Consider this a layman's adventure into the netherworld of municipal accounting, otherwise known as the CAFR. Fun fact: CAFR happens to be the abbreviation of a Latin phrase that means, "Abandon all hope ye who enter here." (Warning: I have the same lack of training in Latin as in accounting). Open the door and you'll be lured into a spider's web of terms and numbers that will bring you down and overwhelm you and smother you. Last warning: run away!
After the jump, the descent begins into this year's Comprehensive Annual Financial Report (CAFR) for the City of Richardson.
From the 2016 CAFR:
The CAFR advises that indicators other than net position should be taken into consideration, too, and goes into mind-numbing detail for 161 pages. But let's look at that bottom line figure, net assets, and how that has increased and decreased over time.The Statement of Net Position presents information on all of the City’s assets and liabilities, including capital assets and long-term obligations. The difference between the two is reported as net position. Over time, the increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
Source: City of Richardson.
|Assets and Liabilities (in thousands)|
|Year||Assets||Deferred Outflows||Liabilities||Net Position|
Note: Statements after 2012 include deferred outflows of resources, as per new standards in GASB Statement 63. Statements after 2014 include deferred inflows of resources, as per GASB Statement No. 68 (not shown here).
After peaking in 2007 at $220,951,000, net position decreased for five straight years, bottoming at $179,468,000 in 2012. The CAFR suggests that a decline in net position may serve as a useful indicator that the financial position of Richardson is deteriorating.
Then, 2013 and 2014 saw a rebound in that net position. In 2014, the city reported a net position of $196,623,061, the highest in four years. Unfortunately, the city had to restate results after a change in GASB standards, wiping out all of that gain and more. The restated net position for 2014 was $180,665,000, a decline of $16 million from the previously stated net position and nearly back to that 2012 low.
The city's net position increased again each of the last two years, to $193,077,382 today. That's still below where it was in 2004, the farthest back I can find data for, but at least the declines seem to have stopped.
There is a curious growth in "deferred outflows" (that new detail GASB requires the city to break out separately). They've grown from $3.7 million in 2012 (the first year the line item appeared) to $41.2 million this year. That deserves more research from me to understand the possible significance, but the huge and sudden growth in that number is worrisome. Could that be a sign of trouble down the road?