Wednesday, January 7, 2009

CAFRs (Comprehensive Annual Financial Report)

This email came to me from a friend who lives in Oakland County, Michigan.

CLICK HERE to view Michigan Comprehensive Annual Financial Reports.

I am pleased to hear of Walter Burien's CAFR research and video explaining how CAFR's work.

I have been trying to present this to everyone I think will pay attention for years, but with little success. The cop-out is "I have no background in accounting". or "It seems too confusing, you loose me".

To me, it seems essential that every citizen who wants to reclaim their government takes the time to know where to look, and understand how, government collects and uses our taxes and money. Honest people need to know this! Burien explains this very well. scroll down to see his "Video"

Two years ago I drafted a proposal to the Auburn Hills city council on how they could lower our taxes by 20% without touching a dime of funds needed for current governmental services. The revenue would come from our annual surplus increase without even diminishing the surplus! No action was taken.

Auburn Hills, at the end of 2007 (latest CAFR in my possession) had nearly $50 Million in their combined governmental and water/sewer funds (surplus). This surplus has increased by nearly $3 Million per year since 2004.

Below is an excerpt from a paper I drafted several years ago based on my CAFR research. It covers State, County and several Cities. I am waiting for the 2008 State, County and City CAFRs to update my research. Although the CAFRs are on line, I prefer the hard copies. Elected officials do not receive CAFRs (some have never heard of them) but are provided with "Budget Proposals" (BPs) when the bureaucrats request their funding approval for the next fiscal year. Although the "surpluses" may appear in the BPs, they are simply ignored as though they do not exist.

Start educating yourself about your city, county and state!

Dave Lonier

Why Are We Paying More Taxes?
Where Do Our Tax Dollars Go?
Look no further than:
Comprehensive Annual Financial Reports (CAFRs)

The financial condition of a taxing authority lies in its' CAFR…The CAFR does not lie!

The City of Pontiac is not going broke. No taxing authority anywhere in America is going broke. It's "We The People" who are going broke! Pontiac collects more in personal income tax than it does from property tax...$15 million income tax, $10.5 million property tax, (pg. A-64 2003 CAFR).

It's pension fund increased from $651 million in 2001 to $699 million in 2005, for an increase of over $10 million per year.Last year (2006) Pontiac doled out $31.2 million to 1,421 retirees for an average benefit of $22,000. The highest paid retiree, a former executive director of the Silverdome, received a whopping $107,899.!!!

Pontiac has over twice as many retirees (1,421) as it has employees (650).Pontiac's retirees and employees (2,070) comprise about one in every 32 residents (66,000).This means one out of every 32 men, women and children living in Pontiac, is on the city payroll! Pontiac has a mere 6% of Oakland County's 1.2 million population, yet last year (2006) it had almost as many retirees as did the county (1,421 to 1,655).

How does your city/township compare to the City of Pontiac Michigan? Check the CAFR!

Some more statistics from STATE OF MICHIGAN CAFRs:

State of Michigan: 1998 Pension Fund: $42.7 billion 2005 55.8 billion

7 year increase: 13.1 billion

For annual increase of: $1.8 billion... or enough $ to pay 90,000 state retirees $20,000.
Is it possible that the State added 90,000 retirees in one year?

Let's see...
2005 Pension benefit recipients: 223,759 - 2003, 210,925

2 year increase: 12,834 For an annual increase of 6,417 or 83,583 short of justifying a $1.8 billion pension fund increase!

And what are Governmental Funds?
Governmental funds are a part of a taxing authority's "operating fund" or "Budget Stabilization Fund", or "Rainy Day Fund". (I got news for's raining and it is about to be a downpour!!) These funds are primarily derived from ending balances (money left at the end of the fiscal year) in budgetary accounts. These are not included when proposing budgetary needs for the next fiscal year, but are rather made to disappear into the governmental fund. Although this money "is available for spending at the government's discretion", it is seldom used for the purpose it was intended. It is simply horded, invested or moved into a "restricted" fund such as a pension fund.

The State's Governmental Fund in 2005 was $3.4 billion, or $2.6 billion more than the State's alleged 2007 budget shortfall .

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