WASHINGTON -- A major opponent of the Municipal Securities Rulemaking Board's proposed electronic disclosure library told federal regulators yesterday that at least four key states collect extensive secondary-market information from their issuers and the practices in other states should be studied before further disclosure requirements are imposed.
The National Association of State Auditors, Comptrollers, and Treasurers announces its conclusion in a report it sent to the Securities and Exchange Commission two days before the SEC's scheduled vote last Thursday on the board's proposed Municipal Securities Information Library. The association has gone on record opposing MSIL.
The report is the outgrowth of a demonstration project the group launched in February that tracked financial information collected from state and local issuers in North Carolina, Ohio, Texas, and California.
The group examined North Carolina because it has a model program for collecting state and local financial information, and Ohio because it is launching an electronic system for collecting local government reports, said Relmond Van Daniker, executive director of NASACT. Texas and California also were studied because of their size, he said.
The report says state and local government financial information is typically collected and maintained by various state departments, agencies, and authorities in the four states. There is no central entity that collects the information, but it is generally available through several state government offices and through private corporations organized by bond dealers, the group says.
Moreover, the establishment of the Government Accounting Standards Board is leading to "appreciably wider use of standards for government accounting and reporting by all levels of state and local government," the NASACT report says.
While the four states appear to be taking significant steps toward producing and storing more and sounder information, the report says comparable information is needed about the other 46 states.
"Clearly, similar studies ought to be undertaken in the remaining states before conclusions about the availability or lack thereof of information needed by the municipal securities market may be drawn," the group says.
NASACT has charged that the MSRB does not have legal authority to create its proposed Municipal Securities Information Library and that it will preempt state efforts to upgrade secondary market disclosure.
However, the group's executive committee opted last July not to proceed with a staff recommendation calling for the development of a network of state repositories for disclosure information. The reasons cited included the expense of such a system, fear of inadequate demand for its services, and generally uneven interest among states.
The NASACT staff also generated controversy last year when -- on the eve of the SEC's vote to approve the MSRB's Rule G-36 -- it heavily lobbied the commission to reject the rule requiring dealers to send official statements to the board. The rule is a preliminary step needed for the creation of the proposed electronic library.
The NASACT report released yesterday focuses on what information currently is collected and made available within each state, what additional information could be collected, and how the information can be made more timely and consistent.
As an example of its findings, NASACT says North Carolina's division of state and local government finance in the state treasurer's office maintains records for local government units on debt principal and interest payments due and monitors payments through monthly reports.
The division collects annual county and municipal financial reports covering fiscal year revenues, receipts, expenditures, and transfers. It collects local government audit reports and semiannual cash balance reports. It maintains computerized data bases of historic information from the report. It also published two 200-page comparative summaries of key local government financial information, NASACT said.
The report also outlines data collection by the North Carolina Municipal Council, Inc., the North Carolina State Data Center, and various state agencies.