Commentary: Some Practical Considerations Concerning Public Debt Issuance

• Author: Michael J. Bell
• DOI: http://doi.org/10.1111/puar.12816
• Published date: 01 September 2017
• Date: 01 September 2017

690 Public Administration Review • September | October 2017

Some Practical Considerations Concerning

Public Debt Issuance

Michael J. Bell , chief financial officer

of a large urban school district, previously

served in that role for a large county as

well as a large city. His private sector work

as an investment banker focused primarily

on exempt facility private activity debt

,

specifically involving airports.

E-mail: michael_j_bell@dekalbschoolsga.org

Commentary

Michael J. Bell

DeKalb County School District

Cheol Liu, Tima T. Moldogaziev, and John L.

Mikesell ’ s insightful article, “Corruption

and State and Local Government Debt

Expansion,” tests on a macro level the hypothesis

that a higher level of public corruption will result in

a higher level of public debt, as measured by federal

conviction rates (during the years 1977–2008). As

one who has worked in the public debt arena (in the

private and public sectors), I would posit that the

relationship between levels of public corruption and

public debt issued is not quite that simple.

Inefficiencies in the public debt issuance process

can result from the underwriting method selected

(negotiated versus competitive bid process versus

placement). Inefficiencies can also result from

changes in the regulatory environment or even from

unanticipated swings in interest rates. Although

inefficiencies often manifest through “pay to play”

schemes that can and have resulted in poor or even

harmful financial decision making, such schemes

seldom rise to the level of successfully prosecuted

corrupt behavior.

Relative to the time period employed for the data

examination of measures of public corruption

and public debt issuance, certain legal/regulatory

watershed occurrences are not even referenced in the

article. Among these, principally, are the 1982 Tax

Equity and Fiscal Responsibility Act and the 1986 Tax

Reform Act. While the 1982 act put in place greater

public notice/input provisions, along with debt

Public Administration Review,

Vol. 77, Iss. 5, pp. 690–691. © 2017 by

The American Society for Public Administration.

DOI: 10.1111/puar.12816.