As cities across the country grapple with economic uncertainty, infrastructure demands, and evolving financial landscapes, the role of city finance leaders has never been more critical. Few professionals understand this better than Kara Skinner, a veteran in municipal finance with nearly two decades of experience in fiscal strategy, operational leadership, and public sector transformation.
Currently serving as a director at MGT, a national leader in social impact and technology-driven solutions, Skinner has held pivotal roles, including Chief Financial Officer for the cities of Boulder and Colorado Springs. Her leadership has shaped financial policy, enhanced transparency, and driven innovation in public finance.
In this exclusive conversation, Skinner shares her journey, key insights from her career, and the strategies she believes will define the future of city government finance.
What inspired you to pursue a career in city government finance and what experiences shaped your approach as a CFO?
My education is in economics, and I initially worked at the State Department of Labor and the State Public Utilities Commission, applying economic principles to state policy. It wasn’t until I joined the City of Colorado Springs Budget Office, that I saw the direct, tangible impact local government has on people’s lives. In this role, our team visualized that impact by producing a short film that depicted how many daily activities such as having safe water, accessing parks, and driving safely to school or work by a road and traffic system are made possible by the local government. Supporting the people and systems that provide those services was extremely rewarding.
Can you share a specific challenge that you faced as a CFO and how you navigated it?
I believe that the greatest challenges I faced occurred when I was part of the finance team, rather than during my tenure as CFO. These challenges were created by the economic shocks of the Great Recession and the pandemic It was a dramatic period marked by widespread stress and uncertainty among people. Despite this, the finance team, alongside the leadership teams in both cities where I worked, collaborated effectively, adopted a problem-solving approach, provided support to team members and navigated the many, and often painful, strategies that needed to be employed including service and staffing reductions . That persevering through those times of crisis – the resilience and confidence building across the team is something I reflect on often..
What do you think are some of the primary budgetary constraints that city governments are currently facing and how can CFOs effectively manage limited resources?
There are numerous budgetary constraints currently affecting government operations. From a financial perspective, the focus is often on the revenue side, with many communities across the United States experiencing stagnant revenues. In Colorado, revenues are flattening due to stagnant sales tax revenues, influenced by demographic changes. Sales taxes mainly apply to goods, but as people age they spend more on services and less on goods, which impacts sales tax collections. Meanwhile, government expenses for materials, supplies, and personnel are rising, making it challenging to balance flat or slowing revenue growth with increasing costs. It has also been my experience, that community desires and demands seemingly continue to grow and they look to the local government to solve many challenging problems and enhance services. CFOs will be tasked with really getting the attention of the community and policy makers to look holistically at the financial picture, the portfolio of services, the projections for revenue and have a hard, honest conversation with the community about prioritization of services and the taxes and fees that they pay. Hard choices need to be made in many instances, but they should be informed by data and community values and sentiment.
Regarding cybersecurity, where are your primary concerns within city government and how do you think they should address those potential vulnerabilities with sensitive data and infrastructure today?
A skilled and experienced Chief Information Security Officer (CISO) or a qualified contract team is essential. A cybersecurity team dedicated to 24/7 data security along with a robust employee training program I believe are the two key components to have in place. Chief Information Officers (CIOs) frequently identify employees as a significant vulnerability due to phishing attacks. These attacks are not only frequent but are also becoming increasingly sophisticated, often making them appear legitimate. Employees, especially when busy, might inadvertently click on malicious links. Hence, providing effective training is essential. I would emphasize that culture also plays a crucial role in cybersecurity. Employees need to feel confident and comfortable reporting any potential mistakes to their IT department, such as clicking on a suspicious link. This open culture of communication enables prompt responses to potential threats and is essential for maintaining robust cybersecurity practices. From a finance officer’s perspective, cybersecurity can be daunting. Concerns include potential ransomware attacks and fraudulent payments by employees. Local governments are often decentralized, with many staff members handling payments and vendor interactions. Therefore, strong training programs are crucial to ensure everyone verifies vendor payments meticulously. Regular training, encouraging employees to speak up, and risk mitigation strategies are essential. If an organization can budget for a cybersecurity insurance policy, I believe that is a worthwhile investment.
How important is it for city governments to diversify their revenue sources and what strategies can CFOs use to achieve this?
Early in my career, I learned about the three-legged stool analogy: property tax, sales tax, and other taxes or fees. This balance is crucial for diversification; if one leg is longer than the others, the stool will tip over. Economic events affect property tax and sales tax differently. For instance, during the Great Recession, sales tax revenue responded immediately, while property tax revenue was delayed. This timing difference helped smooth the overall impact and allowed more time to strategize and respond. During the pandemic, my community saw a 40% drop in sales tax within a month, but property tax revenue increased due to a surge in housing market valuations. Thus, diversification played a key role in stabilizing revenue.
In regards to infrastructure investment with aging infrastructure posing significant challenges, what innovative financing options are available to CFOs to fund critical projects?
I found that large local government infrastructure projects often need federal or state support due to funding limitations. While some projects can be pay as you go funded, many rely on debt financing. It is noteworthy that over the past 20 years, I observed some communities strongly reluctant to issue debt, perceiving it as an unfavorable option. However, due to inflation, project costs have risen faster than debt costs. Issuing debt and completing projects sooner is more efficient, as it avoids inflationary cost escalation and allows the community to enjoy the project benefits sooner. Some communities still face bias against debt, which is a challenge. However, there are creative financing options available. For instance, energy savings initiatives can retrofit buildings or install solar power through energy performance contracts. In these contracts, vendors cover upfront costs, and communities pay for the projects with energy savings over time. Many local governments are exploring such mechanisms to advance energy savings and meet climate action goals.
What role do public private partnerships play in addressing city government financial challenges?
We looked closely a public private partnerships or P3s in both cities I worked for – leaders wanted a strong business case due to community skepticism. Although some communities have successfully supported such partnerships, this was not my experience. As governments can borrow at lower costs through tax-exempt debt, it was challenging to justify the higher cost of private financing both in terms of private debt funding and expected return to equity investors . Some believe private partners’ innovation and efficiency could offset those higher costs and I know there are instances where it has been successful, particularly where the project could clearly carve out an opportunity for private investor return, but it wasn’t convincing in my cities’ case studies.
How can CFOs leverage technology and automation to improve financial management and operational efficiency in city government?
Technology helps us deliver services efficiently, enhancing customer service for community members. I believe efficiency is not just about saving costs, but about helping residents and businesses more easily access services and operate more effectively in their community. Transitioning to online services, which accelerated tremendously through the pandemic, made it easier for community members to interact with local government and receive services. Although this shift incurs costs, the benefits have been clear. Originally planned for a longer timeline, the pandemic accelerated this transition, allowing delivery of essential services more efficiently. It hasn’t been my experience that technology investments lower overall costs but they do improve quality of service significantly. For local governments, these have improved access, increased quality and quantity of information, and sped up information delivery, allowing constituents to benefit greatly.
In regards to transparency and accountability, what steps can CFOs take to enhance transparency in the financial operations of city government?
I take transparency and accountability as two of the highest principles that have guided my career. To be transparent and accountable, the most important thing is to be honest and very clear. Communicate with plain language and make information available. I also feel it is important to form relationships with community leaders and community members and to have financial information accessible in different forms. My former local government had posted a 300-plus page annual budget document on its website in PDF form and some community members found it inaccessible and difficult to navigate. They struggled to find the information they needed. As a response, new technology tools were developed in the market and implemented so the budget information was available through this tool and people were able to interact with the data and have different visualizations of the data. For some community members this met their needs, but others in the community found it difficult to navigate. This highlights the challenge. People have varying preferences and comfort levels with different tools and mediums, making it important to provide a variety of options. In my experience there wasn’t a lot of interaction with local government financial data, unless there was an issue that was really compelling to the community. When that does happen, being very clear about the issue is extremely important. Social media has helped give local governments the opportunity to share smaller pieces of information with the community more regularly so that they can digest that more easily. I believe social media helps provide an honest, accessible, and understandable overview of local government finances in a relatable format for community members who lack time to delve deeply.
In the face of economic uncertainty, what risk management strategies should CFOs and city government prioritize?
All governments face risks, so it’s crucial to be transparent about them with board members or city leaders, discussing potential impacts. Planning ahead is also recommended.
For instance, in the City of Boulder, just three or four months before the pandemic, there was significant enthusiasm among the City Council to establish a financial strategies committee. The objective of this subcommittee of council members was to thoroughly examine and understand the financial landscape, identifying potential risks and opportunities. The intent was to engage in proactive planning so that, in the event of an economic downturn, we would have agreed upon levers to pull or measures to implement. However, shortly after beginning this work, the pandemic struck, necessitating an immediate shift to reactive measures. Consequently, it took considerable time to recover from the pandemic’s impact. Despite those challenges, the efforts of the committee remained crucial. The Financial Strategies Committee is developing a long-term financial plan for Boulder, addressing risks and preparing for potential future economic shocks. Climate change and the resulting impacts and risks to local governments is an area of study or analysis that I anticipate with continue to grow and mature. We have already seen the incredible costs so many communities have borne from catastrophic weather, heat and fire events. I see more and more communities wanting to understand the public safety risks and financial risk into consideration when contemplating a variety of public policy or public project choices.
What role does community engagement play in financial decision-making processes and how can CFOs effectively involve the public?
Community engagement is crucial for transparency and accountability, but it is also challenging. Effective engagement involves meeting people where they are and making interactions accessible. Grassroots activities, such as talking directly with community groups, have proven to be most effective in building relationships and making local government relatable. Some communities have robust engagement frameworks, but it remains an ongoing challenge to engage people equitably across the entire community, ensuring all voices are heard.
How can CFOs navigate the complex regulatory environment that city governments operate in while ensuring compliance and avoiding financial penalties?
Regulatory compliance is like technology and cybersecurity as an organization must focus on training, learning, policies and practices. It is essential to provide team members with the time and space to understand regulatory requirements, attend seminars, and stay updated on annual changes. By offering clear training opportunities, teams can feel confident in navigating the regulatory environment and ensuring compliance. When team members lack time to learn, digest information, and ask questions, uncertainty arises. Regulations originate from various federal agencies or governing bodies pertaining to accounting requirements. Local governments are often decentralized, meaning individuals in different departments oversee activities that impact compliance without being directly controlled by finance officers. Therefore, it is crucial for leadership across the organization to recognize the importance of regulatory compliance.. Furthermore, we must emphasize to our teams the significance of compliance and the potential consequences of non-compliance.
As cities continue to adapt to economic shifts, technological advancements, and emerging risks, leaders like Skinner play a critical role in shaping policies that prioritize both fiscal responsibility and social impact. At MGT, we’re proud to have leaders like Kara Skinner driving impactful change in city government finance. If your municipality is seeking strategic financial guidance, innovative solutions, or a trusted partner to navigate today’s complex challenges, connect with us today. Let’s build stronger, more resilient communities together.
Kara Skinner | 720.739.1108
