Antonio Manuel López-Hernández

Developing a Model to Measure Financial Condition in Local Government: Evaluating Service Quality and Minimizing the Effects of the Socioeconomic Environment: An Application to Spanish Municipalities

Various studies have sought to obtain a measure of the financial health of local authorities, via the concept of financial condition. However, in measuring this latter concept, two serious problems need to be addressed: The first concerns the inclusion or otherwise of socioeconomic variables in the proposed evaluation models, and the second, the difficulty of measuring the solvency in the level of services provided. Therefore, the authors have created a methodology to measure the financial condition of a local authority, including a variable to measure the quality of the services received by the population, and present a new treatment for the variables of the socioeconomic environment so that the financial and socioeconomic factors can be integrated. The application of this method to a sample of Spanish local authorities reveals its capability of minimizing the effects of the socioeconomic environment and maximizing the value of benchmarking, making comparisons between local authorities simpler and more effective.

Developing an alert system for local governments in financial crisis

This article presents a new model which will show whether a local authority is heading for financial trouble. The model is simple for national audit bodies to use and provides an early warning of financial tensions allowing corrective action to be taken before there is a crisis.

Evaluating financial performance in local government: maximizing the benchmarking value

One of the main problems in evaluating financial performance arises in carrying out comparisons between municipalities, as no account is taken of the impact of certain factors of the social and economic environment on the indicators in question. In this study, the concept of financial condition is applied, revealing the influence of such factors, and a methodology is proposed to minimize their effects on the results of the evaluation. The results of applying these to a sample of municipalities in Spain reveal that the model is useful for reinforcing the value of benchmarking between municipalities with similar characteristics. Points for practitioners The use of indicators for evaluating financial performance has advanced considerably in recent years. However, many criticisms have been made by public sector managers concerning the application of such indicators. One of these is that, in many cases, the values measured by different authorities are not comparable, as the services they provide differ significantly. If local authorities were grouped according to the social and economic factors influencing their provision of public services, the evaluations made would be much more effective, facilitating decision-making by supervisory bodies and by municipal managers.

Alternative management structures for municipal waste collection services: The influence of economic and political factors

Identifying and characterising the factors that determine why a local authority opts for a particular way of managing its waste collection service is an important issue, warranting research interest in the field of municipal solid waste (MSW) management. This paper presents empirical evidence spanning a broad time horizon (2002–2010) showing that economic and political factors impact in different ways on the provision of waste management services. We examine five alternatives in this area, including public and private service delivery formulas and, within each field, individual and joint options. Our findings highlight the importance of the service cost and that of the various indicators of fiscal stress as determinant factors of management decisions regarding the provision of MSW management services. 2014 Elsevier Ltd. All rights reserved.Identifying and characterising the factors that determine why a local authority opts for a particular way of managing its waste collection service is an important issue, warranting research interest in the field of municipal solid waste (MSW) management. This paper presents empirical evidence spanning a broad time horizon (2002-2010) showing that economic and political factors impact in different ways on the provision of waste management services. We examine five alternatives in this area, including public and private service delivery formulas and, within each field, individual and joint options. Our findings highlight the importance of the service cost and that of the various indicators of fiscal stress as determinant factors of management decisions regarding the provision of MSW management services.

Online disclosure of university social responsibility: a comparative study of public and private US universities

Public and private universities tasked with incorporating principles of social responsibility (SR) into their activities face the multiple challenges of addressing expectations of diverse stakeholders, establishing mechanisms for dialogue, and achieving greater information transparency. This article has two goals: first, to analyze whether SR has become an essential element in activities associated with university accountability, information transparency, and the use of the Internet; second, to analyze whether SR is used by universities as a differentiating factor in relation to their status. A comparative study of public and private US universities shows that neither is strongly committed to the online disclosure of SR information, including in relation to sustainability-related activities. Moreover, there is a uniformity in the accountability activities of both university types, suggesting that the challenges are not being faced, and SR is not being used as a differentiating factor in the pursuit of positional or competitive advantage.

Governmental financial transparency in MERCOSUR member countries

In the last century, the MERCOSUR member countries have carried out reforms aimed at achieving better public financial information for governmental decision-taking. Important changes are currently taking place on the international public accounting scene, and the International Federation of Accountants (IFAC) has published International Public Sector Accounting Standards (IPSAS), by which it seeks to ensure that governmental financial reports include financial information of sufficient quality to support decision-making by different users, and at the same time to improve the comparability of the financial information presented by public sector bodies throughout the world. In this article, we examine the consistency of the information included by MERCOSUR member countries in their current year-end governmental public financial reports with the public financial reporting practices recommended by IFAC, in order to determine whether further efforts are needed to improve transparency and comparability. Points for practitioners The article may help government practitioners in MERCOSUR countries to become aware of the divergences which exist regarding the governmental financial information offered by each of the countries in MERCOSUR. Moreover, it could help to set up a common project of account reform which would take IPSAS as its model. This unified framework for accounting policies would increase the coherence of financial information and would establish a common measurement basis to assess the financial results of all of the MERCOSUR countries.

Effects of the crisis in Spanish municipalities' financial condition: an empirical evidence (2005-2008)

Administrative decentralisation in Spain has been a continuous process since the restoration of democracy. However, while significant transfers of powers and funding have taken place between the central and regional governments, this is not the case with respect to local authorities. This situation, coupled with borrowing constraints and the budgetary balance required of Spanish councils under Spanish law, as well as the present economic crisis, is causing financial difficulties in municipal accounts. In this paper, we examine a sample of 2,364 local authorities, stratified by population size, for the period 2005-2008, with the aim of analysing the finances of Spanish local councils and observing the effects of the crisis on their financial condition.

Do local authorities use NPM delivery forms to overcome problems of fiscal stress

Finding solutions to the unfavourable economic and financial situation that the local authorities are currently facing is of crucial importance. One such solution is to adopt mechanisms for restructuring local public services, through new management approaches to reduce costs and thereby reduce fiscal stress. The aim of this article is to determine the probability of a city council changing the way it manages services, selecting from different options, in response to situations of fiscal stress. To address this issue, we studied a sample of 1572 Spanish municipalities for the period 2002–2009, using a random-effects panel multinomial logit model. The results obtained show that outsourcing and inter-municipal cooperation are the management formulas that councils are most likely to choose in response to a financial crisis, especially the ones arising from insufficient transfers, negative cash flow, debt or budget deficit.

Online Budget Transparency in OECD Member Countries and Administrative Culture

The Organisation for Economic Co-Operation and Development emphasizes the e-government process as a tool for promoting budget transparency making all fiscal reports publicly available on the Internet. Nonetheless, the particular approach adopted to New Public Management models may influence different policies concerning the concepts of information quality and transparency. Based on an administrative culture approach, the aim of this article is to analyze whether the new technologies are being used by central governments for improving their accountability and democracy making their budgetary figures transparent for all stakeholders. The results of this study confirm that differences do exist across countries under different administrative cultures.

Privatisation of waste collection services in response to fiscal stress in times of crisis

According to the conventional theoretical framework, fiscal stress is an explanatory factor of privatisation, since the latter can provide economies of scale and cost savings, as indicated by the theory of public choice. However, urban planning theories suggest that public choice does not take into account the collective needs of those receiving public services. The present study aims to clarify two major issues. Firstly, in the presence of fiscal stress, do public managers really privatise? And secondly, does privatisation harm the public interest? To investigate these questions, we constructed and analysed a discrete-time survival model, which was applied to the period 2000–2010, to reflect the effects of the current global financial crisis on the fiscal stress–privatisation relationship with respect to urban waste collection services. The results obtained indicate that when certain aspects of financial condition worsen, the likelihood of public services being privatised increases. This was the case during the Great Recession of 2008–2010, especially when a neighbouring municipality had previously privatised its services. After privatisation, service quality did not vary significantly, and so we conclude that public choice does not prejudice the public interest.