Bipartisan senators introduce legislation establishing financial reporting standards for counties S. 4295 would impose financial reporting standards and place an unfunded federal mandate upon counties for compliance
In May 2022, Sens. Mark Warner (D-Va.) and Mike Crapo (R-Idaho) introduced the Financial Data Transparency Act of 2022 (S. 4295) that would mandate government and non-profit financial information to be reported in a standardized format to ensure there is uniform financial reporting across all types of municipal bond issuing entities.
Companion legislation (H.R. 2989), introduced by Reps. Carolyn Maloney (D-N.Y.) and Patrick McHenry (R-N.C.), passed the U.S. House on July 14, 2022, as an amendment to the House version of the Fiscal Year (FY) 2023 National Defense Authorization Act (NDAA), which is annual, must-pass legislation. As such, the Senate is actively considering attaching S. 4295 to the U.S. Senate version of the FY 2023 NDAA.
Section 203 of this legislation would require the Municipal Securities Rulemaking Board (MSRB) to develop data standards for financial reporting related to the municipal bond market. These data standards would be required to include common identifiers for information reported, or universal reporting standards, and reporting entities would be required to the extent practicable render fully searchable and machine-readable data with accompanying metadata that clearly define the semantic meaning of the data. MSRB would also be required to “scale” these requirements for smaller regulated entities.
If the bill is enacted, MSRB would be required to issue a rule for regulated entities on these new reporting standards within 2 years and the bill would provide another 2 years for implementation. Full implementation and compliance would begin in 2027.
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Counties can use this template letter to send to your Senators urging them to oppose S. 4295 in the FY 2023 NDAA.
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Counties recognize the need for full disclosure of all relevant information concerning a county’s financial condition to potential investors, citizens, and other parties interested in municipal bonds. Counties also oppose federally imposed standards for county financial accounting and reporting and supports those principles put forth by the Governmental Accounting Standards Board (GASB). As such, NACo is concerned with the unfunded and federally mandated financial reporting standards included in this bill.
We urge counties to contact your Senators and ask them to oppose inclusion of S. 4295 in the NDAA.
