Www.CTCPAs.org Connecticut’s State and Local Government Crisis: Fixing Our Future 1.
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Transcript of Www.CTCPAs.org Connecticut’s State and Local Government Crisis: Fixing Our Future 1.
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Connecticut’s State and Local Government Crisis:Fixing Our Future
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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
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SHORT-TERMFINANCIAL HEALTH
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State of CT–ST Balance Sheet
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Equity Compared to Others
Source: National Association of State Budget OfficersThe Fiscal Survey of the States – Fall 2011
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LONG-TERMFINANCIAL HEALTH
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State of CT – LT Balance Sheet
Summarized for discussion purposes from page 29 of 6/30/11 audited statements
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www.CTCPAs.orgPension & OPEB Obligations• What is this?– Benefits we owe retired employees– Benefits that current employees have earned
• OPEB - What is included in the liability?– Being “amortized” onto the books starting in 08– On these 6/30/11 statements only 4/30th included– That means 24/30th are not included yet!
• Most of this debt (80%) is NOT on the books yet!
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Percent of Pension Funded
CT is #42 of 50 in Funding our PensionsSource: The Pew Center on the States – 2011 report
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10Source: The Pew Center on the States – 2011 report
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www.CTCPAs.orgOPEB Costs per Year
Source: The Pew Center on the States
CT is #43 of 50 States in Cost per YearCT is #50 of 50 States in Cost per
Year/Person
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Connecticut New Jersey Hawaii Illinois California Michigan $-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000 $46,100
$42,700
$39,600
$24,920
$18,000 $16,400
Total Liabilities and Unfunded Obligations Per Capita
Source: Truth in Accounting Institute. State of the States Report.
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State of CT–LT Balance Sheet
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State of CT – LT Balance Sheet
Summarized for discussion purposes from page 29 of 6/30/09 audited statements
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Long-Term Health Over TimeZero -46,000,000,000
-48,000,000,000
-50,000,000,000
-52,000,000,000
-54,000,000,000
-56,000,000,000
-58,000,000,000
-60,000,000,000
-62,000,000,000
-64,000,000,000
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BUDGET BASIS
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www.CTCPAs.orgSpending Cap• Basic Rule:– Budgeted Expenditures Must Equal Est. Revenues
• Expenditure Limitations:– % increase capped at higher of:• Annual growth in personal income• Annual inflation• Excludes: Debt Service, Certain Grants, Mandates
• Any Surplus must:– Reduce Debt or Increase the Rainy Day Fund– Exception by Gov. and 3/5ths Gen’l Assembly• (This has normally occurred in surplus years)
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www.CTCPAs.org1-Time Fixes to Balance Budget• 2009:
– $916 Million in Borrowing due 2012 to 2016– $400 Million in Federal Stimulus Temporary Funding
• 2010:– $1.3 Billion in “Rainy Day Funds”– $844 Million in Federal Stimulus Temporary Funding– $164 Million in Delayed Pension Payments
• 2011:– $103 Million in “Rainy Day Funds”– $745 Million in Federal Stimulus Temporary Funding– $100 Million in Delayed Pension Payments– $647 Million in Borrowing paid with utility surcharges– $449 Million in “Carry forwards”
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Recommendations from the CPAs!
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Basis of Accounting
Not for Operating
Fund the ARC
We
Wanted
We G
otAuditScope
Limitation
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Our Recommendations for the State• Real “Rainy Day Funds”– Set a 10% to 15% threshold– No offsetting negatives!– Excess committed to pensions/OPEB Obligation
• Strategic Planning including:– Long-term budgeting (5 to 10 years out)– Manage the Full Accrual Balance Sheet
• It can no longer be business as usual
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We must FIX OUR
FUTURE now!
Stay connected at www.CTCPAs.org/fixfuture