The ‘new normal’ of public finance

8/12/2011 - With the debate over the nation’s debt-ceiling issue fresh in the public’s mind, leaders from a dozen state treasurers’ offices and Mexico gathered at the Kellogg School in early August to learn the latest skills in public financial management.

The National Institute for Public Finance, a biennial offering co-hosted by Kellogg and the National Association of State Treasurers, offers officials the premier educational program on public financial management. Topics addressed include investment policies and practices, cash and debt management, and state pension plans.

“States take in money, invest money, borrow money, and use money in the public interest — that we know,” said Kellogg Professor Don Haider, who has served as dean of the Institute since it was founded in 1995. “But we’re focused on understanding the totality of this role and learning how to be better at it.”

Given the tumultuous debt debate in Washington, this year’s program carried added weight.

“There’s a call to state and local offices to get their houses in order. We’re looking at a new normal and need to know how to function in this new era,” said Haider, a former budget director for the City of Chicago and the U.S. Treasury official charged with the New York City bailout in 1979-1980.

A trio of Kellogg professors, all experts in the public finance field, played key roles at the conference, which took place on Kellogg’s downtown Chicago campus. Haider discussed change management during the event’s opening day, while Therese McGuire guided a 90-minute session on state budget pressures. Nationally noted pension expert Joshua Rauh addressed pension issues.

“Public officials need an honest attendant, and Kellogg is a safe haven to carry out a training program of this sort,” Haider said. “Our faculty are able to bring a sobriety about the real world of investments and governance to the table.”

Ron Estes, Kansas’ newly installed state treasurer, ventured to the five-day program eager to gain a deeper understanding of the issues confronted by other state treasurer offices. Estes said he left Chicago with a broad overview of the roles his office plays and new ways his group might need to conduct business.

Another Institute newcomer and newly minted treasurer, Arizona’s Doug Ducey, said he finished the five-day program better prepared to tackle his state’s fragile budget condition.

“Learning from other state leaders and financial professionals about ways to improve a state’s financial standing only makes me more eager to find solutions,” Ducey said.