State government's role in monitoring local governments’ fiscal distress gained importance after several local financial crises. Although many states have implemented state monitoring systems, the effectiveness of these systems has not been well understood. Using the case of the New York State, we conducted a regression discontinuity analysis to examine the effect of fiscal stress labeling on local governments. We find some evidence to support that fiscal stress labels lead local governments to improve their fund balance and cash positions. Specifically, school districts at the early stage of fiscal stress are more responsive to the labels than districts under more severe fiscal stress.
CattaneoMatias D.JanssonMichaelMaXinwei. 2019. lpdensity: Local polynomial density estimation and inference. arXiv:1906.06529.
3.
CattaneoMatias D.TitiunikRocíoVazquez-BareGonzaloKeeleLuke. 2016. “Interpreting Regression Discontinuity Designs with Multiple Cutoffs.” The Journal of Politics78 (4): 1229–1248. https://doi.org/10.1086/686802.
4.
ChungIl HwanWilliamsDaniel. 2021. “Local Governments’ Responses to the Fiscal Stress Label: The Case of New York.” Local Government Studies47 (5): 808–835. https://doi.org/10.1080/03003930.2020.1797693.
DiMaggioPaul J.PowellWalter W.. 1983. “The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields.” American Sociological Review48 (2): 147–160. https://doi.org/10.2307/2095101.
GelmanAndrewImbensGuido. 2019. “Why High-Order Polynomials Should not be Used in Regression Discontinuity Designs.” Journal of Business & Economic Statistics37 (3): 447–456. https://doi.org/10.1080/07350015.2017.1366909.
10.
GerrishEdSpreenThomas Luke. 2017. “Does Benchmarking Encourage Improvement or Convergence? Evaluating North Carolina's Fiscal Benchmarking Tool.” Journal of Public Administration Research and Theory27 (4): 596–614. https://doi.org/10.1093/jopart/mux018.
11.
HonadleBeth Walter. 2003. “The States’ Role in US Local Government Fiscal Crises: A Theoretical Model and Results of a National Survey.” International Journal of Public Administration26 (13): 1431–1472. https://doi.org/10.1081/PAD-120024405.
12.
HoplandArnt O.2014. “Voter Information and Electoral Outcomes: The Norwegian List of Shame.” Public Choice161 (1–2): 233–255. https://doi.org/10.1007/s11127-014-0151-9.
JacobRobinZhuPeiSomersMarie-AndréeBloomHoward. 2012. A Practical Guide to Regression Discontinuity. New York, NY: MDRC.
15.
KimYoungsungParkYoung Joo. 2022. “Does Accountability Improve Government Performance? Evidence from the US State Fiscal Monitoring and Intervention Systems.” Public Management Review, 1–23. https://doi.org/10.1080/14719037.2022.2052945.
16.
KlohaPhilipWeissertCarol S.KleineRobert. 2005. “Developing and Testing a Composite Model to Predict Local Fiscal Distress.” Public Administration Review65 (3): 313–323. https://doi.org/10.1111/j.1540-6210.2005.00456.x.
RivenbarkWilliam C.RoenigkDale J.AllisonGregory S.. 2010. “Conceptualizing Financial Condition in Local Government.” Journal of Public Budgeting, Accounting & Financial Management22 (2): 149–177. https://doi.org/10.1108/JPBAFM-22-02-2010-B001.
20.
ScorsoneEric A.PruettNatalie. 2020. Assessing Existing Local Government Fiscal Early Warning System through Four State Case Studies. Colorado, Louisiana, Ohio and Pennsylvania: Michigan State University Extension: Michigan Center for Local Government Finance & Policy.
21.
SpreenThomas LukeCheekCaitlin M.. 2016. “Does Monitoring Local Government Fiscal Conditions Affect Outcomes? Evidence from Michigan.” Public Finance Review44 (6): 722–745. https://doi.org/10.1177/1091142115611743.
22.
ThompsonPaul N.2016. “School District and Housing Price Responses to Fiscal Stress Labels: Evidence from Ohio.” Journal of Urban Economics94 (2016): 54–72. https://doi.org/10.1016/j.jue.2016.05.004.
23.
ThompsonPaul N.2017. “Effects of Fiscal Stress Labels on Municipal Government Finances, Housing Prices, and the Quality of Public Services: Evidence from Ohio.” Regional Science and Urban Economics64: 98–116. https://doi.org/10.1016/j.regsciurbeco.2017.03.001.
24.
ThompsonPaul N.2019. “Are School Officials Held Accountable for Fiscal Stress? Evidence from School District Financial Intervention Systems.” Economics of Education Review72 (2019): 44–54. https://doi.org/10.1016/j.econedurev.2019.05.005.
25.
ThompsonPaul N.WhitleyJoseph. 2017. “The Effect of School District and Municipal Government Financial Health Information on Local tax Election Outcomes: Evidence from Fiscal Stress Labels in Ohio.” Public Choice170 (3–4): 265–288. https://doi.org/10.1007/s11127-016-0395-7.
26.
YangLang Kate. 2021. Fiscal Transparency or Fiscal Illusion? Housing and Credit Market Responses to Fiscal Monitoring. International Tax and Public Finance29: 1–29. https://doi.org/10.1007/s10797-020-09654-x.
