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KEEPING STATE FISCAL OFFICIALS INFORMED VOLUME 35, NUMBER 12 | DECEMBER 2015

NASACT 2015  A YEAR IN REVIEW NASACT has focused on a number of major is substantially the same as fair value. Th e criteria initiatives in 2015. Each of these topics has been would only relate to fi nancial reporting. covered in past newsletters, business and committee In June, GASB issued an exposure draft , Accounting meetings, and email updates this year. and Financial Reporting for Certain External AMENDMENTS TO RULE 2a-7 Investment Pools, to revise the guidance on LGIPs. Th e ED only allowed a change in accounting policy to NASACT and the National Association of State amortized cost at the time of implementation when a Treasurers created a work group last fall to examine fi nal statement is issued. the the U.S. Securities and Exchange Commission’s amendments to Rule 2a-7 impacting money market NASACT replied to the ED at the end of August, mutual funds (MMFs). Among other things, the generally agreeing with the provisions of the ED amendments will require institutional prime MMFs but urging the Board to reconsider and remove the to adopt a fl oating net asset value (NAV) instead restriction on the ability for LGIPs to make justifi able of the traditional stable NAV. Th e work group has changes between acceptable accounting principles in primarily focused on the impact the amendments the future. A fi nal pronouncement is expected at the will have on local government investment pools end of December. (LGIPs), which in many cases are operated by state PENSION STANDARDS AND AUDIT GUIDANCE governments. NASACT has continued to host work groups Th e work group requested that the Governmental focusing on the implementation of GASB’s pension Accounting Standards Board (1) add this issue to its standards, Statements No. 67 and No. 68. technical agenda and (2) consider options that would allow LGIPs to continue using amortized cost (stable Th e Pension Standards Implementation Work Group NAV). GASB added the issue to its technical agenda has held regular calls since October 2012 to focus on in December 2014. a number of issues related to implementation. Th e group held its last call on December 10 and decided Th e work group also responded to a GASB survey not to hold additional calls unless needed. intended to explore an exception to fair value reporting for external investment pools when Th e Pension Audit Issues Work Group, a amortized cost is substantially the same as fair subcommittee of the state auditors, has worked value. Th e results of the survey were used by GASB to address audit-specifi c issues related to staff to develop criteria that would minimize the implementation. Th e group held its last call on risk that amortized cost deviates from fair value, November 12. Future call dates are to be determined. such that pools only report amortized cost when it Continued, next page

NASACT MEMBERS: PROVIDE YOUR INPUT! Watch for these three upcoming member surveys: 1. Membership Satisfaction Survey: Will be distributed in mid-January. 2. NASACT Annual Conference Topics Survey: Will be distributed in mid-January. 3. Washington Issues Survey: Will be distributed in mid-February.

NASACT News | December 2015 1 ASSOCIATION NOTES

2015  A YEAR IN REVIEW continued from previous page AFFORDABLE CARE ACT INFORMATION REPORTING past presidents (21 past presidents attended the ISSUES conference), and the unveiling of the inaugural Th e Aff ordable Care Act’s employer mandate went class of the NASACT Hall of Fame. into eff ect on January 1, 2015, for employers with Th e Hall of Fame was developed to recognize an 100 or more full-time employees and goes into eff ect elite group of individuals who have made major and on January 1, 2016, for those with between 50 and enduring impacts on state government fi nancial 99 full-time employees. management. Th e four recipients in the inaugural Employers, including state and local governments, Hall of Fame class were: with more than 50 full-time employees, are required • Louis L. Goldstein, former state comptroller of to provide aff ordable health insurance to any Maryland employee who works 30 or more hours per week (or 130 hours per month). While a safe harbor for • William R. Snodgrass, former comptroller of certain penalties exists for states who off er coverage the treasury in to at least 95 percent of their eligible employees, • Frank L. Greathouse, former director of state penalties of $2,000 or $3,000 per full-time worker audit and assistant to the comptroller in may be imposed depending on the circumstances Tennessee (transitional relief in the year 2015 provides that coverage is 70 percent instead of 95 percent of full- • Relmond P. Van Daniker, former executive time employees). director of NASACT Specifi cally, under Section 6056, large employers ADMINISTRATIVE / PROCESS CHANGES (those with 100 or more employees) will be required In January 2015, NASACT entered into an agreement to provide information to employees and the Internal to provide conference support services to the Revenue Service concerning health insurance off ered National Association of State Treasurers. NASACT by the employer. also began provided accounting services to NAST in Although no reporting is required until 2016, February 2015. NASACT and NAST recently agreed employers should already have a plan in place to extend these services through June 30, 2018. to assure that the appropriate recordkeeping is Th e state auditors are working through a task force of being done to comply with the new reporting its Peer Review Committee to automate NSAA’s Peer requirements. Review Program. Th is is a signifi cant undertaking; NASACT has held a series of information sharing however, automating the forms and checklists will calls this year, led by , on the ACA greatly improve effi ciency of the process. Th e target and has also partnered with several private sector date for completion is June 2016. organizations that have expertise in this area in NASACT launched a new conference registration providing educational webinars on the issue. system in January 2015. Th is system will be upgraded Th e National Association of State Comptrollers also again in January 2016. conducted a conference call with representatives ONGOING ISSUES from the IRS in May to discuss issues surrounding information reporting required by the ACA. NASACT continues to be actively engaged in several ongoing projects, including: ACA resources, including links to the IRS’s page on ACA provisions and employer responsibilites, • Implementation of the Digital Accountability as well as forms and instructions, can be found on and Transparency Act. NASACT’s home page at www.nasact.org. • Implementation of the new Uniform Grant 100TH ANNIVERSARY Guidelines. Th e association celebrated its 100th anniversary at • Tax exemption for municipal bonds. the 2015 NASACT Annual Conference in August in MORE INFORMATION , . For more information about NASACT’s activities Several special activities were planned as part in 2015, view past issues of NASACT News at www. of the Centennial Celebration, including the nasact.org or call (859) 276-1147 or (202) 624-5451. release of a commemorative book, a parade of

NASACT News | December 2015 2 ASSOCIATION NOTES

NEW MEMBERS IN 2015 STATE TREASURERS AR — (replacing Charles Robinson) STATE AUDITORS AZ — Jeff DeWit (replacing Doug Ducey) DC — (replacing Yolanda Branch) CA — John Chiang (replacing Bill Lockyer) FL — Sherrill Norman (replacing David Martin) DE — Ken Simpler (replacing Chip Flowers) MO — (replacing Thomas Schweich) HI — Wesley Machida (replacing Kalbert Young) MS — James A. Barber (replacing Max Arinder) IL — (replacing Dan Rutherford) NE — (replacing Mike Foley) IN — (replacing Dan Huge) NH — Michael Kane (replacing Jeffrey Pattison) MA — (replacing Steve Grossman) NJ — Phillip Degnan (replacing Marc Larkins) ME — Terry Hayes (replacing Neria Douglass) NM — Tim Keller (replacing Hector Balderas) MI — Nick Khouri (replacing Kevin Clinton) NV — Rocky Cooper (interim - replacing Paul Townsend) MN* — Myron Frans (replacing James Schowalter) SC — K. Earle Powell (replacing Perry Simpson) NJ — Robert Romano (replacing Andrew Sidamon-Eriston) SC — George L. Kennedy (replacing Rich Gilbert, interim) NM — (replacing James B. Lewis) NV — Dan Schwartz (replacing ) STATE COMPTROLLERS NY — Eric Mostert (replacing Aida Brewer) AR — (replacing Charlie Daniels) PA — Timothy Reese (replacing Rob McCord) AR — Larry Walther (replacing Richard Weiss) PR — Juan Zarangosa (replacing Melba Acosta Febo) CA — (replacing John Chiang) RI — (replacing ) GU — Anthony C. Blaz (replacing Benita Manglona) TX* — Glen Hegar (replacing Susan Combs) HI — Douglas Murdock (replacing Dean Seki) UT — (interim - replacing Richard Ellis) IL — Leslie Munger (replacing Judy Baar Topinka) WI — Matt Adamczyk (replacing Kurt Schuller) LA — John McLean (replacing Afranie Adomako) VI — Valdimir Collins (replacing Angel Dawson) MA — Thomas G. Shack (replacing Martin J. Benison) MN* — Myron Frans (replacing James Schowalter) CHANGES COMING IN 2016 MT — Cody Pearce (replacing Julie Feldman) As a result of recent elections and impending retirements, several member NE — Jerry Broz (replacing Hari Kadavath) changes are coming in 2016. — NH Gerard Murphy (replacing Karen Benincasa) STATE AUDITORS — NJ David Ridolfino (replacing Charlene Holzbaur) IL — Frank Mautino (replacing William G. Holland) — NM Ron Spilman (replacing Ricky Bejarano) KY — (replacing ) — NV Ron Knecht (replacing Kim Wallin) OR — Mary Wenger (interim - replacing Gary Blackmer) TN — Mike Corricelli (replacing Jan Sylvis) TX* — Glen Hegar (replacing Susan Combs) STATE TREASURER WI — Jeff Anderson (replacing Stephen Censky) KY — (replacing Todd Hollenbach) WV — Ross Taylor (replacing Dave Mullins) * This office fills both the comptroller and treasurer functions.

NASACT News | December 2015 3 NEWS FROM WASHINGTON

PUBLIC PENSION PLAN DATA AT YOUR FINGERTIPS

Public pension funding remains a hot Intermediate updates occur when topic in the media as well as among new variables are added or data state and local offi cials. Although errors are corrected. Simple audits are state and local fi scal conditions have built into the database (e.g., income QUICK FACTS FROM: improved in recent years, most public statement is reconciled with assets pension plans have not yet returned and liabilities). Once annual data for to their pre-recession funding levels. all plans are entered and reviewed for State and local governments continue quality, they are uploaded to a test to balance demands for services with website for verifi cation. Any errors their pension funding obligations. identifi ed by plan administrators are In 2014, state and local governments fi xed before moving the test data to paid 88 percent of their annual the live website. required contribution to pension plans, on average. KEY FEATURES Public Plans Data includes COMPREHENSIVE DATA ON STATE AND State and local governments comprehensive retirement plan LOCAL PUBLIC SECTOR RETIREMENT PLANS recognize that retirement and health data on employee and employer benefi ts are an important factor in contributions, benefi ts, investment Employer’s Annual Required Contribution as a Percent of Payroll attracting and retaining a talented and Portion Paid, 1992-2013 income, plan membership and plan workforce. Having access to reliable provisions. Key features of the online data about these plans can inform database include: state and local government leaders in making decisions about benefi t and • Quick Facts compensation changes. Public Plans Data’s quick facts To make state and local pension are pre-populated data tables and Percent of Payroll Percent data easily accessible and graphs that illustrate key pension approachable, the Center for State data at the national, state and and Local Government Excellence, local levels. Quick facts contain Fiscal Year in partnership with the Center for explanatory text describing the

Source: Public Plans Database Retirement Research at relevance of each data point. College and the National Association Th ese useful charts can be for State Retirement Administrators embedded into user websites and Did You Know? off ers Public Plans Data (accessible presentations. at www.PublicPlansData.org), a free, • Interactive Data Browser publicly-accessible online database of fi nancial, actuarial and governance Th e interactive data browser For state and local plans data for the nation’s largest public allows users to select from more % covered by Social Security, the than 100 variables to create 16.4 annual required contribution pensions plans. as a percentage of payroll has customized data tables. Variables risen to 16.4%, a more than Public Plans Data currently contains range from plan funding threefold increase since 2001. plan-level data from 2001 through (e.g., covered payroll, funded 2013 for 150 pension plans: 115 ratio, required contribution), At the same time, the portion administered at the state level and investment assumptions (e.g., of the annual required % 35 administered locally. Th is sample smoothing method, assumed 21 contribution paid by employers covers 90 percent of public pension Ø has decreased by nearly 21%, rate of return), income statement from 100 percent in 2001 to 79 membership and assets nationwide. (e.g., administrative expenses, percent in 2013. DATA COLLECTION AND VERIFICATION net assets, total benefi ts), asset allocation, investment returns, www.publicplansdata.org Public Plans Data is updated each actuarial costs, plan provisions spring from data in newly released @PublicPlansData (e.g., COLA, vesting period), comprehensive annual fi nancial membership, plan reporting, reports and actuarial valuations. Continued, next page

NASACT News | December 2015 4 NEWS FROM WASHINGTON

HHS RELEASES MORE INFORMATION ON THE SECTION 5 DATA ACT PILOT – SINGLE AUDIT INCLUDED IN TEST MODEL

Th e U.S. Department of Health and Human recipients to fi le the Federal Financial Report at a Services’ Program Management Offi ce recently single point of entry to help streamline the close-out released additional information on the Section 5 process. Th e third test model involves use of the pilot required by the Digital Accountability and newly created grants information gateway, which is a Transparency Act. Th e goals of the pilot are to tab on the grants.gov website that provides a central standardize reporting elements across the federal place to post policies, processes, funding and other government, eliminate unnecessary duplication in information needed throughout the grants lifecycle. fi nancial reporting and reduce compliance costs for In addition to promoting the use of standardized recipients of federal awards. terminology, the model will test whether exposure Th e U.S. Offi ce of Management and Budget to the grants information gateway helps enhance designated HHS to lead the pilot activities. HHS has recipient compliance during post-award activities. posted online its Grants Pilot Framework, which Finally, HHS will test two areas dealing with the takes a broad approach to meeting the pilot goals. single audit. Th e fi rst will be to establish a focus Specifi cally, the framework includes collecting group to solicit input of the use of a combined feedback through the national dialogue, analyzing form. Th e combined form will include information data standards and testing designated models previously required on both the SEFA and the (including single audit) to align with the DATA Act’s SF-SAC. Th e hypothesis is that grantee burden will legislative requirements. be reduced if the same information is not being Th e fi rst test model is use of the Common DATA required on two forms. Th e second single audit test Element Repository Library (C-DERL). Th e area includes the development of a common Notice C-DERL is an online repository for grants-related of Award (NOA) cover sheet for federal awards. It standards, defi nitions and context. Th e test model is predicted that the NOA coversheet will reduce will look at whether there is a diff erence in recipient grantee burden by providing grantees with access to burden associated with completing federal forms standardized data needed for completion of single for those that have access to the C-DERL and audit information collections. those that do not have access. Part of the test will NASACT is currently monitoring implementation also be the opportunity to identify duplicate forms of the DATA Act and will provide members with and opportunities to amend the forms to achieve relevant information, including notices about burden reduction. Th e second test model will allow opportunities to participate in pilot activities.

PUBLIC PENSION PLAN DATA Plans Data contains data for 150 state and local plans; over the next fi ve years, current and historical Continued from previous page data for will be added for 10 new local plans employee group basics, and plan basics (e.g., each year, bringing the total sample to 200 plans. inception year, Social Security coverage). Th is Additional data on benefi ts and plan governance powerful tool allows users to look at trends over will soon be added to the site. time and to compare data across multiple plans. Aft er exploring the site, please send an email to USERS PROVIDE FEEDBACK [email protected] with your feedback, including suggestions for additional subsets of data Public Plans Data relies on its community of users and how you would expect to use them. to identify needed enhancements as new features, variables and data are added regularly. Today, Public

A free webinar demonstrating Public Plans Data was held on December 8. A recorded version of the webinar will be posted soon on SLGE.org. Questions may be directed to Danielle Wagner at [email protected].

NASACT News | December 2015 5 NEWS FROM WASHINGTON

NATIONAL FRAUD SUMMIT TEAM MAKES RECOMMENDATIONS ON NAMING CONVENTIONS FOR ACH TAX REFUNDS

BACKGROUND HOW YOUR ACH FILE SHOULD BE FORMATTED FOR A STATE OR A CITY TAX REFUND Members of the fi nancial industry, state revenue tax agencies, the National Automated Clearinghouse Company Entry Description: List the IRS assigned Association, and the Internal Revenue Service four-digit MEF code and the phrase TAXRFD. have banded together to combat identity theft and • State Example: NYSTTAXRFD prevent fraud by making recommendations on • City Example: NYCTTAXRFD naming conventions for ACH tax refunds. Individual Name: Last Name, First Name, Middle ACH TAX REFUNDS TODAY Initial (if provided) and joint First Name, and Today, members of the fi nancial services industry Middle initial. Display the fi rst 22 characters of can easily identify an IRS tax refund. Being able name. to identify the refund allows them to partner with • Example: Jones, Steven E & Deborah L = the IRS to review questionable refunds. Existing JONES, STEVEN E & DEBO programs include: Individual Identifi cation Number - List the full • R17 Opt-In ACH Return Process: Th e fi nancial Social Security number or the last four digits of the services industry may send back questionable Social Security number without the dashes refunds using the ACH reason code R17. • Full SSN Example: 123456789 • External Leads Reporting: Financial services institutions provide the IRS with external leads • Last 4 SSN Example: XXXXX6789 when they identify questionable funds. Th e IRS BENEFITS OF ADOPTING THE NEW FILE FORMAT then reviews the refunds, and if there are issues, they request funds back through the indemnity • Industry can identify the ACH tax refunds process. states issue. Each state’s Department of Revenue has a diff erent • Industry can notify states of questionable ACH naming convention for the ACH tax refunds tax refunds before the money is deposited into they issue. Some naming conventions may be the account and the fraudster has wiped the more descriptive than others. Diff erent naming account. conventions make it diffi cult to identify the ACH • Industry can more quickly notify states of transactions as tax refunds. If the fi nancial services suspicious refunds. industry cannot identify an ACH transaction as a • Industry can implement technical solutions that tax refund, they cannot take additional identity theft allow them to reject more fraudulent refunds. and fraud fi ghting steps for the states like they do for the IRS. • States can participate in fraud prevention programs similar to those the IRS has in place NEW ACH TAX REFUND NAMING FILE and prevent fraudulent behavior and loss of Th e stakeholder group has identifi ed a suggested revenue. template for naming ACH fi les in connection with • States can reduce the risk of the tax return/ state tax refunds. Wherever possible, the template refund being used as a vehicle for fraud. matches the IRS fi le information. • States can reduce the risk of their refunds being States are encouraged to conform to these sent to the IRS in error (instead of to the state). requirements. If a state does not implement the common ACH solutions, it could prevent the state Stakeholders can all work together to make it from having questionable tax refunds identifi ed more diffi cult for criminals to commit fraud while as fraudulent, and the state might not be able to instilling confi dence in customers that everything use future processes such as a state version of the possible is being done to protect the integrity of tax R17 ACH reject process, external leads reporting revenue systems and fi nancial industry. or other newly implemented fraud prevention methods. Continued, next page

NASACT News | December 2015 6 NEWS FROM WASHINGTON

IRS ISSUES GUIDANCE ON ABLE PROPOSAL TO PROVIDE EASIER PROGRAM ADMINISTRATION FOR STATES Th e Internal Revenue Service has announced three 1. Categorization of Distributions Not Required: changes to the proposed rules for new tax-favored ABLE programs need not include safeguards to Achieving a Better Life Experience (ABLE) accounts. determine which distributions are for qualifi ed Th e changes, which will make it easier for states to disability expenses, nor are they required to off er and administer ABLE programs, will appear in specifi cally identify those used for housing the fi nal regulation once released. expenses. Th e ABLE Act established section 529A of the 2. Contributor TIN Not Required: If the program Internal Revenue Code, which allows a state to has a system in place to reject contributions that establish and maintain a tax advantaged savings exceed the annual limits, it will not be required program for qualifi ed disabled persons to cover to request the TIN of contributors to the ABLE certain disability expenses. Th e ABLE Act is built on account at the time when the contributions are the basis of current 529 education savings plans that made. However, if an excess contribution is help families save for college. deposited into a designated benefi ciary’s ABLE In June, the Internal Revenue Service issued proposed account, the program will need to request the regulations, Guidance Under Section 529A: Qualifi ed contributor’s TIN. For most people, the TIN is ABLE Programs, to implement the provisions of their Social Security number. the ABLE Act. Similar to a section 529 college 3. Disability Diagnosis Certifi cation Permitted: savings program, a qualifi ed ABLE program is to Designated benefi ciaries can open an ABLE be established and maintained by a state. Th e assets account by certifying, under penalties of perjury, accumulate on a tax-free basis, and although the that they meet the qualifi cation standards, federal law sets forth the authority to establish these including their receipt of a signed physician’s tax advantaged accounts, each state must develop their diagnosis if necessary, and that they will retain own regulations before making the accounts available. that diagnosis and provide it to the program or Th e IRS is making changes to the proposed the IRS upon request. Th is means that eligible regulations based on comments and concerns individuals with disabilities will not need to expressed by states and other interested parties provide the written diagnosis when opening during a public hearing held earlier this year. the ABLE account, and ABLE programs will Specifi cally, comments were concentrated on three not need to receive, retain or evaluate detailed areas: (1) a requirement to establish safeguards to medical records. categorize distributions from ABLE accounts, (2) Until the fi nal regulations are issued, Notice 2015- a requirement to request a taxpayer identifi cation 81 should be followed. Th e notice, the proposed number for each contributor to an ABLE account and regulations and additional information on ABLE (3) requirements to process disability certifi cations. accounts can be found at www/irs.gov/Tax Benefi t for According to the announcement of Notice 2015-81, Disability: IRC Section 529A. the IRS is seeking to respond to the concerns by announcing changes in each of these three areas:

ACH NAMING RECOMMENDATIONS refund is returned to keep them informed and faciliate the investigative process. Continued from previous page WHEN SHOULD STATES ADOPT THE NEW ACH FILE A FEW MORE THINGS YOU MAY WANT TO DO FORMAT • Coordinate fi le changes with the treasury States are encouraged to adopt the new format department and/or fi nancial institution. by June 30, 2016, so they can participate in future • Consider how to handle refunds returned and processes such as a state version of the R17 ACH identifi ed as suspicious. reject process, external leads reporting or other • Consider how to notify the taxpayer when a new fraud prevention methods. Questions may be directed to [email protected].

NASACT News | December 2015 7 ASSOCIATION NOTES

NASACT ANNOUNCES UPCOMING WEBINARS

HOW DIGITAL TRENDS ARE SPEAKERS taking place. In this session, you RESHAPING GOVERNMENT will learn about the nature of FINANCIAL MANAGEMENT • Bill Eggers, public sector research director, Deloitte the challenge, and whether the Wednesday, January 20 traditional talent management 2:00 - 3:50 p.m. Eastern • Debbie Sills, public sector model will continue to work. Is Digital technologies are west region leader (principal), there a better model for the future? Deloitte fundamentally transforming the SPEAKERS way state organizations conduct • Christina Dorfh uber, fi nancial management, from the principal, Deloitte • Bill Kilmartin, director, Public use of digital technologies to Service Strategy, Health & COST complex algorithms to machine Public Service, Accenture learning. $299 per group (unlimited • Breck Marshall, managing attendance) Join us for a discussion of director, Talent & current digital trends shaping $50 per person Organization Practice, Health & Public Service, Accenture government fi nancial management Use promo code: INDWEB and key fi ndings from the to receive individual discount COST Deloitte-NASACT 2015 Digital pricing. $299 per group (unlimited Transformation survey. We’ll attendance) explore how public sector fi nancial CPE executives can overcome barriers Two credits are available for this $50 per person to digital adoption ranging event. Use promo code: INDWEB from culture to workforce skills to receive individual discount to procurement processes. In ANALYTICS: THE WINNING EDGE IN THE BATTLE FOR TALENT pricing. addition, learn leading practices Thursday, February 25 for taking a strategic approach CPE 2:00 - 3:50 p.m. Eastern to digital and the six questions Two credits are available for this NASACT agency leaders should All employers, including state and event. consider to help accelerate their local governments, are facing a digital transformation. Lastly, long-term talent shortage–baby MORE INFORMATION we’ll take a look at how specifi c boomers are retiring and the Questions about NASACT’s technologies like artifi cial percentage of the population of webinars may be directed to Anna intelligence coupled with analytics working age is shrinking. Talent Peniston or Pat Hackney at (859) are helping to transform the audit that was plentiful is becoming 276-1147. Registration is available of the future. scarce. A battle for talent is now at www.nasact.org.

Stay tuned for info on our March 24 webinar: Benford’s Law and Fraud Analysis!

NSAA TO ESTABLISH PEOPLESOFT AUDIT GROUP Th e E-Government Committee at 3:00 p.m. Eastern time. Roger participate in the conference calls, of the National State Auditors Boyd (GA) will lead this call. On please contact Sherri Rowland Association is establishing a this fi rst call, participants will at [email protected] or (859) PeopleSoft Audit Group (similar determine the interest in the group 276-1147. to the Banner Audit Group created and set a few topics for future Th e agenda for the fi rst call will be last year). discussions. distributed in mid-January. Th e kick-off call is scheduled for If you (or others in your offi ce) Wednesday, January 20, 2016, wish to join this group and

NASACT News | December 2015 8 ASSOCIATION NOTES / NEWS FROM AROUND THE NATION

NASC 2016 ANNUAL CONFERENCE March 16-18 | Salt Lake City, UT

John Reidhead, director of Utah’s Division of Finance and president of NASC will host the 2016 conference in Salt Lake City. See page 14 for details!

NASACT MEMBER NEWS

NEVADA UTAH WASHINGTON On December 4, Paul Townsend, David Damschen was appointed Troy Kelley has returned to offi ce legislative auditor of , recently by Gov. Gary Herbert as aft er a seven- retired aft er a long and successful as the new . month leave of absence career. Damschen will fi ll the remaining Jan Jutte, who was serving as Mr. Townsend served on various term of Richard Ellis, who acting state auditor, will now be committees of the National State stepped down to pursue another deputy state auditor. Auditors Association over the career opportunity. OTHER years, including the Executive Prior to this appointment, James A. Barber is the new Committee. Damschen served as chief deputy executive director of Mississippi’s Rocky Cooper has been named to the Utah Offi ce of the State Joint Committee on Performance interim legislative auditor until a Treasurer for six years. Evaluation and Review. He permanent succesor is appointed. replaces Max Arinder.

McCOY APPOINTED TO NASACT EXECUTIVE COMMITTEE

As reported in the has appointed Steve McCoy, state McCoy has served in his role as November issue of treasurer of Georgia, to fi ll the Georgia’s state treasurer since the NASACT News, vacancy. November 2011. a state treasurer McCoy joins David H. Lillard, McCoy has been an active vacancy existed Jr. (TN), (VT), participant on several NASACT on the NASACT (VA) and committees including the Executive Mike Frerichs (IL) to represent Financial Management and Committee. Th e National state treasurer interests on the Intergovernmental Aff airs Association of State Treasurers committee. Committee.

NASACT News | December 2015 9 NEWS FROM GASB & FAF

GASB NAMES FINANCIAL REPORTING MODEL TASK FORCE Governmental Accounting Standards Board • Stephen Gauthier, director, Technical Services Chairman David A. Vaudt recently announced Center, Government Finance Offi cers the appointment of a task force to assist with the Association Board’s project reexamining Statement No. 34, Basic • Elizabeth (Betsy) Hill, chief executive offi cer, Financial Statements—and Management’s Discussion Bright Bay Advisors and Analysis—for State and Local Governments and related pronouncements on the fi nancial reporting • Lacey Horn, treasurer, Cherokee Nation model. Th e members of the task force are: • Amy Laskey, managing director, Fitch Ratings • Douglas Benton, vice president/senior • Michelle Mark Levine, deputy comptroller municipal credit manager, Cavanal Hill for accounting, Offi ce of the Investment Management Comptroller • Eric Berman, partner, Eide Bailly • Justin Marlowe, endowed professor of public • David Bullock, partner, Macias, Gini & fi nance and civic engagement, University of O’Connell Washington • Michael Calvert, director, Legislative Fiscal • Christopher Mier, managing director, Loop Offi ce, Nebraska Capital Markets, LLC • Tom Canby, associate executive director for • Jacqueline Reck, professor of accounting, governmental relations, Association of School of Accountancy, University of South School Business Offi cers Florida • Richard Ciccarone, president and chief • Doug Ringler, auditor general, Michigan executive offi cer, Merritt Research Services • Paul Rotzenburg, director of fi nance/treasurer, • Harriet Commons, retired fi nance director, Franklin, Wisconsin Fremont, California • George Scott, retired partner, Deloitte • Frank Crawford, partner, Crawford & • Alan Skelton, state accounting offi cer, Georgia Associates • Stephen Stuart, senior analyst, Bureau of • Joni Davis, accounting manager, Nebraska Governmental Research, New Orleans Public Power District • Charles Tegen, associate vice president for • Susan Friend, director, Accounting Division, fi nance, Clemson University Broward County, Florida

FAF ELECTS NEW CHAIR, VICE CHAIR & FIVE NEW TRUSTEES

Charles H. Noski was recently elected chair of the • Christine M. Cumming, retired fi rst vice Financial Accounting Foundation board, eff ective president and chief operating offi cer of the January 1, 2016. He will serve an initial term of three Federal Reserve Bank of New York years, succeeding Jeff rey J. Diermeier, whose term • Eugene Flood, Jr., a member of the board of ends on December 31, 2015. directors of Janus Capital Group, Inc. W. Daniel Ebersole was elected vice chairman and • Kenneth B. Robinson, former chief audit Anne Marie Petach was re-elected as secretary/ executive and global risk and compliance leader treasurer. of the Procter & Gamble Company Th e FAF also announced the appointment of fi ve new • Diane M. Rubin, retired audit partner and quality trustees, each to a fi ve-year term beginning January control partner of Novogradac & Company LLP. 1, 2016: For more about the FAF board, visit www. • Charles M. Allen, a partner and vice chairman accountingfoundation.org. with Crowe Horwath LLP

NASACT News | December 2015 10 NEWS FROM GASB & FAF

GASB ISSUES NEW PENSION GUIDANCE: STATEMENT NO. 78

Th e Governmental Accounting Standards Board Employer Defi ned Benefi t Pension Plans, assists these recently issued guidance designed to assist governments by focusing employer accounting governments that participate in certain private or and fi nancial reporting requirements for those federally sponsored multiple-employer defi ned pension plans on obtainable information. In lieu of benefi t pension plans (such as Taft -Hartley plans and the existing requirements under Statement 68, the plans with similar characteristics). new guidance establishes separate requirements for During the implementation of GASB Statement No. employers that participate in these pension plans. 68, Accounting and Financial Reporting for Pensions, Statement 78 establishes the criteria for identifying stakeholders raised concerns regarding the inability the applicable pension plans and addresses of a small group of governments whose employees are measurement and recognition of pension liabilities, provided pensions through such multiple-employer expense, and expenditures; note disclosures of pension plans to obtain measurements and other descriptive information about the plan, benefi t terms, relevant data points needed to comply with the and contribution terms; and required supplementary requirements of that statement. information presenting required contribution amounts for the past 10 fi scal years. Th e new guidance in GASB Statement No. 78, Pensions Provided through Certain Multiple- Th e full text of GASB Statement 78 is available at www.gasb.org.

To view NASACT’s responses to GASB due process documents, visit www.nasact.org/gasb. Questions about NASACT’s responses may be directed to Kim O’Ryan ([email protected]) or Sherri Rowland ([email protected]).

FAF NAMES NEW GASAC MEMBERS

Th e Financial Accounting Foundation recently • Richard Larkin, Securities Industry and Financial announced the appointment of three new members Markets Association to the Governmental Accounting Standards Advisory • Gerard Lian, Investment Company Institute Council. • Lealan Miller, Association of Government Th e new appointments include a fi rst-time Accountants representative from the National Association of State Treasurers, which joins the GASAC as a member • Sandra Moorman, American Public Power organization in 2016. Association Th e newly appointed members and the stakeholder • Jacqueline Reck, American Accounting Association. organizations that nominated them are: • Alan Skelton, NASACT • , Tennessee state treasurer, • Daniel Smith, Association for Budgeting and representing NAST Financial Management • James Wells, director, Nevada Governor’s Finance • Joseph Stefk o, Governmental Research Association Offi ce, representing the National Association of • Charles Tegen, National Association of College and State Budget Offi cers University Business Offi cers • Terri Wenck, senior fi nancial analyst, Fitch • Glen Whitley, National Association of Counties Ratings, representing bond rating agencies • Robert Wylie, National Association of State In addition to the new appointees, the FAF reappointed Retirement Administrators. 12 current members of the GASAC to two-year terms: Th ree GASAC members—Jim Reardon, GASAC vice • Stephen Klein, National Conference of State chair, Barbara Flickinger and Dominic Colafati—will Legislatures complete their service at the end of December 2015.

NASACT News | December 2015 11 CORPORATE ASSOCIATE SPOTLIGHT

IS YOUR ORGANIZATION READY FOR THE CLOUD? BY ROBERT SABO, ERP CLOUD PROGRAM LEAD, ORACLE PUBLIC SECTOR

Computer technology is constantly collaboration make cloud applications ArticleID/173/Capitals-in-the-Clouds- evolving. Organizations started with easier to use. Th is in turn helps Th e-Case-for-Cloud-Computing-in- mainframe technology, embraced client- employees become more productive. State-Government-Part-I-Defi nitions- server models, and then Internet-based • Resources and-Principles). applications. We are now in the midst of another change: the move toward cloud- Most public agencies are facing a IF YOU THINK YOUR ORGANIZATION IS READY, WHAT’S NEXT? based computing. A recent Gartner survey shortage of technology talent. Veteran (August 2015), reveals that when compared employees are retiring at the same time • Analyze your needs. Cloud-based with traditional on-premise licenses, demand for highly trained technology applications rarely replace every alternative models like cloud computing, staff is increasing in all industries. system. Many organizations, aft er account for more than 50 percent of new According to the National Association analyzing their overall modernization soft ware implementations. So most public of State Chief Information Offi cers’ approach, plan for a hybrid sector organizations have to ask themselves, State IT Workforce Survey, “…it is clear deployment. A hybrid approach will “Are we ready for the cloud?” that CIOs are concerned about the state determine which systems will benefi t of their workforce… for the fi rst time most from the cloud. For example, WHY CONSIDER CLOUD APPLICATIONS? in several years.” Human resources/ some agencies have implemented cloud As with any major investment, government talent management made NASCIO’s applications for specifi c functions, like leaders must fi rst ask why they should Top 10 list for 2015. Cloud applications budgeting or recruiting, and integrated consider cloud applications. What change the staffi ng mix required of them with specifi c on-premise advantages does the model off er–in personnel to support technology. applications. Others have implemented terms of cost, sustainability or citizen Vendors now can manage much of the a cloud fi nancial system for all or service–that current on-premise or even infrastructure and maintenance, such specifi c units within their state. hosted applications cannot? Some key as database administration, networking • Review procurement and contracting considerations include: and upgrades. Th is in turn means options. Cloud computing poses government needs fewer employees • Major System Changes diff erent challenges from procurement with specifi c core technology skills. and contracting perspective. Governments across the country are Th e result is that agencies can focus on faced with modernizing aging systems employing staff who are experts in core • Examine staffi ng implications. Cloud built on last-generation technology. government business processes. models will aff ect the mix of skills and Th is presents an opportunity to activities demanded of your technical • Funding and Cost review their requirements in light and business staff . Review how of capabilities currently available to Organizations facing capital funding responsibilities will change with Cloud provide better, more adaptable systems constraints fi nd that cloud models are deployments. at the same or even lower cost. One easier and more predictable to fund • It’s not only about applications. example is the city of Detroit. As it from operational budgets. High up- Many organizations, such as the city moved toward greater fi scal stability, front costs are replaced with monthly of Aspen, are deploying supporting the city recognized the need to replace “subscription” prices. Agencies are technology using Platform as a Service an older, on-premise fi nancial system also fi nding cost advantages. While functions (PaaS) both to complement with one that off ered greater fl exibility the model diff ers by organization, Soft ware as a Service (SaaS) and functionality. In this case Detroit long-term investment models show applications or as standalone functions. selected Oracle Cloud fi nancial and Cloud deployments can be less PaaS areas include application budgeting applications to position the expensive in the long run. Because development, document/content city for the future. Cloud applications are oft en faster to management, business intelligence, and implement, up-front implementation • User Demands integration functions. costs are lower. An excellent series on Today’s public sector employees expect cloud computing in state government Cloud computing holds great promise for modern applications with the same is available from NASCIO. Part many organizations. Whether they are usability and social capabilities they one of the “Capitals in the Cloud” looking to upgrade their infrastructure, or enjoy at home. Most cloud applications series, Th e Case for Cloud Computing deploy modern applications that are easier have advanced usability as a core in State Government, provides an to implement, use and maintain. But it all principle. Features such as graphical excellent overview: http://www. starts with a plan. data access, dashboards and social nascio.org/Publications/ArtMID/485/

NASACT News | December 2015 12 ASSOCIATION NOTES

WHAT’S NEW AT www.nasact.org? Th e following new items have been posted on NASACT’s website: • Gerry Boaz’s observations of the November 18- 20, 2015, meeting of the GASB at www.nasact. org/member_content (you must be logged in to view this content). • Letter from the Public Pension Network opposing additional pension reporting in Puerto Rico-specifi c legislation at www.nasact.org/ congress_reg_comments. • Letters from state and local groups urging support for legislation to treat municipal securities as high quality liquid assets at www. NASACT’S HOLIDAY SCHEDULE nasact.org/congress_reg_comments. NASACT’s offi ces will be closed on the following days • NASACT’s response to the GASB on the exposure during the upcoming holiday season: draft Implementation Guide No. 20XX-X at www. nasact.org/gasb. • Th ursday, December 24 (half day) • A technical inquiry from the National • Friday, December 25 Association of State Comptrollers on W-9 • Friday, January 1 Signature and Date Requirements at www.nasact. org/technical_inquiries (you must be logged in to view this content).

UPCOMING INFORMATION SHARING CALLS

JANUARY NSAA Peoplesoft Audit Work Group – Jan 20 NSAA Human Resources Info Sharing Group – Jan 27

FEBRUARY NASC Electronic Payments Info Sharing Group – Feb 9 NASC Payroll Info Sharing Group – Feb 10 NASC Travel & P-Card Info Sharing Group – Feb 17

MARCH NASACT Committee on Accounting, Reporting and Auditing – Mar 1

APRIL NSAA Human Resources Info Sharing Group – Apr 27

GET INVOLVED! For information on participating in any of these calls, contact NASACT’s headquarters office at (859) 276-1147.

NASACT News | December 2015 13 CALENDAR

2016

January 20 | Webinar: How Digital Trends are Reshaping Government Financial Management

VOLUME 35, NUMBER 12 | DEC 2015 February 25 | Webinar: Analytics – the Winning Edge in the Battle for Talent March 15 | NASACT Executive Committee Meeting, Salt Lake City, UT

R. Kinney Poynter March 16-18 | NASC Annual Conference, Salt Lake City, UT Executive Director March 24 | Webinar: Benford’s Law and Fraud Analysis Cornelia Chebinou April 12-14 | NASACT Middle Management Conference, Austin, TX Washington Office Director April 27-28 | Tennessee Training Seminars, Chattanooga, TN Glenda Johnson May 2-3 | Tennessee Training Seminars, Nashville, TN Communications Manager May 9-10 | Tennessee Training Seminars, Morristown, TN May 12-13 | Tennessee Training Seminars, Jackson, TN National Association of State Auditors, Comptrollers and Treasurers June 13-16 | NSAA Annual Conference, Avon, CO August 14 | NASACT Executive Committee Meeting, Indianapolis, IN Headquarters Office 449 Lewis Hargett Circle, Suite 290 August 13-17 | NASACT Annual Conference, Indianapolis, IN Lexington, KY 40503-3590 September 20-23 | NSAA IT Workshop & Conference, Phoenix, AZ P (859) 276-1147, F (859) 278-0507 Washington Office REGISTRATION IS NOW OPEN FOR NASC 2016! 444 N. Capitol Street, NW, Suite 234 BY DONNA MALOY, CONFERENCE MANAGER Washington, DC 20001 P (202) 624-5451, F (202) 624-5473 Th e 2016 annual conference of the National Association of State Comptrollers will be held www.nasact.org on March 16-18, 2016, at the Little America Hotel in Salt Lake City, Utah. Th e conference will be hosted by Utah Department of Finance Director and NASC President John Reidhead.

NASACT OFFICERS CONFERENCE HOTEL Calvin McKelvogue Th e negotiated room rate at the Little America Hotel is $179/night (single occupancy; each President additional guest is $15 per night) plus applicable taxes. To book your room, call the Little Chief Operating Officer America Hotel at (800) 437-5288 and ask for the NASC Annual Conference group rate. State Accounting Enterprise, Iowa Th e cut-off date to receive this rate is February 19, 2016. David H. Lillard, Jr. PROGRAM AND SCHEDULE OF EVENTS First Vice President State Treasurer, Tennessee NASC’s Program Committee, chaired by Anna Maria Kiehl, state comptroller, Pennsylvania, is working on the technical program. A draft program will be posted to Debbie Davenport NASACT’s website in early January. Registration is open now at www.nasact.org. Second Vice President Auditor General, Arizona TRAVEL ASSISTANCE FOR NASC MEMBERS D. Clark Partridge NASC members in good standing will be eligible to receive up to $1,000 to attend the Secretary NASC annual conference. Th e funds will be provided as a reimbursement following the State Comptroller, Arizona conference and may be used by the state comptroller or a designee. Beth Pearce MORE INFORMATION Treasurer Questions about the techical program may be directed to Kim O’ Ryan ([email protected]); State Treasurer, Vermont questions about registration may be directed to Donna Maloy ([email protected]).

NASACT News is published monthly. Congratulations to the Free Registration Winner! To submit articles, photos or ideas, Everyone who filled out the NASC conference topics survey was entered into a drawing contact Glenda Johnson at to receive either a free iPad or a free registration to the conference. Congratulations to [email protected] or (859) 276-1147. David Von Moll, state controller of Virginia, winner of a free registration!

NASACT News | December 2015 14