Financing the places we love should be simple. Right?
Imagine we could learn from the past two decades of the internet and the benefits of information becoming freer than ever before. From how that freedom has benefited healthcare, software and now even artificial intelligence.
That’s where we’re going. But first let’s talk about where we are.
We’ll start with a quick overview of how our nation’s public schools pay for new things, like buildings.
Imagine your local school district needs $10 million to build a new school.Investors like you agree to loan the district money for the 5 years it will take to build the school. Every year, you earn interest on the loan. After 5 years, the district promises to pay back your investment. In most cases the interest you earn will be tax free because it’s a public project, and 99% of these loans are paid back on time.
That’s called a municipal bond. In the past year California school districts raised 12 billion dollars this way, over 475 issuances.
So how does your school district create a municipal bond and issue it? First they need a team of finance experts:
- A Municipal Financial Advisor who helps calculate what the school can afford.
- An underwriter who markets the bonds to investors, and in many cases will purchase the bonds in the rare case no one wants them.
- Counsel (that’s lawyers to you and me) who help prepare documents, review everything, and sign off that the issuance is ready to go.
The second thing the district and their team needs is data. They use this data to decide how much to borrow, what the terms should be, and to create documents that advertise the plan to investors like you.
They’re not the world’s prettiest documents. And they’re often 200 pages in length.
Here’s where it stops being simple.
To put together this bond issuance the district and its team need a wide range of data, including information about the school itself, data from the county, and data about the local economy that might affect the district.
We’re already at six different data sources. That means that each time the data changes, you need to recollect six times. We’re probably not talking about going to a website and downloading a PDF, either – that’s a good case – we’re talking about making a phone call. Some of this data still lives on CDs. Seriously.
Data Silos and How We Got Into Them
This is a classic data silo problem. In order for a school to raise money for a new building, in order for you to invest in your local school, hundreds of people need to dive in and out of these silos.
Now remember: all of this data is public. As a taxpayer you could request it, in theory. But it would take time to parse, process and make that data usable.
So why do silos exist? For some very good reasons, actually.
- You’ve got a lot of organizations working in the same space. They can’t all collaborate perfectly.
- If I can collect and manage data better than you, my organization will have an advantage over yours.
- People have built some services to navigate these silos. I can pay my way out of the silo for a few hundred dollars a time.
So where is the problem? The problem is the scale.
As I mentioned in 2015 California school districts did issuances at least 475 times.
That’s 475 times a few hundred dollars + some number of hours of work and salaries paid. That’s just one data source, and one type of issuer. In California as a whole, public agencies went through the same process 2,500 times last year. In the United States, this process repeated 13,000 times in one year.
From Silos to a Network
But breaking down silos sounds hard. How do you do it?
You have to believe that breaking down silos will benefit you and the industry more in the long term than preserving them.
You need to believe it’s worth building a data community. Like the Human Genome Project did. Or Elon Musk did. Or the city and county of San Francisco did. We think it’s worth it for public finance.
To get to a data community, you start with a network. Bring all the siloed data together in one place.
On Neighborly Pro you can search for a school district and find a single page that aggregates 9 different data sources, and represents that data in a variety of forms, charts and tables. Believe it or not, this is the only place on the web right now where you can get this information about Berkeley Unified School District in one single place, on demand, for free. Even though all this information is public.
Next, what’s the most powerful thing about networked data? Interactions and associations.
How does Berkeley compare to other school districts? We built a ranking system to start answering questions like that about all the organizations involved in public finance.
Public finance professionals will tell you this is a relationship business. On Neighborly you can see which organizations a school district has worked with in the past and explore their relationships.
From a Network to a Community
This network is a good start. But if we’re going to realize the vision of schools getting all the data they need to build a new school instantly, for free, we need to build a community to sustain and grow the data.
What does it mean to be a data community? It means that everyone using the data understands that it’s in everyone’s interest for that data to be open, verifiable and co-created. All the users and creators of public finance data are our partners in making high quality data available to the whole community.
Sounds good, but how do you persuade people it’s worth joining a data community?
There are four main reasons to be part of a data community.
- Get access to the data you need instantly
- Don’t pay for something twice (your taxes already paid for it)
- Learn from others faster
- Spend your time on finding insights from data and providing value
Now of course, public finance is a highly regulated industry. We’re not crowdsourcing Yelp reviews here. The accuracy of this data matters a lot. It’s your tax dollars, your investments, and your children.
That’s why a networked approach to making sure the data is correct and accessible is critical. So we’re working with the public finance community to make the best data possible available to everyone. In machine readable formats, with tools to keep it accurate. All open, all free. That’s the solid foundation we need to make the right decisions.
If you work in public finance, email me for a beta invite to Neighborly.
And if you’re excited about funding the future of your community, let’s talk. I’d love to hear questions you have and to hear about data problems you’ve worked on.