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Mailbag: Leaders, columnist cite misleading figures

November 08, 2010

A month ago Orange County Supervisor John Moorlach and Councilman Eric Bever co-authored a commentary on these pages decrying the fiscal management practices of our elected leaders and city staff. Unfortunately, Daily Pilot columnist William Lobdell picked up their baton and ran with it in a column of his own two weeks ago in which he perpetuates the misinformation generated by the earlier commentary.

Moorlach, an accountant, Costa Mesa resident and, according to Lobdell, the fellow who could have saved Orange County from bankruptcy if we'd have listened to him, took numbers provided to him by Bever assuming they were valid and pontificated about them. The problem is, some of those numbers on which Moorlach based his analysis were not accurate. Bever asked city staffers a couple questions and didn't understand the answers. He thought he was adding apples and apples when he was actually adding oranges and tangerines.

In their commentary Moorlach/Bever said, "The city's $50 million unreserved savings has dissipated in less than three years." Lobdell, in his column, said, "The city has plowed through $50 million in savings in three years..." Unfortunately, that information is incorrect. We're talking here about one of the components of the always-confusing "Fund Balance," that segment of the budget that contains monies earmarked for specific circumstances in some cases and less-rigidly controlled requirements in others.

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I like to think of the Fund Balance as a cash drawer of a cash register. It's a large drawer that contains money, divided into compartments of varying denominations, plus coins of different values. In the Fund Balance "drawer," there are two major sections, Reserved and Unreserved. The Reserved section includes amounts for things with legal requirements, like Inventories, Prepaid items, Debt Service, Encumbrances and, until recently, Self Insurance. The "Unreserved" section includes amounts that are "designated" for specific purposes, such as "working capital" — that's the $14,125,000 commonly known as the Emergency Reserve or the "rainy day fund."

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