What factor does not need to be considered when using variable rate debt instruments according to GFOA?

When evaluating the use of variable rate debt instruments, several critical factors are outlined by the Government Finance Officers Association (GFOA) that directly influence the effectiveness of such financial strategies. One key consideration is internal staffing and expertise, as having the appropriate skills and knowledge within the organization is essential for managing the complexities of variable rate debt.

Market volatility is another significant concern since the interest rates on variable rate instruments can fluctuate based on prevailing market conditions, affecting overall debt service costs. Likewise, documentation standards are important in ensuring that all agreements are clear and legally sound, providing a framework for the management of these financial instruments.

In contrast, state unemployment rates do not play a direct role in the assessment or management of variable rate debt instruments. While they might influence overall economic conditions and potentially affect the issuer’s revenue, they are not a specific factor tied to the operational mechanics of utilizing variable rate debt. Therefore, when considering the framework for managing variable rate debt, state unemployment rates are not a necessary consideration according to GFOA recommendations.