Small city use of the 10-point test of financial condition.

An article titled "The 10-Point Test of Financial Condition: Toward an Easy-to-Use Assessment Tool for Smaller Cities," published in the December 1993 issue of Government Finance Review, introduced a procedure for comparing a city's performance on 10 financial ratios with that of other cities of comparable size. The scoring and benchmarking system was developed by Dr. Ken Brown based upon FY89, FY90 and FY91 data in the GFOA's Financial Indicators Database, which contains financial data for all cities awarded GFOA's Certificate of Achievement for Excellence in Financial Reporting in those fiscal years.

Brown, an associate professor of accounting at Southwest Missouri University and a member of GFOA's Special Review Committee, wrote that his article was intended to provide "a conversation piece around which finance officers and others can discuss and develop better financial condition assessment tools.... Tests such as [this] provide a case for continued and expanded exchange of financial information by cities so that they can make better-informed judgments about the state of their financial affairs."

Readers of that article were invited to contact the author to discuss their experiences using the 10-Point Test and their views on its further development. As a result, Professor Brown received a large number of telephone calls, letters and several invitations to present his methodology at conferences of state associations of finance officers. He shared his list of contacts and correspondence with the editor of Government Finance Review, who asked the following officials of small governments to describe their experience using the 10-Point Test.

Robert L. Kolodziej, deputy director of finance, Village of Arlington Heights, Illinois

The Village of Arlington Heights (population 77,000) has embraced the 10-Point Test of financial condition as a very effective method to convey an understanding of the village's financial condition to the elected officials and the general public. A presentation using the 10-Point Test was given at the finance committee meeting of the board of trustees as one of the first steps in the budget process. Elected officials and citizens have expressed their compliments of the report and its presentation. One trustee remarked, "I have a better understanding about our own finances as a result of a 20-minute presentation than collectively from the myriad of discussions and processes we undertake throughout the year. More information and an analysis of comparing ourselves to other similar-sized cities is needed to gain a better understanding of our. own strengths and weaknesses."

The 10-Point Test uses a database of financial information on 750 small communities (less than 100,000 population) across the nation that...