City Controller's Office Releases Comprehensive Annual Financial Report for Fiscal Year 2018
December 18, 2018 -- The Office of Houston City Controller Chris B. Brown released the City of Houston’s Comprehensive Annual Financial Report (CAFR) today.
The Fiscal Year (FY) 2018 CAFR underscores the need to address the city’s $2.438 billion unfunded Other Post-Employment Benefits (OPEB) liability, as new requirements from the Governmental Accounting Standards Board (GASB) change how the liability is reported in this year’s report.
GASB Statements 74 and 75 require a liability for OPEB obligations, known as the net OPEB liability, to be recognized on the city’s balance sheet. This new reporting requirement had a significant effect on the statement of net position for the city’s governmental funds, which decreased to negative $914.84 million at the end of FY 18. This decrease is due almost exclusively to the OPEB liability. The city's statement of net position including all governmental and business activities is $791 million.
“Addressing the unfunded OPEB liability must be the city’s foremost short-term financial priority,” said Controller Brown. “Similar to the unfunded pension liability pre-reform, the ballooning OPEB liability is putting significant strain on the city’s bottom line.”
Prior to the implementation of the ‘Houston Pension Solution’, the city’s unfunded pension liability was $8.2 billion. The reform plan structurally reduced the accrued liability in a budget neutral manner. The plan also required legislative buy-in from Houston City Council, the Texas Legislature, and Houston voters.
Unlike the pension reform plan, addressing the city’s OPEB liability can be achieved at City Hall.
“The good news is that we can fully address this issue locally,” added Controller Brown. “The administration has indicated that a solution will be introduced in FY 2019. We look forward to working with Mayor Turner and the city’s Finance Department on addressing another challenge that threatens the financial future of our city.”
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 FY 2018 CAFR is dated November 29, 2018 and can be found in its entirety on the Houston City Controller’s website at: http://www.houstontx.gov/controller/cafr.html.