MOORLACH UPDATE — GASB Gasp — March 9, 2016

The Comprehensive Annual Financial Reports (CAFRs) are being released at a steady clip by the counties and cities of the state. They are, for the first time, including the unfunded actuarial accrued liabilities (UAALs) in the liabilities section of their balance sheets (see MOORLACH UPDATE — State of the Municipalities — January 24, 2016 january 24, 2016 john moorlach).

The inclusion, finally, of these massive debts are having a profound impact. The adjustment amounts are massive. Fox & Hounds has printed one of our announcements on the subject in their piece below.

The CAFRs are provided on the websites of the various counties and usually appear around December (six months after the end of the fiscal year). Due to this new requirement, many CAFRs have not been completed and posted. In fact, we are not expecting the state’s CAFR until April. Consequently, we’ll continue to post these accounting adjustments and, when appropriate, the resulting unrestricted net deficits, as they are released.

Doing the GASB Gasp

Senator John Moorlach
By Senator John MoorlachCalifornia State Senate, 37th District
Wednesday, March 9th, 2016

County deficits balloon by BILLIONS after accounting for unfunded pension liabilities

The financial carnage continues as more local governments report their Fiscal Year 2015 balance sheets under the new rules, which requires them to account for defined benefit public employee pension “unfunded actuarial acrued liabilities” (UAALs).

Last week, we reported that Los Angeles County’s debt increased by over $8 billionwhen adding unfunded public employee pension liabilities to its balance sheet. Several more counties have reported their Fiscal Year 2015 numbers, adding themselves to the “Billion Dollar Club.” The latest list includes:

County Debt
Kern $ 1.5 billion
San Diego 1.9 billion
Riverside 1.7 billion
Sacramento 1.7 billion
Santa Clara 2.2 billion
San Francisco 1.4 billion
Contra Costa 1.0 billion

Including Los Angeles County’s $8.6 billion, and Orange County’s $3.3 billion,the total debt adjustment for just 9 of California’s 58 counties is more than $20 billion!

Beginning this year, the Governmental Accounting Standards Board (GASB; pronounced “GAZ-bee”) mandated that governments must report unfunded public employee pension liabilities on their audited balance sheets in their Comprehensive Annual Financial Reports (CAFR; pronounced “CAF-er”). As more CAFRs keep rolling in and reflecting the true condition of local government balance sheets, everyone is doing the ‘GASB gasp.’

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