33
www.CTCPAs.org www.CTCPAs.org 1
| Date post: | 27-Dec-2015 |
| Category: |
Documents |
| Upload: | edgar-harrell |
| View: | 219 times |
| Download: | 0 times |
www.CTCPAs.org
1
www.CTCPAs.org
www.CTCPAs.org
2
www.CTCPAs.org
www.CTCPAs.org
3
www.CTCPAs.org
Connecticut’s Crisis
www.CTCPAs.org
4
www.CTCPAs.org
5
GASB – policy setting org that sets GAAP for state & local govt
June 2012 – GASB imposed reforms to take effect in 2014.
Require all pension and OPEBs to be reported fully on F/S.
Estimated T’s of unreported liabilities.
How will States handle this?
How will Towns handle this?
www.CTCPAs.org
6
Moody’s
www.CTCPAs.org
7
Accounting Principles
Core – Matching Concept
www.CTCPAs.org
8
C = comprehensive A = annualF = financialR = reports
Where is the data?CAFR’s
www.CTCPAs.org
9
Full Accrual=Long-Term Health
Modified Accrual=Short-Term Health
Budget Basis can be anything!“Modified Cash” for the State
Either of the above are GAAP
www.CTCPAs.org
10
Budget Reporting Basis – not GAAP
(reporting revenue as fast as possible reporting expense as slow as possible)
• Revenue – as earned and available• Expense – as paid• Debt - income
www.CTCPAs.org
11
State of CT - Balance Sheet Working Capital MethodModified Accrual Total
June 30, 2012 (expressed in thousands) Governmental
Funds
Assets
Cash and Cash Equivalents 412,647
Investments and Securities 129,385
Receivables: 3,880,909
Other short-term assets 747,668
Total Assets 5,170,609
Liabilities and Fund Balances
Liabilities
Accounts Payable and Accrued Liabilities 505,556
Other short-term liabilities 2,974,164
Total Liabilities 3,479,720
Fund Balances
Nonspendable: 171,576
Restricted 2,454,652
Committed For:
Other 99,931
"Rainy Day Fund" 93,454
Assigned 22,770
Unassigned -1,151,494
Total Fund Balances 1,690,889
Total Liabilities and Fund Balances 5,170,609
Summarized for discussion purposes from the YE June 30, 2012 Consolidated Annual Financial Report (CAFR)
www.CTCPAs.org
12
State of CT – Balance SheetFull Accrual – Almost…….Sort of…….
June 30, 2012 (expressed in thousands)Governmental Activities
Assets As ReportedCurrent Assets 2,774,150Noncurrent Assets 1,170,411Capital Assets 10,965,884Total Assets 14,910,445
LiabilitiesCurrent Liabilities 3,498,709Noncurrent Liabilities
Bonds 16,559,594Long-term Notes 573,365Net Pension Obligation 2,496,190 *
Net Other Post Employment Obligation (OPEB) 5,755,731 *Compensated Absences 503,954Workers' Compensation 456,702Capital Leases 36,162Claims and Judgements 35,241Other 25,661
Total Liabilities 29,941,309
Deficit 15,030,864
Summarized for discussion purposes from the YE June 30, 2012 Consolidated Annual Financial Report (CAFR) Pages 29 and footnote 17
www.CTCPAs.org
13
www.CTCPAs.orgPension & OPEB Obligations
Being “amortized” onto the books starting in 08On these 6/30/12 statements only 5/30th includedThat means 25/30th are not included
83% of this debt - NOT on the books
www.CTCPAs.org
14
State of Connecticut Balance Sheet – Long-termState of Connecticut Balance Sheet - Including Long-term DebtsJune 30, 2012 (expressed in thousands)
Governmental Unrecorded Debt Governmental Assets Activities as Reported Activities in Total
Current Assets 2,774,150 2,774,150Noncurrent Assets 1,170,411 1,170,411Capital Assets 10,965,884 10,965,884
Total Assets 14,910,445 14,910,445
Liabilities and Fund BalancesCurrent Liabilities 3,498,709 3,498,709Noncurrent Liabilities
Bonds 16,559,594 16,559,594Long-term Notes 573,365 573,365Net Pension Obligation 2,496,190 22,049,821 24,546,011
Net Other Post Employment Obligation (OPEB) 5,755,731 15,197,203 20,952,934
Compensated Absences 503,954 503,954Workers' Compensation 456,702 456,702Capital Leases 36,162 36,162Claims and Judgements 35,241 35,241Other 25,661 25,661 Total Liabilities 29,941,309 37,247,024 67,188,333
Summarized for discussion purposes from page 29 of the YE 6/30/2012 Consolidated Annual Financial Report (CAFR), Page 29 and* June 30, 2012 Actuarial reports** June 30, 2011 Actuarial report - most recent
www.CTCPAs.org
15
State of Connecticut Balance Sheet – Long-term – Continued
State of Connecticut Balance Sheet - Including Long-term Debts
June 30, 2012 (expressed in thousands)
Governmental Unrecorded Debt Governmental
Activities as Reported Activities in Total
Assets
Total Assets - From previous slide 14,910,445 14,910,445
Liabilities and Net Assets (Equity)
Total Liabilities - From previous slide 29,941,309 37,247,024 67,188,333
Net Assets
Invested in Capital Assets , net of related debt 5,305,440 5,305,440
Restricted, but expendable 1,429,076 1,429,076
Restricted, not expendable (endowed) 212,897 212,897
Unrestricted ($21,978,277) ($37,247,024) ($59,225,301)
Total Net Assets ($15,030,864) ($52,277,888)
Summarized for discussion purposes from page 29 of the YE 6/30/2012 Consolidated Annual Financial Report (CAFR), Page 29
www.CTCPAs.org
16
Avail Assets As Reported
Assets 3 15
Liab 67 67
Avail -64 -59
Per taxpayer ~50,000
www.CTCPAs.org
17
www.CTCPAs.org
Lessons from Detroit…..Detroit CT
Debt 3,990 21,690
Off B/S Debt
Pensions 643-3.5B* 24,546
OPEBs 5,727 20,953
Total Debt 10,360 67,189
Avail Assets 1,830 3,000
Debt to Asset Ratio
5.66 22.4
www.CTCPAs.org
18
www.CTCPAs.org
Lessons from Detroit…..
At .16 $30,000 pension$ 4,800
www.CTCPAs.org
19
www.CTCPAs.org
• Revenue has not grown as fast as commitments• State employee benefits increased significantly,
with little contribution to funding• Unfunded pensions – close only to MA• OPEBs – highest in country • CT & RI only 2 states with no county gov’t
– Inefficiencies in running 169 towns, 195 school districts?
www.CTCPAs.org
20
www.CTCPAs.org
• CT problems – exacerbated by reliance of fed funding (37% of our revenue)
• 32% economy on FIRE (nat’l average is 21%)• Less people employed than in 1990• Not recovering as quickly as expected/hoped• 5,000 fewer small business than in previous
decade
www.CTCPAs.org
21
www.CTCPAs.org
• Co’s downsizing/leaving CT• Loosing highly educated workforce• Major investments in higher education –
students move to other states • Tax incentives do not constitute an economic
strategy• Our reputation is unfriendly to business
– High taxes, over regulated
www.CTCPAs.org
22
www.CTCPAs.org
• Healthcare costs rising• Population – shrinking
www.CTCPAs.org
23
www.CTCPAs.org
Many One-Time Fixes to Balance the Budget
www.CTCPAs.org
24
What lies ahead?
$1B 1 year deficit awaits the “winner”
2015-2016 tax increases?
drastic cuts in spending?more borrowing?
www.CTCPAs.org
25
As services are cut………. As taxes increase……….
What happens to our population?
www.CTCPAs.org
26
www.CTCPAs.org
27
$875 M $560 M *
$314 M refi
*GAAP Conversion Bonds
www.CTCPAs.org
28
www.CTCPAs.org
www.CTCPAs.org
29
www.CTCPAs.org
A small sampling of idea’s from the CPAs….
www.CTCPAs.org
30
www.CTCPAs.org
What do we do now? • Address the problem – report truthfully &
completely• Improve economic growth
– Improve infrastructure (roads, bridges, mass transit)
– Update, coordinate, rationalize regulations– Tax code reforms to encourage small business and
private sector growth– Strengthen education-workforce pipeline
www.CTCPAs.org
31
www.CTCPAs.org
• Enhance CT competitiveness• Create transparency, accountability,
efficiency and transformation at all levels of gov’t
• Insist on 5 and 10 yr strategic plans • Promote dialog for non-partisan
solutions
www.CTCPAs.org
32
www.CTCPAs.org
www.CTCPAs.org
33
www.CTCPAs.org
Thank you!
Camille Murphy, CPA
203-208-0572
