State, school budget cuts: 100% funding if CAFR billions, trillions disclosed

Our high school principal asked our staff what suggestions we have to address our school and district’s budget cuts. You are welcome to adapt and share my response:

SRVHS budget/$ concerns versus California’s off-budget surplus billions, trillions

Dear Ruth and Social Science colleagues,

At our staff meeting, Ruth spoke of our parents contributing ~$1 million of their own money, and opened conversation for our staff to address our #1 issue of money and improved budgeting. I am willing to contribute a detailed response. I invite you to invest the time to read the following and/or allow me to brief you over a lunch or your conference period (I’m available periods 1-3 this semester), because I can document an existing solution.

As you may know, last April I was one of six international speakers at the Claremont Colleges’ monetary reform conference. We addressed this very topic of decreasing public budgets and increasing debt, and three areas of proven historical solutions. I’ll address one with you now.

This solution is professional economic cost-benefit analyses of California’s off-budget ~$600 billion in surplus taxpayer cash and investments. Professional and public consideration will conclude structural changes would instantly fully fund California’s budget. This $600 billion is disclosed in California’s 2011 Comprehensive Annual Financial Report (CAFR). About $100 billion is in cash, and $500 billion for investments claimed to fund California public pensions. To put this in perspective, our SRVUSD budget cuts are part of California’s budget deficit of $16 billion.

The page numbers with detailed account surpluses for our state’s CAFR are here.

Moreover, the current $27 billion state pension cost only received $1 billion net income from our $500 billion investment fund, with fund managers paid over $2 billion. The good news is that these colossal funds are unknown to the general public, and could be restructured to easily fully fund California’s budget. The great news is that data-sampling of California’s various 14,000 governmental agencies’ CAFRs show a grand total of $8 trillion in surplus taxpayer accounts (Los Angeles County = $66 billion, City of Los Angeles = $38 billion). This data is explained and documented with CAFR page numbers in the bullet points here.

This $8 trillion data-sampled estimate of California’s total taxpayer asset surpluses means that each of California’s ~12 million households has ~$650,000 in government-held surplus accounts. 

I know that this is news to you. What this means is if our district coordinates a political response with other school districts and interested parties, we can have these accounts known to the public and reconsidered to maximize public benefits.

Colleagues: I’m happy to sit down with anyone to explain and point to the documentation of these surplus assets. My suggestion is for a responsible party at the district and/or school board to be briefed by me, verify the data, and initiate a coordinated district response. 

If it helps to consider the value of investigating this data, please recall that I was a leader in an organization (RESULTS) that worked with both Republican and Democratic parties’ leadership for 18 years that led to two UN Summits for heads of state. We were, and still are, the principal proponent for microcredit (topic of the 2006 Nobel Peace Prize). I have worked with policy that literally saves millions of human lives in the extremely complex issue of ending poverty. This history may suggest my capacity to reliably present economic data for professional and public consideration. And that said, as educators of objective facts, the real power of this data is anyone can independently verify its accuracy. I promise that you will easily understand this data when you see it.

Importantly, I am unaware of anyone who has even attempted to refute the existence of the colossal funds revealed in CAFRs. Although I’m a leader of pointing to their existence through alternative media, interested parties have failed to receive any political response. For example, last summer I worked with my two state reps, California State Senator Carol Liu and Assemblyperson Anthony Portantino, to have them to merely confirm the data on the state’s own CAFR and respond to my request for independent professional economic cost-benefit analysis of these funds. After five weeks of my personally briefing several staff members, all I received back was obfuscation and delay that drew even my appreciation for creativity. Both offices chose to officially respond with: “No comment.” They would neither confirm nor refute the data on California’s own published and public financial document!

The final status and summary of my “summer service project” with CAFR is reported here.

In 2009, I worked with California’s Treasurer’s Office and received explanation that these account surpluses can only be addressed by the legislative branch due to their legislated designated structures.

My personal interpretation is that both parties’ leadership do not feel safe admitting to the hidden growth of these massive accounts. Putting myself in their shoes, I empathize with their position of not knowing how to disclose retaining so much taxpayer assets that return so little in public income. Close scrutiny will likely reveal massive embezzlement (peculation is the actual legal term for such acts by public officials).

I also see our current position accurately described by a quote attributed to Gandhi (who Ruth honors with Martin King on her office wall): “First they ignore you. Then they laugh at you. Then they fight you. And then you win.”

You may know that many leading economists now use blogs as their media, including Nobel Prize-winners and the author of our AP Economics text. They have found that corporate media (the “Big Six” corporations) will not accurately cover key economic areas, especially in pointing-out reform. This has certainly been true regarding CAFR data. You may also know that mainstream leaders now acknowledge alternative media sources are often more credible than corporate media, and that public polling show over 2/3 of Americans are “angry” at corporate media for their failure to accurately report on our most important issues.

If you’re curious, the other two areas of reform are public banks that remove need for these 14,000 California agencies to keep “rainy day” funds and provide at-cost credit (think a 2% mortgage and credit card that pays your state taxes by themselves), and national monetary reform to stop creating what we use for money as debt and start creating debt-free money.

Thank you for your investment of time and attention.

Feel free to share this e-mail. I am willing to contribute my time and research for public recognition that our problem already has proven historical solutions.

Carl Herman

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