Partnership connects muncipal finance data with academic researchers

The University of Chicago Harris School of Public Policy’s Center for Municipal Finance is joining forces with Investortools, a fixed income software and data company, to make more data on the municipal finance sector available to academics. It’s the first step in an expansion of the center’s resources as it looks to become the premier destination for municipal finance researchers.

Inspired by a decade-old program at the University of Chicago Booth School of Business, the data distribution partnership will connect researchers looking to publish in scholarly journals with data points gathered by Investortools and chosen by the center.

The center will adjust its data points based on feedback from researchers, CMF Director Justin Marlowe said, and the researchers will be able to choose from different data segments.

“We chose data points that we believe are most in demand among researchers,” Marlowe said, adding that the partnership is a win for the university because of Investortools’ decades of leadership in the municipal finance industry.

“Their data from government financial statements are widely known as the most comprehensive and reliable in the business,” he said. “And perhaps more important, they are thought leaders who believe high-quality academic research can add tremendous value to practice.”

Investortools pulls data from the audited financial statements of city, county and state governments; the data spans everything from school districts to hospitals to transportation authorities. Its database covers all local governments with populations over 20,000, said Richard Ciccarone, president emeritus of Merritt Research Services, a subsidiary of Investortools, and includes 15 sectors in total. 

“It’s a pretty wide net of the credits that are really making a difference,” Ciccarone said.

Few academics can afford top-quality private sector data, and there are a lot of hurdles involved in signing contracts with data vendors, so the academics often wind up using inferior data, said Christopher Berry, the William and Alicia Townsend Friedman professor at the Harris School.

The new partnership gives academics access to Investortools data at lower pricing, and the center handles the administrative work and vetting of researchers.

The Booth School has had a partnership with the Nielsen Corporation through the school’s Kilts Center for Marketing since 2012. Berry said that partnership “has led to some great research,” and has proved to be a stepping stone to other Booth School partnerships with private sector data vendors. 

“Our goal is to make the CMF a similar sort of academic repository for private sector data in the municipal finance industry,” he said. 

The Harris partnership is already producing results. One group of researchers is currently using Investortools data to examine how natural disasters impact the fiscal health of cities and counties, and to see if climate adaptation planning can act as a buffer. Another group is researching nonprofit hospitals, and how a hospital’s debt load affects the ratio of Medicaid to Medicare to privately insured patients as well as the mix of elective or non-elective procedures performed there.

The latter research recalls one of the earlier, sporadic partnerships that Merritt had with individual academics. Northwestern University Kellogg School of Business professor Thomas Prince used Merritt data to look at nonprofit hospitals; specifically, how bond ratings and debt insurance coverage affected operating performance.

Precursors to the more comprehensive Harris School partnership, those partnerships helped Ciccarone see how such collaboration could serve both parties’ interests, he said.

“We’re going to learn a lot from this whole process,” he said. “All of public finance is going to benefit from the insights developed with the help of this program.”

In screening researchers who apply to use the data, Marlowe said, the center will be looking to answer questions that no one has asked thus far or to update previous knowledge with more recent results.

“The main criterion is that the researchers can articulate how the project might contribute to the academic literature,” he said. “Is it developing new measures of important concepts? If that potential contribution is clear and obvious, then we’re interested.” 

Jonathan Anderson, chief product officer at Investortools, said in a statement that the company expects its partnership with the university to deepen understanding of public finance, from the academic realm to market participants. 

“We have to speak more of a common language – that’s part of the goal,” said Ciccarone. “It starts with the data.”