Creating a Finance Decoder for Colonie, New York
Introduction
Hi, I'm David. Let me walk through my experience creating a Finance Decoder.
I heard about the Hudson Finance Decoder Project and it interested me. I have a personal interest in the Town of Colonie, NY which is an incorporated town in Albany County, NY and I wanted to create a Finance Decoder for the Town. Btw - it’s pronounced “Col oh KNEE”, emphasizing the last syllable! and also btw - I have zero experience in accounting or finance. Let's see how it goes.
I read the instructions for filling out a worksheet one more time, “For luck” as Princess Leia said in Episode IV.
I started by getting a copy of the Finance Decoder (FD). I went here, clicked the Strong Towns Finance Decoder 1.0.1 which opens up a read-only copy of the FD. I then chose File>Make a Copy into a new folder on my Google Drive.
Next, I needed to find the audited financial statements for the Town of Colonie. A basic search “Town of Colonie Audited financial statements” got me to the right place. Unfortunately, I only can see audited financial statements for 2024 back to 2019. So I downloaded each of the 6 audited files to my hard drive so I could begin exploring.
I decided to divide and conquer. I will first try to fill out the Total Assets and Total Liabilities section. To start I’m going to search through the pdf looking for “Current Assets” in a table called “Net position”
I found it on pdf page 39. Because I know that the Town has both Governmental and Business Activities, what I care about is the Total - I don’t want to analyze just the governmental activities or just the business activities.
Sometimes the Town and auditors have made things easy, sometimes they haven’t. Unfortunately there is no summarization of Current Assets so I created a little table to add up the numbers. Capital Assets is straightforward - we can use the “Capital assets, net of depreciation” line, or $146,023,498 from the Total column. Our FD looks now looks like this (image above), including our little math project.
Moving on to liabilities. The three liabilities lines are fairly straightforward:
- The Deferred Outflows can be found on the bottom of the screenshot above - $50,961,484. I made sure to get the value from the “Total” column.
- The “Total Liabilities” are on the next page of the pdf on the “Total Liabilities” line.
- The Deferred inflows are found in the table on the next page - “Deferred Inflows of Resources”
Btw, I didn’t know what “Inflows” are (and “outflows” which we’ll get to later). I found this doc to be very helpful to understand the definitions.
Making progress! Our sheet now has our Assets and our liabiltiies!
Moving on to Revenues. I’ve gotten pretty good at searching this pdf so I’ll just search for “Total revenues” which helps me find the table above. Our total revenues are $103,826,667.
The next thing to look for are Operating Grants and Contributions, and Capital Grants and Contributions. These reflect funds that flow from state, federal and county governments to the Town of Colonie. The Finance Decoder suggested I look for the section “Changes in Net Position”. There are several places where this phrase exists, however I’m looking for two things - a table that indicates the activities are “Government-wide” and a table that lists out Operating Grants and Capital Grants as columns that cut across both governmental activities and business-like activities. And I found it… and I plug some numbers into my Finance Decoder. Operating Grants = $8,752,228, Capital Grants = $1,424,133.
Lastly, we move into the TCA section which will provide insights on our Town’s Tangible Capital Assets. This is data on our long-lasting physical possessions used in operations, such as land, buildings, vehicles, machinery, equipment, and infrastructure like roads and water systems.
Our town buys a lot of our tangible assets using debt and we pay interest on our debt. The first value - “interest charges” - is the yearly interest we are paying on our debt. Conveniently, the data point is found in the last table we looked at above, in the “Debt Interest” field - $1,840,395.
Our next search is to find the Net Book TCA (Tangible Capital Assets) which we can think of as the value of the things that our town owns. Searching for “Capital assets” in the pdf will find many occurrences of the phrase however, again, we are looking for a table or tables that recognize “Government-wide”, and a table that lists both “Government Activities” and “Business-Type Activities”. We find such a table on pdf p39:
We plug the Total value of $146,023,498 into our FD.
The last section of TCA is a set of 3 or 6 variables - 3 if your government only has government activities, 6 if your government has both government and business-like activities.
These values can be found in the “Notes” section, e.g. “Note 3”, “Note 7”, etc. Doing a search for the word “depreciated” is usually a good cue for finding this section in your pdf. We find two tables on pdf pages 62 and 63. This appears to be what we are looking for.
This is the table for governmental activities. Note the “assets not being depreciated” and “assets being depreciated” sections.
This is the table for business-like activities. Importantly, depreciation changes over the year so we want to capture the value at the end of the calendar or fiscal year.
And we plug the data into our Finance Decoder.
When I got to the end I thought, wow am I really done? Yep. I looked at the “Results” tab (above) to see the start of some of the graphs.
The Net Financial Position shows nearly a negative $300 million. My initial thought was something like “That can’t be right, we’re a small town!!” I went back and looked at the data that I entered. The FD’s Net Financial Position is our Current Assets (row 6) - Total Liabilities (row 12), or ($122 million - $414 million).
A good starting point to understand this number is to do a little research in the audited financial statement. I searched for the words “liability”, “debt” and “liabilities” and I found:
- The town has significant liabilities associated with postemployment benefits for Town employees. Note that this is related to the “Identify what year the local government recognized GASB 75” guidance. Somewhere prior to 2024 the Town began to follow GASB 75
- I looked for commentary about debt used to purchase things that support both government and business-like activities. On pdf p36 there is a discussion about outstanding indebtedness. Even without understanding the details, I could see that the Town has over $140 million of Debt, which is a component of the Town’s liabilities.
While I wanted someone to review my work, I have a good idea of where the different data points are that get plugged into the Finance Decoder. Now that I have cracked the code on where to find all of these different data points, I can start working backwards in time, looking for the same data points in prior year audited financial statements.