Thursday, July 10, 2014

Crunching the State Cash Statement for 2013-14

The state controller's cash statement for the last fiscal year, 2013-14, which ended on June 30, 2014.  You can find it at

The key line to look at is the one at the bottom of the table below and is labeled "Ending Reserves."  As can be seen, the state ended with a positive reserve balance of $2 billion for the first time in Gov. Brown's current term.  If you take the cash receipts and disbursements - with some adjustment for the assumed voter approval of a "rainy-day" fund - next year will be back in negative territory.  One thing to note, however, is that the governor pushed for "conservative" revenue estimates for 2013-14 when the budget for that year was being passed.  Doing so tends to push the legislature to spend less.  There was then a "surprise" when more revenue actually came in than was forecast.  He likely did the same for the current year.  So the estimated negative balance (regular reserve plus rainy-day fund) might turn out to be positive again despite the negative projection.

On the accrual basis used for the official budget, the reserve combo stays positive at the end of the current fiscal year although it drops.  Thereafter, projections to 2017-18 show total reserves rising by about a billion dollars a year.  Still, the ratio of reserves to spending stays under 5%.  Any kind of economic bump could easily blow out reserves of that magnitude in short order.  Since the Great Recession ended in 2009, forecasts out to 2018 that assume no negative bumps in the economy become increasingly risky, based on historical precedents.  All we can say is that things are quiet now on the budgetary front.  But there are no guarantees it will stay quiet as we project out further and further, rainy-day fund or not.  So the folks in UC headquarters should always have a Plan B ready.

General Fund Cash Flows and Reserves by Fiscal Year

              |                             | Adjusted*
$billions     |  2010-  2011-  2012-  2013- |    2014-
              |   2011   2012   2013   2014 |     2015
Starting      |                             |
Reserves**    |  -$9.9  -$8.2  -$9.6  -$2.4 |    +$2.0
              |                             |
Receipts      |   95.5   87.8  103.4  104.0 |    107.5
Disbursements |   93.7   89.2   96.3   99.6 |    111.5
              |                             |
Surplus/      |                             |
Deficit       |   +1.7   -1.4   +7.2   +4.4 |     -4.0
              |                             |
Ending        |                             |
Reserves**    |   -8.2   -9.6   -2.4   +2.0 |     -2.0
*Based on cash data from 2014-15 budget.  Starting reserves from controller’s cash data.  Receipts reflect subtraction of $104 million transfer from reserves.  Disbursements reflect subtraction of $3,183 million to reserves.  Ending reserves include regular general fund reserve plus “rainy day” fund.
**Includes “rainy-day” fund.

Source: June cash statements of the California state controller (for data from 2010-11 to 2013-14.  Data on receipts, disbursements, and surplus/deficit from California Department of Finance at:

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