Comprehensive Annual Financial Reports
Government's Best Kept Financial Secret
The Comprehensive Annual Financial Report (CAFR) is a very little known, yet detailed presentation of a US governmental entity's financial condition. The CAFR is also one of government's best kept financial secrets, as these reports show that almost all governments have far more money than people would ever suspect. Literally hundreds of billions of dollars are available to governments in investment accounts that are never mentioned to the public, as verified in these publicly available government reports. Read the powerful essay below to find out how we may be in much less fiscal difficulty than you ever imagined.
With best wishes,
Fred Burks for PEERS and WantToKnow.info
Former language interpreter for Presidents Bush and Clinton
P.S. The article's author, Harvard-trained Carl Herman, is a personal friend and educator whose work I admire.
CAFR: US agencies have billions, trillions in investments while crying budget deficits
By Carl Herman (edited for brevity and clarity, full essay available here)
Gerald Klatt and Walter Burien are unrecognized heroes. These individuals are pioneering national leaders who have revealed how government agencies quietly conceal American taxpayers' money in surplus accounts that collectively total literally trillions of taxpayers' dollars. The data is found and can be verified in publicly available documents for each governmental entity called Comprehensive Annual Financial Reports (CAFRs).
What CAFRs reveal is a little-known, yet devious policy whereby taxpayers collectively surrender enormous assets to the government, which then invests the trillions that swell in these accounts. As this money is secreted away, taxpayers are warned of debilitating budget deficits to either squeeze more taxes from them and/or cut public services. To add insult to injury, the state commits a gross lie of omission by never informing citizens of their withheld trillions as they eliminate jobs, reduce education, and attack the quality of our lives.
The American Constitution is a contract of limited government whereby the public informs and is informed by our representatives. CAFRs are damning public documents that expose political leadership from both left and right as exactly what leading economic voices have said: a thoroughly corrupt and self-serving oligarchy.
Let's look at the economic data revealed in CAFRs for 2009.
Take California, for example, which has a budget deficit of about $20 billion. The combined investments reported in CAFRs for the state of California, Los Angeles County, and the City of Los Angeles is over $450 billion! That's over 22 times the amount of the budget shortfall!!! Click on the links for verification.
These governments claim they need this money mainly for public employee retirement benefits. Let's check that story. The CAFR data shows current member contributions pay for all retiree benefits except for $1.8 billion (net cost). If just these three state agencies paid off their budget deficits, paid the $1.8 billion in retirement benefits, and surrendered the remaining withheld money back to the public, each taxpayer in California (population 36 million, taxpayers less than 2/3 of this number) would receive well over $15,000.
Why has political leadership and corporate media not informed American taxpayers of this intriguing option? And why isn't this data publicly submitted for professional and independent economist cost-benefit analysis to consider other options which benefit both government and the people? As we all know, money talks and power corrupts.
So far, we've only considered three CAFRs in the state of California. The comprehensive reality is far more dramatic. Looking at all of California's roughly 10,000 cities, counties, towns, and other government agencies, the combined total assets reported in CAFR's, according to Walter Burien's sampling analysis, is $8 trillion. Let's say Walter is way off. For argument's sake, let's say the total is less than half of Burien's estimate; only $3 trillion. If that amount was returned to the public, even after paying off all debts and pension expenses, each Californian taxpayer would receive well over $100,000!
Obviously, we need independent auditing and economic cost-benefit analyses of all state and local CAFRs around the US in order to make clear choices on how the public benefit might best be served. In California, oppressed under a $20 billion dollar budget deficit that cuts education, child welfare, and other essential public services, continued "investing" of these vast sums of money is likely among the worst of choices imaginable.
To put this into an analogy:
This is like a teenager claiming to everyone that he needs money badly because the front pockets of his pants are empty, which he dutifully shows (budget debt). What he's not telling you is that his back pockets are stuffed with over 100 times the money he says he "needs" (shown in various places of the CAFRs). Whenever someone by chance sees the wads of money stuffed in his back pockets and asks him about it, he says, "Oh, that money is being saved for when I need it much later. I can't touch that."
So far, the silence of major media and political leadership from left and right is deafening. Of course, the politicians' claim of "I can't touch that" is a lie of omission, because it can be touched the moment policy changes. So the real issue is the heart of economics: what are the costs and benefits of different choices?
Here's the specific data and documentation: