up accounting. For the last 20 years, Mike has been hands-on with budget, financial reporting and accounting operations, including City budgets and CAFRs. He holds a B.S. in Accounting from SJSU and M.S. in Instructional Technology from CSUMB.
Category: Government Finance