State's assets need to be restructured

July 04, 2012

La Cañada Flintridge families annually contribute $2 million for La Cañada Unified School District schools, and fund the La Cañada Flintridge Educational Foundation’s endowment fund of $4 million. The families’ contributions are compensation for claimed state budget shortfalls.

Gov. Jerry Brown claims the state’s $16-billion budget deficit leaves no option other than austerity. But this is similar to claiming there is no money in a checking account to pay for our children’s schools while having 35 times that amount in savings. Here is game-changing data from California’s 2011 Comprehensive Annual Financial Report (CAFR), available online from the State Controller’s Office; search “CAFR summary: if $600B” for page numbers:

California holds $600 billion in taxpayer cash and investments ($50,000 per household).

$460 billion are investments characterized as funding pensions, but the financial report shows that these investments had only $1 billion in net income for the state’s $27-billion pension costs. Meanwhile, Californians were taxed $19 billion, and plan members contributed $7 billion.

Since 2008, California’s CAFRs reveal these colossal investments have cost more to manage than their net income.

Even more astounding, California’s 14,000 state and local government entities have a data-sampled estimate from their CAFRs of literal trillions in taxpayer assets. For examples, Los Angeles County has $66 billion, and the city of Los Angeles has $38 billion.

Leaders of both parties are silent about the failure to manage these funds efficiently or put the money to better use for taxpayers.

Several times a week since June 8, I've communicated with the offices of state Sen. Carol Liu (D-La Cañada Flintridge) and Assemblyman Anthony Portantino (D-La Cañada Flintridge) to confirm the data in California’s CAFR and offer recommendations. I encourage community members to politely and appropriately assist our state representatives in coming to grips with the availability and misuse of our assets.

A question the public should demand answered is how we can best restructure our existing retained assets to adequately fund pensions, programs, infrastructure and the $16-billion budget deficit.

Carl Herman

La Cañada Flintridge

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