Creating an Investor Relations Program.

With a population of more than 650,000, Jefferson County is Alabama's most populous county. The county is home to Birmingham-Alabama's largest city-and is the principal center of finance, trade, manufacturing, transportation, healthcare, and education in the state. From 1995 to 1998, the county ranked first in Alabama for total bond issuance, and it is expected to issue approximately $2.1 billion by the end of fiscal year 2001.

The Need for Information

In the mid 1990s, Jefferson County's finance director became aware that investors who purchased the county's bonds needed and wanted more information. Although the county was frequently contacted by rating agencies and investor analysts for information, it was rarely contacted by the portfolio managers themselves. The finance director understood the underwriters' desire to protect their customers from being harried by issuers, but he realized that investors still needed access to information that only the county could provide.

Around the same time, the Municipal Securities Rulemaking Board (MSRB) issued new municipal disclosure guidelines, placing the burden of disclosure on the issuer. With this change in place, the need for an Investor Relations Program became obvious.

Creating an Investor Relations Program

Jefferson County began by conducting research into an issuer's legal requirements to the financial community. While the Securities and Exchange Commission (SEC) has substantial authority over corporate issuers of equity or debt, its authority with respect to municipal securities issuers is much more limited. Municipal securities issuers are subject to anti-fraud provisions of the federal securities laws, but they have no specific registration or continuous reporting requirements mandated by the SEC. Section 15B(d) of the Exchange Act specifically prohibited the SEC from writing rules that directly or indirectly imposed a presale filing requirement for issuers of municipal securities. But the investment community wants to know that the commitments made to repay the debt and the creditworthiness of municipal issuers are still viable. Amendments to the SEC Rule 15c2-12 ensure that brokers, dealers, and issuers will review the secondary market disclosure practices of issuers at the time of an offering. The infor mation required for updating the final official statement is what is considered necessary for an investor to make an informed decision. But there are strong indications that most buyers do not accept the minimal disclosure rules complying with Rule 15c212 as sufficient. So in addition, the county looked at the informational needs of the bond rating agencies, bond insurers, and underwriters regarding their requirements to comply with SEC and Municipal Securities Rulemaking Board (MSRB) rules.

Next, the county began searching to identify investors holding Jefferson County debt, which quickly became the most difficult and frustrating endeavor. The county realized that it was obligated to furnish disclosure documents to the Nationally Recognized Municipal Securities Information Repositories (NRMSIRs). However, it was not yet aware of the important role of CUSIP (Committee on Uniform Securities Identification Procedures) numbers and the necessary cover sheet containing the CUSIP numbers that was to accompany the documents. In January 2001, GFOA's Committee on Governmental Debt and Fiscal Policy urged issuers to include cover sheets containing CUSIP numbers when they send their secondary market disclosure documents to the NRMSIRs. According to the NRMSIRs, most issuers have not been including the nine-digit CUSIP numbers, which identify each maturity of a bond issue. As a result, the repositories have been unable to tie disclosure documents to specific bond issues. Exhibit 1 contains a sample cover sh eet for disclosure documents sent to the NRMSIRs.