Practicum Research Study

A STUDY OF LOCAL GOVERNMENTAL TRANSPARENCY
Financial Transactions & the Municipal Budget
PRACTICUM RESEARCH STUDY
PUBA 6320: Fiscal Administration
Summer 2015, Module I, June 16, 2015
Dr. George Atisa
Group 6 Authors
E. Rey Garcia – Project Leader
Melissa Ipina, Howard Clayton, Xavier Hinojosa
Tuesd

A Study of Local Government Transparency
Practicum Research Study – Group 6 P a g e | 1
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TABLE OF CONTENTS
Abstract …………………………………………………………………………………….. 4
Introduction …………………………………………………………………………………. 5
Background …………………………………………………………………………………. 7
Literature Review …………………………………………………………………………… 8
The Research Team …………………………………………………………………. 9
Criteria ………………………………………………………………………………. 9
Empirical Data Collection ………………………………………………………….. 10
Reporting …………………………………………………………………………… 10
Transparency Measures …………………………………………………………...…11
Methodology ……………………………………………………………………………….. 12
Communications Methods …………..………………………………………………16
The Case Studies …………………………………………………………………….16
Houston, TX …………………………………………………………………17
Fiscal Responsibility ………………………………………………...17
Performance Measurement ……………………………………….... 18
Statistical Analysis …………………………………………………..19
South Padre Island, TX ……………………………………………………...19
Statistical Analysis ………………………………………………..…20
Bandera, TX ………………………………………………………………....20
Statistical Analysis …………………………………………………..20
Findings and Recommendations ………………………………………………………….....21
Bibliography …………………………..…………………………………………………… 22

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ABSTRACT
This study researches, investigates and reports how local government agencies share their
financial transactions and municipal budget process with the community, media, and other arms
of the government. The research team has focused on three Texas cities: Houston, South Padre
Island, and Bandera. These local governments are categorized as a: (1) City, (2) Town, or (3)
Place or Village.

INTRODUCTION
There is an ever growing distrust and weakening of our democracy’s efficiency and
effectiveness. Transparency provides information and promotes accountability for citizens about
what their government is doing, and what they are funding. Transparency provides consistent
openness which allows others to access information that is key to an organization’s processes
and strategies. Some people may ask what “transparency” is and why is it important.
Government transparency allows the taxpayer to research and hold elected officials
accountable for how they spend money at all levels of government. In the last decade,
transparency has become increasingly important as citizens become ever more distrustful of the
federal government. The public has demanded greater visibility into all government decisions
especially those that involve tax dollars, while also calling for higher levels of accountability.
Mistrust in our governmental leaders has reached an all-time high, with only 34 percent
who say they trust the government. Much of this mistrust has come from governmental leaders
providing misleading information when it come to the budget. The public also lacks trust in
government leaders and their ability to be ethical and honest. This stems from the thought that
once elected, public officials act in self-interest. Transparency not only means demonstrating
that decisions are fact based, but that the information that is obtained is accurate and is
distributed with efficiency through the use of technology.

The purpose of our research is to investigate how local governments share their
municipal budgets with communities and the public sector. The study will focus on three local
governments and will examine the transparency efforts and methods used by each agency to
inform the community and public of budget meetings, budget workshops, city council meetings,
agendas, minutes, financial reports, web, social media, and other forms of communication to
keep the community and public informed of FY Budget.

BACKGROUND
Today’s Internet-savvy citizens are engaged with their government and this means clear,
credible information from the government and its business. The communication must be easily
accessible via information services, such as web and social media. Transparency originates from
Open Government, E-Government and Gov 2.0; connecting citizens with the government,
fostering openness, collaboration, and an efficient public sector through public data.
1) Open Government is defined by the Organization for Economic Cooperation and
Development (OEDC) as “the transparency of government actions, the accessibility
of government services and information, and the responsiveness of government to
new ideas, demands and needs.”
2) E-Government is defined by the World Bank as “the use by government agencies of
information technologies that have the ability to transform relations with citizens,
businesses, and other arms of government. These technologies can serve a variety of
different ends: better delivery of government services to citizens, improved
interactions with business and industry, citizen empowerment through access to
information, or more efficient government management. The resulting benefits can be
less corruption, increased transparency, greater convenience, revenue growth, and/or
cost reductions.”
3) Gov 2.0 is defined by Gartner Research as “the use of Web 2.0 technologies, both
internally and externally, to increase collaboration and transparency and potentially
transform the way government agencies relate to citizens and operate.”

Literature Review
This research study is composed of predominantly secondary sources regarding the field
of governmental transparency. Governmental financial accounting is complex and difficult to
understand by its citizens. Transparency has become an issue due to the growing lack of
confidence of the public in their governments. This is especially true since governments began
carrying huge deficit budgets. In addition, globalization has impacted accounting methods and
reporting due to the exchange of finances through loans between countries. Standards have been
established to assist governments with financial transparency efforts. These standards based
upon “best practices” to aid governments in creating benchmarks that guide improvements.
In the article, “FISCAL TRANSPARENCY, POLITICAL PARTIES, AND DEBT IN
OECD COUNTRIES, James E. Alt provided a definition of fiscal transparency as: openness
toward the general public about government structure and functions, fiscal policy intentions,
public sector accounts, and a form of commitment among coalition partners when problems
occur (Hallerberg et al. 2001).
The article acknowledges that both citizens and governments are in favor of increased
transparency and are making attempts to continue with the implementation of E-Government
through technology. The article also identifies the challenges to E-Government. While
technology makes E-government possible there are also limitations. A significant problem is the
lack of access by the public as well as technical literacy. Forty percent of the homes in the U.S.
lack internet capabilities which limits a large part of the population’s ability to participate in E-
Government. There are four issues identified that must improve in order for E-Government to
reach its potential. These include: the ability to understand and use technology; usability of

technology to enable citizens to access information; accessibility of all, including modifications
for those with disabilities and functionality where the design includes features users want to see.
This literature review explains and summarizes all sources as they pertain to local
government agencies and their transparency efforts when it comes to sharing financial
transactions and the municipal budget with the local community, media, and other arms of the
government. The study uses a mixed approach of both qualitative and quantitative research
methods and therefore allows for the reshuffling of information, alternative interpretations, and
the progression of the study.
The Research Team
This study consists of a research team of four professional MPA candidates who study,
review, analyze, and report on three Texas government agencies and the transparency efforts and
methods used to keep the public informed on the financial transactions and the municipal budget.
Criteria
The research team studied three types of local government agencies and based it on the
following criteria: (1) Bigger cities, which have a population of 6,000 or more; (2) Smaller
cities/towns/places/villages, which have a population between 1,000 and 6,000; and (3) Very
small towns and villages, which have a population of 1,000 or less. The three cities selected for
this study are:
• Houston, Texas – A bigger city with a population of 2,160,821.
• South Padre Island, Texas – A smaller city with a population of 2,896.
• Bandera, Texas – A very small town with a population of 856.

Empirical Data Collection
Empirical data findings are evident in this study. The data being collected and reviewed
from all three local government agencies follows state mandated actions and recommendations,
ordinances and compliances as posted by the State of Texas and other supporting organizations.
Reporting
After studying each local government agency, the research team presents a report of all
findings and recommendations. The research team uses a mixed approach of both qualitative and
quantitative processes to gather both statistical and informal data to report on the transparency
efforts and methods of the agencies being studied.

Transparency Measures
Most government agencies are taking measures to strategize processes such as
accountability of all financials, develop approaches and methods to report revenue, and
standardized or state mandate practices, and actions to ensure ethical budgetary practices and the
trust in the leaders.
1) Government Accountability – Agencies are gradually holding themselves accountable
to the community of all their financial transactions.
2) Actual Method – Agencies are moving towards implementing accounting methods to
report revenues on the income statement. Under the cash basis of accounting, revenues
are reported on the income statement when the cash is received. Under the accrual basis
of accounting, expenses are matched with the related revenues and/or are reported when
the expense occurs, not when the cash is paid. The result of accrual accounting is an
income statement that better measures all budgetary expenses.
3) Standardization – Agencies are gradually standardizing by following state mandated
recommendations, and developing and implementing standardize information systems to
communicate information by working together with Information Technology and
Communications departments.
4) Actions / Results – Agencies that are taking action and implementing transparency are
quickly noticing the results are a well-kept community, trust in the leadership, and builds
values, integrity and ethical practices of the public service officials.
5) Citizen Engagement – Agencies are using social media and the Internet to engage and
collaborate with their citizens.

Methodology
Agencies that adopt organizational methodology practices, recommendations and
standards can focus more on the tasks of leading, innovating and delivering products and
services, while improving efficiency and performance. Below are eight key organizations who
help agencies administer transparency by recommending, educating and awarding, rating, or
monitoring governmental financials and transparency efforts and methods.
Texas Comptroller of Public Accounts Office
www.Texastranparency.org
Agencies are adapting the transparency efforts as posted on the Texas Comptroller of
Public Accounts' Texas Transparency website www.texastransparency.org, which provides
detailed information about state spending, downloadable datasets and reports, links to local
government transparency efforts, and general information about the state budget process.
American Legislative Exchange Council (ALEC)
www.alec.org
Through the adaptation of the Local Government Transparency Act, ALEC requires that
a unit of local government or school district having an annual budget equal to, or more than,
$500,000 must maintain and post on its website for the current calendar or fiscal year, as the case
may be, and the 4 years immediately before that calendar or fiscal year.

Texas Municipal League (TML)
www.tml.org
TML provides a forum in which city officials can study municipal issues, network with
their counterparts from across the state, meet with vendors who provide services and products to
cities, hear from speakers who have timely and important information, and exchange ideas. It
offers participating agencies open government training, certification, transparency and leadership
recognition awards.
Texas City Managers’ Association (TCMA)
www.tcma.org
TCMA offers leadership
development, advocacy for a Council-
Mayor form of government, education
and training on uniformity and
consistency, and membership allows
access and collaboration with other
agency professionals and social media
which allows for better citizen
engagement and current information.
TCMA recognizes and awards agencies that become more transparent.

International City Managers’ Association (ICMA)
www.icma.org
ICMA advocates that a transparent governance means that government officials act
openly, with citizens’ knowledge of the decisions the officials are making. Availability of
information on government policies and actions, a clear sense of organizational responsibility,
and an assurance that governments are efficiently administered and free of systemic corruption
are important components of transparent governance.
ICMA educates and offers the tools like Performance Measurement to help local
government agencies become more transparency by helping build the flow of adequate
information, strong civil society, effective and transparent financial management systems, and
procurement regulations that keep the bidding process fair and open. (Reform, Ethics & Code
Enforcement, Open Budget and Procurement Process, Citizen Involvement or Services
Delivered. ICMA has developed an approach and methodology based on five elements that are
critical to success:
1) Political will at the highest levels of leadership
2) Integrity in local government systems
3) A culture of information sharing
4) Continuous monitoring and evaluation
5) The promotion of an ethic of public service

International Public Sector Accounting Standards (IPSAS)
www.ipsas.org
IPSAS offers agencies standardized accounting practices and accrual-based standards
used for the preparation of general purpose financial statements by governments and other public
sector entities around the world. These standards aim to enhance the quality, consistency, and
transparency of public sector financial reporting.
Bond Ratings (Moody’s, Fitch, Standard & Poor)
www.moody.com / www.fitch.com / www.standardandpoor.com
Local governments hire bond rating companies like Moody’s, Fitch and Standard & Poor
to review their municipal finances, governance and management. When a rating company awards
a high bond rating, this means that the budget is stable and predictable, thus making it safer for
conducting business with the local government.
National Association of Government Web Professionals (NAGW)
www.nagw.org
NAGW offers government agencies affordable membership, networking, and a national
conference that provides education and awards the best city websites with the prestigious
Pinnacle Award – This award is selected by the board members and judges teamwork, content,
organization, design, performance, accessibility, standards, and interactivity.

Communications Methods
Local government agencies are implementing information technology methods to
communicate information to the public, such as the Internet, cloud computing, mobile and smart
devices, social media apps, mobile web, local access channel, instant messaging systems, and
other forms of communications systems to keep the community informed of their financial
activity.
The Case Studies
The research team carefully studied, analyzed and reported the transparency efforts and
initiatives of three local government agencies of Texas (Houston, South Padre Island, and
Bandera). The team conducted a statistical analysis and reviewed each city’s communications
sources used to collaborate information with the public, budget documents and reports accessible
to the community, and organizational hierarchy and management style of each agency.

Houston, TX
www.houstontx.gov
Fiscal / Financial Responsibility
The City of Houston receives an A- or 88 points for
transparency. With a population of 2.1 million, it has established
an eGovernment Center dedicated to making more services
available online through the tools and information offered via the
web 24 hours. From a financial point of view, the city has
adopted five priorities to ensure “Fiscal Responsibility”. For
more information go to http://www.houstontx.gov/mayor/Fiscal-
Responsibility.
1) Jobs and Sustainable Development
2) Public Safety
3) Infrastructure
4) Quality of Life and
5) Fiscal Responsibility

Performance Measurement
The City of Houston has implemented a Performance Improvement Portal, a division
which partners with City departments to identify opportunity, eliminate waste, and provide
internal consulting services. It offers the following methods to measure performance:
Performance Reporting via Publications
Open Data & Civic Innovation – Accessible information to the public.
One Houston - Adopt simple, cost-saving measures to employees’ life.
Improvement Projects – Offers training and improvements for employees.
Lean Six Sigma Program – Offers Six Sigma Methodologies training.
Strategy - Actions using performance measures to track progress.

Statistical Analysis
The research team conducted an analysis of the City of Houston’s, communication
sources, budget documents, and organizational structure. The initial hypothesis: larger cities with
higher budgets are capable of allocating more money, time and efforts into transparency in their
municipal budgets. True: Houston had the highest weighted score of 88/100.
South Padre Island, TX
www.myspi.gov
The City of South Padre Island, Texas receives a B or 66 points for transparency. SPI,
takes pride in their transparency and community involvement by allowing members of the local
community to get involved in the following boards and committees:
1) Board of Adjustments
2) Board of Ethics
3) Convention and Visitors Advisory Board
4) Convention and Visitors Transition Board
5) Development Standards Review Task Force
6) Economic Development Corporation
7) Historical Preservation Committee
8) Keep SPI Beautiful Committee
9) Parks, Recreation & Beautification Committee
10) Planning and Zoning Commission
11) Shoreline Task Force

The research team conducted an analysis of the City of South Padre Island’s communication
sources, budget documents, and organizational structure. The initial hypothesis: smaller cities
with a smaller budget are less capable of allocating funds, time and efforts into transparency in
their municipal budgets. South Padre, with a limited budget received a weighted score of 66/100.
Bandera, TX
www.cityofbandera.org
The City of Bandera, TX receives a C+ or 66 points for transparency. According to Texas
Transparency or www.texastransparency.org, the City of Bandera is taking measures to educate
the leaders, employees, and community on eGovernment and transparency. Such methods
currently in place are:
1) Recent Bond Election
2) Tax-Support Debt
3) Comprehensive Annual Budget Report
The research team conducted an analysis of the City of Bandera’s communication sources,
budget documents, and organizational structure. The initial hypothesis: a city with a very small
budget and staff is less capable of allocating funds, time and efforts into transparency in their
municipal budgets. Bandera received a weighted score of 66/100.

Findings and Recommendations
The research team concludes this study by reporting findings and making
recommendations. The study shows
that in order to compete with other
municipalities, local governments,
regardless of size, have to educate the
leadership, staff, and community on
transparency. By being an open
government the city gains trust and
credibility of their leaders and elected officials. To achieve the transparency of communication,
agencies should make their information:
 Portable and Expandable– Information should be portable and allow for
expansion and must be accessible via mobile web, smart devices and apps.
 Reusable Technology – Using existing technologies to communicate your
information to the public.
 Support and Collaboration – By collaborating and engaging with the community,
trust and ethics are built and credibility and support of the leadership.
 Provide Training of EGovernment – Agencies have the option of using the many
trainings and certification programs offered by organizations like TML, ICAM
and NAGW.

Bibliography
A Citizen's Guide to Open Government, E-Government, and Government 2.0. (2013, June 10).
Retrieved June 1, 2015, from https://onlinempa.unc.edu/a-citizens-guide-to-open-government-e-
government-and-government-2-0/
American Legislative Exchange Council (ALEC). (n.d.). Retrieved June 16, 2015, from
www.alec.org
Athukorala SL, Reid B. 2003. Accrual Budgeting and Accounting in Government and its
Relevance for Developing Member Countries. Asian Development Bank: Manila, Philippines.
Bhatnagar, S. (2003). E-government and access to information. Global Corruption Report 2003.
Washington DC: Transparency International. Braman, S. (2006).
City of Bandera, Texas. (n.d.). Retrieved June 16, 2015, from http://www.cityofbandera.org/
City of Houston eGovernment Center. (n.d.). Retrieved June 16, 2015, from
http://www.houstontx.gov/
City of South Padre Island, Texas. (n.d.). Retrieved June 16, 2015, from http://www.myspi.org/
Fitch Ratings. (n.d). Retrieved June 15, 2015, from http://www.fitchratings.com
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and Administrative Reform in Western Europe, Kickert W (ed.). Edward Elgar: UK
Moody’s, (n.d.). Retrieved June 15, 2015, from http://www.moodys.com
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National Association of Government Web Professionals (NAGW). (n.d.). Retrieved June 15,
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Relly, J. E., & Sabharwal, M. (2009). Perceptions of transparency of government policymaking:
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Standard and Poors (S&P). (n.d.). Retrieved June 15, 2015, from
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Sutcliffe P. 2003. The standards programme of IFAC’s Public Sector Committee. Public Money
& Management 23(1): 29–36.
Shim, D. C., & Eom, T. H. (2009). Anticorruption effects of information and communication
technology (ICT) and social capital. International Review of Administrative Sciences, 75,
99−116.
Shim, D. C., & Eom, T. H. (2008). E-government and anti-corruption: Empirical analysis of
international data. International Journal of Public Administration, 31, 298−316.
Shim, D. C., & Eom, T. H. (2009). Anticorruption effects of information and communication
technology (ICT) and social capital. International Review of Administrative Sciences, 75,
99−116
Texas City Managers’ Association (TMCA). (n.d.). Retrieved June 16, 2015, from
http://www.tcma.org
Texas Comptroller of Public Accounts, Texas Transparency. (n.d.). Retrieved June 16, 2015,
from http://texastransparency.org/
Texas Municipal League. (n.d.). Retrieved June 16, 2015, from http://www.tml.org/
Texas Very Small Towns and Villages (fewer than 1000 residents). (n.d.). Retrieved June 1,
2015, from http://www.city-data.com/city/Texas3.html
USA: Texas. (n.d.). Retrieved June 1, 2015, from http://www.citypopulation.de/USA-Texas.html

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