CAFR Budget Analysis

CAFR Budget Analysis
At a government’s year-end, a Comprehensive Annual Financial Report (CAFR) must be completed. A CAFR consists of three parts: introduction, financial, and statistical sections and is a very detailed report of the government’s financial condition and reports on the states’ activities and funds for the past year. The state of California completed and published its CAFR for year-ending June 30, 2013 in April 2014. From this CAFR, we were able to glean a significant amount of information in regards to the state’s population, governmental structure, size of the state’s budget, how the budget interrelates to the CAFR, major industries, and other pertinent demographic information.
Population
In order to interpret a government’s CAFR, the reader must have knowledge about the jurisdiction the issuing government serves. Part of understanding the jurisdiction is to have knowledge about the jurisdiction’s population. For this reason, a CAFR must present basic information about population.
With more than 37 million residents, the state of California is the most populous state in the United States (US) (as of Census 2010). California’s population has grown steadily at a rate of just under 1% per year since 2005. This trend is similar to that of the US overall, albeit a bit slower (Chiang, n.d.). Residents of California consistently have higher per capita income as compared to the US overall with $46,477 yearly income for the former and $43,735 for the latter as of 2012. However, the state’s unemployment rate has been higher than the rest of the US, peaking at a high of 12.4% in 2010 (as compared with 9.6% US wide) and returning to single digit numbers with 9.6% in 2012 (8.1% US wide).
Governmental Structure
The governmental structure of the State of California is divided into three offices, the Executive Branch, Legislative Branch, and the Judicial Branch. The Executive Branch is headed by the State Controller, Governor, and Lieutenant Governor, and under them fall the Attorney General, State Treasurer, Secretary of State, Superintendent of Public Instruction, and the Insurance Commissioner. The Legislative Branch is headed by the Senate and Speaker of the Assembly. Finally there is the Judicial Branch which is headed by the State Supreme Court and the Judicial Council (Chiang, n.d.).
Size of Budget and its Interrelationship with the CAFR
The size of a budget has a significant influence on an entity’s CAFR. Although states must present its budgetary information in the CAFR in a similar manner as dictated by GASB standards, the size and complexity of the budget does influence the document. California’s general fund budget for 2013 was $97.9 million. This figure does not include revenues and other fund balances.
The CAFR reports on the government’s budget and its performance in terms of budgetary compliance. Within California’s CAFR are three sections useful in finding information about the state’s budget.
The first section is the Management’s Discussion and Analysis and presents an overview of the governmental funds, explaining its make-up, uses, balances, and explanations of their conditions. The second section is Financial Fund Statements. This section is part of the Financial Statements section and provides more details on the entity’s funds in raw numbers. The last section, the Budgetary Comparison Schedule is part of the CAFR’s required supplementary information. In addition to showing the differences between actual and budgeted amounts, this section explains the reconciliation between budgetary basis fund balances to GAAP basis fund balances.
It is important to note that the Budgetary Comparison Schedule is not at the legal level of budgetary control. According to the CAFR (Chiang, n.d.), “such a presentation would be extremely lengthy and cumbersome” (p. 198).
Major Industries Located in the Entity
There are many major industries located in California including entertainment (motion picture industry), tourism, technology, agriculture, manufacturing, aerospace, oil, and mining. The aerospace industry is a very large and critical component of the Californian economy and employs over 117,000 and brings in $28 billion in sales every year. In manufacturing, besides developing computers, California produces telecommunications, biotechnology, shipyards, foundries, mills, workshops, transportation equipment, metal products, chemicals and food products. Although the California workforce has a vast assimilation of advanced capabilities and products, “the majority of their industries produce food, electronic and other electrical equipment, transportation equipment, apparel, and fabricated and industrial machinery” (Advameg, Inc., 2010). The motion picture industry generates billions each year and provides employment to over 475,000 residents. California’s tourism trade attracts people from all over the world, brings in $60 billion in sales each year, and provides jobs for 700,000 residents. The service industry is one of the most thriving and bustling industries nationally and according to the California Legislative Office, “the service industry is the largest single industry sector in the state” (Newsmax Media, Inc., 2015).
Other Pertinent Demographic Information
California’s population in 2012 was 37.9 million, increasing by 0.8% from 2011 (Chiang, n.d.) and represented 12% of the US population. California’s population consisted of 50.3% female and 49.7% male, and the median age was 35. California’s multi-ethnic population consisted of 40.1 % Caucasian, 37.6% Hispanic, 5.8% African-American, 0.4% American Indian, 13% Asian, 0.4% Pacific Islander and 2.7% two races combined with other races (U.S. Census Bureau, 2015).
The total personal income in California in 2012 was $1.8 billion, increasing by 7.5% from 2011. In 2012 per capita income was $46.5 million, improving 6.1% from 2011. California’s unemployment rate in 2012 was 9.6% -- higher than the US rate of 8.1%. The 2012 civilian labor force was 18.5 million in California, consisting of 16.7 million working and 1.7 unemployed (Chiang, n.d).
Conclusion
The California CAFR presents a variety of information to include population, the structure of the government, the size of its budget and how the budget interrelates to the CAFR, major industries within the state, and other demographic information. California is the most populous state in the nation and is number one in many of its industries. The state general budget is over $97.9 million and supports 37.9 million residents.

References
Advameg, Inc. (2010). California – Industry. Retrieved from http://www.city-data.com/states/California-Industry.html.
Chiang, J. (n.d.). State of California comprehensive annual financial report for the fiscal year ended June 30, 2013. Retrieved from www.sco.ca.gov/Files-ARD/CAFR/cafr12web.pdf.
Newsmax Media, Inc. (2015). Top 5 Industries in California: Which Parts of the Economy Are Strongest? Retrieved from http://www.newsmax.com/FastFeatures/industries-in-california-strongest/2015/03/08/id/626901/#ixzz3VqawDooJ.
U.S. Bureau of Labor Statistics. (2015, March 20. BLS information. Retrieved from www.bls.gov./dollaq/bls_ques23.htm.
U.S. Census Bureau. (2015, March 28). 2008-2012 American community survey. Retrieved from http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk.