The City of Providence, RI: A Case Examining the Financial Condition of a U.S. Municipality

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Abstract

Almost all municipalities in the United States are faced with fiscal problems that affect their operations, services provided to their citizens, and ultimately, the public interest. This case requires you to evaluate research, background information, and the financial statements of a municipality (the City of Providence, Rhode Island), in order to make an assessment of the financial health of the city and identify any areas of weakness. We provide you with background information on the city, and then present a series of questions that require you to research the financial statements as well as the popular press to obtain information that will be useful in your analysis. Using the financial statements, as well as a model presented in Trussel and Patrick (2009), you will be asked to assess key financial ratios, and apply your knowledge of financial accounting, governmental accounting, current events, operating risk and external risk factors to the information you gather about the city. You will then determine possible solutions to the city’s financial challenges. Through these analyses it is anticipated that you will deepen your knowledge of governmental accounting and be able to gain a greater understanding of how various elements of municipal financial statements are integrated with one another. In addition, you will better understand the tradeoffs and decisions most city and state governments are facing in the current economic environment, as well as the ethical implications of such decisions.

Authors

• Nancy Chun Feng, Suffolk University

• Christine Earley, Providence College

• Patrick T Kelly, Providence College