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Financial Myopia in Closed Systems: How State Financial Monitoring Systems Can Ignore Local Constraints

David Schwegman et al.

Public Budgeting & Finance2026https://doi.org/10.1111/pbaf.70024article
ABDC C
Weight
0.50

What the paper says

Abstract We examine how closed‐system state financial monitoring can misrepresent local fiscal health by ignoring broader legal and regulatory contexts. Using Texas as a case study, we show that school districts financing debt with renewable energy revenues are penalized under the state's monitoring system due to higher debt‐per‐pupil levels despite responding rationally to state incentives. This case illustrates a form of financial myopia, where rational financial behaviors are penalized under a monitoring system. We provide causal evidence of this dynamic and argue for an open‐systems approach to fiscal monitoring that recognizes the legal and fiscal environments shaping local financial decisions.

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https://doi.org/https://doi.org/10.1111/pbaf.70024

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@article{david2026,
  title        = {{Financial Myopia in Closed Systems: How State Financial Monitoring Systems Can Ignore Local Constraints}},
  author       = {David Schwegman et al.},
  journal      = {Public Budgeting & Finance},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1111/pbaf.70024},
}

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Financial Myopia in Closed Systems: How State Financial Monitoring Systems Can Ignore Local Constraints

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.