How this Gen Z CFO guides a city budget through turbulent times

As part of an occasional series on dealing with a possible recession, we’re asking CFOs and other finance pros how they’re gearing up in case the economy does contract in the coming months.

At 28 years old, Eric Mason, chief financial officer of Quincy, Massachusetts, manages a $372 million budget for the city of a little over 100,000 people.

An economist by training, Mason became Quincy’s CFO in March 2020, just as the state was going into COVID-19 lockdown.

It’s been a lively tenure, to say the least. Since taking on the role, Mason has seen the local economy affected by COVID-19, launched capital projects worth hundreds of millions of dollars, and helped steer a $475 million pension obligation bond through an uncertain interest-rate environment.

Mason spoke to CFO Brew about the current economic uncertainty, how the city’s planning process has had to change, and what CFOs of all stripes should be doing to make good financial decisions.

How would you describe our current economic moment?

I think there’s uncertainty, especially from a data perspective. I always look at it this way: We’re looking at these big macroeconomic trends, and we’re trying to make financial decisions based on these macroeconomic trends. It’s really important to have data to make good decisions in that scenario.

The last pandemic was 1918. Macroeconomics was not a field till 1927. So we don’t have any kind of grasp on what the recoil of this is going to look like. The best we have to look at is after wars, where you spend a couple of years producing well beyond the production frontier. Government spends all this money—rightfully so, unrightfully so, I’m not going to dive into politics—but it spends all this extra money to fight something, whether it’s another nation or, in this case, a pandemic, and then naturally that spending has to end, and the natural process of that is inflation.

So I’ve been modeling a lot of our decision-making off what finances follow those types of scenarios.

And how have you seen this, as you describe it, economic uncertainty, play out in your current role?

Inflation is a big driver. Inflation isn’t just prices rising. A lot of times, it represents uncertainty. The more uncertain you are…That increases your risk exposure, and that naturally ties into inflation of prices.

We’ve done a lot of capital projects. We have about a $1.2 billion debt portfolio. We’ve done many large-scale projects over the last year, including a $475 million pension obligation bond, which I believe is one of the largest any municipality has done in recent years to take advantage of low rates.

But as uncertainties begin to creep in, as you do these large construction projects, it really puts a value on understanding both the cost and potential exposure to cost increase over time. So there’s a lot about increasing those confidence intervals in our modeling.

You said this uncertainty is changing your planning and decision-making timelines. How are you adjusting?

There’s really two parts. One is the physical timeline changing, because, naturally, when you have supply-chain issues and you’re doing large projects…that can change or accelerate, or in some cases, delay, certain projects.

And then we have to tie that into our bonding. We naturally don’t want to bond anything and pay interest just for the sake of paying interest if we know that the supply is not going to be there.

But in this rising interest-rate environment, we’ve really been aggressive in modeling out when we can long-term bond any sort of project, because we naturally bond tax-free, so we get much better interest rates. And what we’re doing in a municipality is we’re actually tracking the high-quality bond market. We correlate very, very accurately to what some of the really large corporations are seeing just at 20–30 basis points lower mark, because we’re not taxed for it.

What’s your key advice for a CFO showing up on the job today in this uncertain environment?

Try to understand everything you can. You can’t make good decisions without good data. You can’t orient yourself in the market and being in a high-ranking fiduciary role, you can’t say to yourself, you’re making a good fiduciary decision if you’re not understanding what’s around you. Both from a macroeconomic standpoint, from a financial regulatory standpoint, it’s important to keep up on GASB and the different DLS and IRS bulletins.

When I was put in this position two and a half years ago, I found that my biggest strength came from reading, from understanding the CARES Act, understanding what's in front of us, trying to get those best decisions.

If you have that data, you’re getting that intelligence coming in so you can make better decisions financially, that's the best way to go because the market is too big, the economy is too big.  You, as a single actor, can’t push it left or right, but you could dodge it. And you can only dodge it by knowing where things are coming from.—DA

Correction 9/12: An earlier version of this story incorrectly listed Quincy CFO Eric Mason's age as 27. He's 28. We regret the error.