To govern effectively you have to know the language. And while the language of campaigning is handshakes and hyperbole, the language of governing is money — taxes, bonds, pensions and inevitably, budgets.
The trouble is, many newly elected or appointed officials arrive knowing next to nothing about public finance, says Justin Marlowe, a public finance specialist with the University of Washington’s Evans School of Public Affairs.
“They don’t know the technical details, and more important, they often don’t know where to learn what they need to know,” said Marlowe. “Many policymakers find this overwhelming, and this is understandable.”
That’s why Marlowe, an associate professor, wrote the “Guide to Financial Literacy: Connecting Money, Policy and Priorities” for Governing Magazine, which published it as an insert in its July issue. The 34-page document breaks down the basics of government finance with chapters on the flow of government money, legacy costs such as pensions and investing for long-term stability.
Marlowe said the guide seeks to help policymakers better understand their role in the world of government finance — a more complicated process, he said, than simply following the law. In fact, the guide lists several cautions that may be a surprise to the newcomer to government. These include:
- A government can put a lot of money into its pension fund but still fall short of fully funding it.
- Balancing a budget does not in itself ensure financial sustainability.
- The ongoing federal deficit is a major threat to local and state fiscal health.
Candidates have always run for office on narrow, ideological platforms; that’s just politics.
But the current polarization — people working only with those of like minds — has never been worse, Marlowe said. It makes officials hesitant to admit any lack of financial expertise for fear of being vulnerable to political opponents.
Yet effective governing depends on asking the right questions, Marlowe said. Toward that end, the guide lists sets of “essential questions” in each chapter that new officials should ask and that budget directors or agency heads should be able to answer. These include details on direct and indirect costs, diversity in revenue, reserve funds, legacy costs, audits and more.
Marlowe said the document is intended for local and state officials and people recently appointed to top-level administrative positions in government agencies.
“The whole guide is predicated on the idea that there are thoughtful people out there who want to learn. They really want to know these things — they just don’t know where to start.”
Tellingly, Marlowe said when discussing the planned guide with the magazine’s advisory board, he started with the assumption that most officials had at least a basic understanding of the property tax process. He was told no, assume that someone just elected knows nothing.
“So, the guide starts at the beginning,” Marlowe said, and lays out what every elected official and senior appointed policymaker at the state and local level should know.
“Detroit reminds us that state and local finance is a high stakes, complicated business. When it’s done well, no one notices. When it’s not done well, the consequences are painfully real. That’s why good public finance governance is essential.”
The Guide to Financial Literacy was funded by e.Republic, which receives support from sponsors including VISA, J.P. Morgan, Wells Fargo and others. Marlowe was paid for his contribution as an author.
For more information, contact Marlowe at 206-221-4161 or firstname.lastname@example.org.
- Watch a video of Marlowe discussing the financial guide, produced by the Evans School of Public Affairs: