Any economists/accountants here?

[Tammuz]

http://www.sco.ca.gov/ard/cafr/2002/cafr02.pdf

Here is the California Comprehensive Annual financial report.

O.K. sounds boring but ITS NOT!

Apparently they have massive surpluses that we are not supposed to know about.
Can any accountants confirm this?

[newyawker99]

1. kick

[stilpist]

2. Where are you looking?

In the summarizing overall statements on pp. 28-31, I see an overall change in net assets (would be more or less net income for a business) of minus $13 billion ( a loss) at the bottom of pp 30-31, and total net assets of $7 billion on p. 29. None of that sounds very rosy. Where do you see the massive surpluses?

[donco6]

3. The most telling section is the Management's . . .

Discussion and Analysis. This contains elements required by the Governmental Accounting Standards Board.

Note this:

"The assets of the primary government exceeded its liabilities on June 30, 2002, by $7.0 billion. After reducing this total amount by $11.9 billion for investment in capital assets (net of related debt), and by $14.5 billion for restricted net assets, the resulting unrestricted net assets were a ***negative $19.4 billion.***

And

As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. The primary government's combined net assets (governmental and businesstype
activities) declined 65.6%, from $20.3 billion at June 30, 2001, to $7.0 billion a year later.

A DECLINE OF 65.6% IN ONE YEAR! HOLY SHITE!

But here's an interesting (at least to an accountant) point:

"A large portion of the negative unrestricted net assets of governmental activities is a result of the $16.7 billion in outstanding bonded debt being issued to build capital assets for school districts and other local governmental entities. The bonded debt reduces the unrestricted net assets, but the capital assets that would offset the reduction are recorded by local government, not the State.

So a large part of this negative unrestricted net assets is money provided to schools to build buildings (because of the class size reduction law, which capped the class size, which then required more classrooms). The state records the debt, but the schools record the asset. This really should be adjusted in a later reconciliation page, to give a more accurate picture.

Another telling statement:

"For the year ended June 30, 2002, the weak economy caused a substantial reduction of the state tax revenues collected for governmental activities. Personal income taxes decreased mainly as a
result of a severe drop in capital gains and stock option income, but expenses for governmental funds did not similarly decline. Much of the decline in tax revenues affected the General Fund, which also experienced an increase in expenses. The General Fund is discussed in more detail in Fund Financial Analysis, Governmental Funds.

And there is no safety net available:

"Within the total fund balance, $17.6 billion has been set aside in reserves. The reserved amounts are not available for new spending, because they have already been committed for outstanding contracts and purchase orders ($8.3 billion), noncurrent State of California Comprehensive Annual Financial Report interfund receivables and loans receivable ($3.6 billion), and continuing appropriations
($5.7 billion). The balance of the governmental funds that is unreserved is a negative $6.0 billion.

So the fund balance is already spent, and more.

All of this will have a terrible impact on California's ability to borrow money and issue debt. Their bond rating issued to Moody's or Standard and Poor's will certainly decline in a big way, which will make borrowing much more expensive for every government agency.

I'll read more.

[Tammuz]

4. Ive seen this video:

which features this man:http://members.aol.com/_ht_a/cafr1/CAFR.html

and another man who was an-ex employee of the government who both say the government has secret surpluses that show up in the 1998 CAFR and 1999.They said that it would be edited out of future editions so it was probably a mistake for me to post the 2003 edition.
Anyway for those who can read financial documents here is the California 1999 CAFR:


http://www.sco.ca.gov/ard/cafr/cafr99.shtml

These people say the government has trillions of dollars in investments,liquid assets etc.

[Tammuz]

5. ?

?

[Tammuz]

6. ?

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