To say there is little financial transparency at the Commonwealth Financing Authority (CFA) would be the ultimate in understatement.
To begin, the 2004 law creating the CFA (PA Title 64, Chapter 15) requires an annual audit but does not require that financial information be made available to the public through an annual report. The audits are to be presented to the Secretary of the Senate and the Chief Clerk of the House. The law does mandate that a concise financial statement be published annually in the Pennsylvania Bulletin. However, an online search of the Bulletin finds no such document even though the law creating the CFA was enacted in 2004.
Whether audits are being presented to the Senate and House officers each year is being researched by the Institute. The law does not require the publication of annual reports but two can be found online: one for 2007 and one for 2012. However, neither of those reports includes any financial reporting.
As is typical in legislation creating authorities, there is a provision in the law stating the debt of the CFA will not constitute any indebtedness, liability or obligation of Commonwealth. (See Article VIII, sections 8 and 9 of the Pennsylvania Constitution for legal requirement language regarding obligating the Commonwealth.) But later on in the law creating the CFA there is provision for the Secretary of the Budget to certify the following; –quoting directly from the law;
“ (i) Whether sufficient surplus revenues will exist in the General Fund for the two succeeding fiscal years immediately following the fiscal year for which the estimate was signed to pay any liabilities which would be incurred by the Commonwealth during those years if the authority incurs an additional $250,000,000 of indebtedness. (ii) The aggregate amount of liabilities which would be incurred by the Commonwealth for the two succeeding fiscal years immediately following the fiscal year for which the estimate was signed which are a result of the activities by the authority.
(2) The Secretary of the Budget shall publish the certification in the Pennsylvania Bulletin as soon as possible.
Indeed, just such a certification was published in the Pennsylvania Bulletin in 2006.
Commonwealth Financing Authority Certification
[36 Pa.B. 1460]
I, Michael M. Masch, Secretary of the Budget, hereby certify in accordance with and as required by section 1543(e) of the act of April 1, 2004 (P. L. 163, No. 22), 64 Pa.C.S. § 1543(e), that:
(1) sufficient surplus revenue will exist in the General Fund for Commonwealth fiscal years 2006-2007 and 2007-2008 to pay any liabilities which will be incurred by the Commonwealth during those fiscal years if the Commonwealth Financing Authority incurs an additional $250,000,000 of indebtedness; and,
(2) the aggregate amount of liabilities which will be incurred by the Commonwealth for its fiscal years 2006-2007 and 2007-2008 as a result of the activities of the Commonwealth Financing Authority are $36,939,000 and $85,165,000 respectively.
Perhaps the language cited by Secretary Masch has been adjudicated and found in compliance with the Constitution by the courts, but it is surely confusing to have the section of the law forbidding the CFA from obligating the taxpayers to be superseded by the section apparently allowing it if a certification of budget surplus is made.
It’s just one more oddity in the lack of transparency of the Commonwealth Financial Authority.
