California’s late on its own financial report for the 6th year


In summary

State Controller Malia Cohen’s office says the report — which helps determine California’s credit rating and ability to borrow money — has been delayed by tax extensions and technical difficulties.

California — a state whose officials love to tout it as the world’s fifth largest economy — is a year late in producing a report on its own financial health for the sixth year in a row. 

The most recently available such report, from 2022, blamed the chronic lateness of the reports on, among other things, a state software changeover that started in 2005, the year the first YouTube video was uploaded.

The state’s annual comprehensive financial report, which aims to provide insight into California’s financial health, is significant because it helps maintain the state’s credit rating, which is important in situations where the state might need to borrow money. 

While there isn’t a specific deadline for the reports under state law, bond certificates and federal funding require reporting by April 1 and March 31, respectively. State Controller Malia Cohen’s office said it typically tries to meet the March 31 deadline. 

This is the sixth consecutive year that the report missed those deadlines. The last available report is for the fiscal year that ended in 2022, published this past March.

Cohen’s office attributed the delay of the 2021-2022 report to the “unanticipated” extension of personal and corporate income taxes by both the federal government and California in 2023, as well as to ongoing challenges with agencies’ transition to FI$Cal, the state’s replacement budgeting and finance platform.

California launched the FI$Cal overhaul in 2005 to bring all of its budgeting and finance systems under one umbrella. If FI$Cal were a person, it would now be old enough to vote. The Legislature passed a bill to deem the project complete as of July 2022, but the state auditor noted that state agencies struggle to use the system.

In the 2022 report, the state auditor raised concerns that continued delays could affect California’s ability to maintain a high credit rating and borrow money at low interest. 

But the controller’s office told CalMatters via email that the reporting delays haven’t harmed California’s bond ratings yet due to the “availability of data from a number of other sources describing California’s financial position and ability to meet its bond obligations.”

Cohen, who took the helm as controller last year, pledged in the 2022 report published in March of this year to get the reports on track by March 2026. 

The statement from her office said she “has taken substantial measures to mitigate the root causes” of delays,  including streamlining processes and optimizing technology. 

The state also allocated more resources to the controller’s office in the 2023-24 budget to address workload and provide state departments with technical assistance.  

“These efforts are part of a comprehensive plan to return the State to timely reporting over the next several reporting cycles,” the email from the controller’s office said. 

In April, a report from the Illinois-based government transparency group Truth in Accounting ranked California 48th in financial transparency, based on a mix of factors including the state auditor’s opinion and the timeliness of reports. 

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