City of Pacifica: Damage Control

Creative Accounting or Stonewalling?

 

Comments

[Jay Bird]

"It's just an accounting rules change." Comment is a bit glib; try using that phrase at the IRS.

Most people don't have time to dig through documents used to screen future liabilities from public view, liabilities an aging population may not be able to afford. Yet not doing so impacts economic viability of the community.

GASB 67 and 68 are a welcome change. Certainly, in personal financial accounting, no one questions being able to pay for future liabilities. Now the public may easily do the same.

[www.Pacifica.city]

Where the $36M in new CalPERS pension obligations went on paper:

http://www.pacifica.city/images/PAC_BUDGET_2015_CAFR_reset.jpg

[www.Pacifica.city]

Either way, the City of Pacifica should not have waited eight months to make it public.

Here's the auditor's statement on GASBs that are new this year, from page 118 of the City Council agenda for February 22:

http://www.pacifica.city/images/PAC_BUDGET_2015_CAFR_audit_emphasis.jpg

[www.Pacifica.city]

Not quite. Pacifica adopted GASB 67 in the 2014 CAFR.

GASB 68 & 71 are new this year.

CalSTRS teachers' pensions have a similar pension discount rate crisis, except schools aren't contracting agencies like cities, which opt in to CalPERS, so the CalSTRS liability is not really the responsibility of schools.

[Matthew Levie]

There is a new GASB rule this year (GASB 67 and 68), which requires the totality of an employer's pension obligations ("Net Pension Liability") to be carried as a liability on its books, where in the past this was not accounting practice.

The yearly payments for these pension liabilities have always appeared in the agencies' budgets, and the overall liability would probably have been noted in the audit report.

So what has happened this year is that suddenly the agency's entire pension liability appears on the balance sheet, and therefore its "net position" has decreased. This doesn't mean that the city "discovered" that it owes new money, or that it owes any more than it did last year, and it doesn't mean that it has any less cash on hand than it did before. It's just an accounting rules change. This same surprise is occurring in every city and school district across the state.

GASB simply wants people reading the financial statements to be able to see the agency's entire pension liability easily, which is the kind of transparency that I think taxpayers want. Audit reports are very confusing, and governmental finances operate very differently from corporate finances, so it is not really possible to translate the way you would read, say, a corporation's quarterly filing with the SEC to reading a city's audit report.

[Laurie Soca]

Or tightening the budget? Instead of the City of Pacifica providing free childcare, how about helping applicants apply for federal loans, instead of using city money? Or provide low-cost or no-interest-loan childcare.

Take this and other small actions to get the city into a positive cash flow position.

[www.Pacifica.city]

@Jay Bird, you quoted accurately and we have since amended slightly.

Instead of $27M in assets disappearing overnight, $27M in liabilities appeared overnight. The net effect is the same.

[Linty Marr]

This is all coming to light just weeks after Tinfow got her massive compensation deal, which we can ill afford. Instead of planning for coastal retreat, Pacifica's "leaders" would rather coddle developers who create phantom plans of pie in the sky homes on the coast and up Fassler, whose only interest is to resell ocean views to the greater fool. This is the legacy of Nihart, Stone, O'Neill, and Ervin. Coastal buildout is the dream of Horsley and Speier. Defeating Mary Ann Nihart's re-election would be a powerful signal to them that real estate cronyism is at an end.

[Chris Fogel]

Folks, I think it's time to give some serious consideration toward disincorporation.

[thetruth]

The city's net cash position (unclear from the table provided) has declined by $30 million. WTF? What exactly is going on here?

The city had no finance director for six+ years. It's not surprising that we have no idea how close to insolvency we are.

[Jay Bird]

Item 7 on Consent Calendar is financial report.

According to pacifica.city, "$27M disappeared overnight from city assets when an end of year audit discovered..." Read the story http://www.pacifica.city/

Let's discuss the $27 million and account for it before approving item #7.