Houston City Controller’s Office Releases 2016 Comprehensive Annual Financial Report; Sounds Alarm on Critical Need for Pension Reform
Houston City Controller Chris B. Brown released the City of Houston’s 2016 Comprehensive Annual Financial Report (CAFR) today, and is once again “sounding the alarm” on the critical need for meaningful reform to the city’s three pension systems. Notably, for the first time in modern history, the City of Houston ended the fiscal year with a negative statement of net position.
“The urgency of the situation cannot be understated,” said Controller Brown. “This is the first time that the City of Houston’s liabilities exceeded its assets, and this can be almost exclusively attributed to the city’s unfunded pension liabilities. A crisis continues to loom on the horizon and I urge our leadership in Austin to pass Mayor Sylvester Turner’s proposed pension reform plan as soon as possible.”
The recent implementation of the Governmental Accounting Standards Board (GASB) 67 & 68 accounting standards resulted in a decrease of the City of Houston’s statement of net position from $3.17 billion in 2014 to $146 million in 2015. The reduction was due almost entirely to newly required changes in how the city reported its pension liabilities. The City of Houston’s statement of net position for 2016 is negative $95 million.
“When I took office in January 2016, I sounded the alarm on what I saw as a critical issue facing the City,” added Controller Brown. “Over the past year Mayor Turner has worked to build consensus among the public employee pension systems, legislators, the business community and other stakeholders around the idea of “shared sacrifice” to achieve a comprehensive pension reform. Mayor Turner’s plan has been agreed to by local stakeholders – now our leaders in Austin must do their part to secure a strong financial future for the City of Houston.”
Mayor Turner’s pension reform package was approved by City Council in October 2016. The package must now be drafted into legislation and approved by the Texas Legislature, which has ultimate control of the city’s public employee pensions.
The City of Houston’s Annual Financial Report is a comprehensive overview of the city’s finances. The City Controller’s Office works with all City departments in collecting and analyzing financial data from the City’s fiscal year (July 1 – June 30). In addition, the CAFR analyzes the City’s debt service and investment portfolio and is utilized by bond rating agencies for their issuance of credit ratings. The CAFR is audited by an independent third party to assure the public that the document is accurate and in compliance with accepted accounting principles.
Under Texas Law, the Controller is obligated to issue an annual financial report. The 2016 CAFR is dated November 30, 2016 and can be found in its entirety on the Houston City Controller’s website at: https://www.houstontx.gov/controller/cafr.html