The City of San Jose’s 2014 Annual Comprehensive Financial Report (CAFR) reveals:

  • A $5.4 billion Pension Trust Fund (pg. 194) that generated $105 million income from interest and dividends (pg. 195), and pays advisors $24.4 million for investment expenses (pg. 195).
  • A comprehensive financial strategy of purchasing debt securities to earn interest ($58.6 million, page 195), and selling debt securities that cost interest ($98.4 million, page 201).

Therefore, this financial strategy involving a $5.4 billion pension fund cost $17 million to taxpayers and retirees (income minus interest and investment expenses) while paying the advisors to manage these “investments” $24 million.

And it might be worse than this because the CAFR is not transparent with how much debt securities cost taxpayers:

  • Page 201 states a $98 million interest cost, but page 85 has total interest cost for the fiscal year ending June 30, 2015 as $135 million.
  • Page 8 has governmental activities stating a $60.8 million interest cost.
  • Page 16 states a total city debt of $2.7 billion.

I spoke and e-mailed with Kimberly Colburn at their Finance Department. I requested four business days to confirm my findings on their public CAFR; Kimberly answered they would not  respond until at least ten business days after my request. You can come to your own conclusions whether my questions require this amount of time, or are basic information that a city should have readily available. I welcome any corrections and/or additions Kimberly can provide. I report in good-faith effort as a member of the public in civic service, with training in economics and mathematics for attempted leadership to maximize public benefits.

So what does this mean? San Jose’s CAFR is typical, as I explain below in this 22-minute interview from 2012:

  • CAFRs reveal tremendous public assets that serve Wall Street’s financial sector with parasitic income like Goldman Sachs’ $11 billion quarterly earnings, and cost taxpayers in a tragic-comic game of debt and scarcity to fund infrastructure.
  • CAFRs are not meant to transparently communicate public money. Try reading one to confirm this obvious conclusion.
  • Real leaders and responsible citizens must embrace these Emperor’s New Clothes facts, and demand full democratic disclosure of the viable alternative of public banking and monetary reform.

San Jose’s newly-elected mayor, Sam Liccardo, committed to innovation in his 2015 Inaugural Address (regarding ending homelessness for ~3,000 residents here):

Particularly in this time when San Jose—like so many California cities, bears the burden of billions of dollars of unfunded pension debts, backlogged maintenance, and infrastructure needs—how can San Jose demonstrate its leadership in addressing these challenges in this time of scarcity?

…We’ll build new partnerships, leveraging the resources and expertise of non-profit organizations and private-sector leaders … We’ll engage collaboratively in regional approaches to problem-solving for those issues … Above all, however, we will innovate.

In a time of public-sector scarcity, we can only flourish by creating a City Hall as innovative as our extraordinary community.

Collectively, we must muster the courage:

  • to try what has been untried;

  • to open our city’s workings to public scrutiny;

  • to allow volunteer energy to loosen City Hall’s grip on every task;

  • … and, above all, to fail, to learn, and to endeavor again.

Breakthrough solutions with public banking, monetary reform

Innovations in public banking (and herehere) and monetary reform are available now, and affirmed by American historical practice beginning with Benjamin Franklin’s publication how public banking allowed colonial Pennsylvania to operate without taxes, and advocated by leading American innovators Thomas Edison and Henry Ford for government to create debt-free money to directly pay for public infrastructure.

Public banking:

  • Creates at-cost and in-house credit that typically reduces infrastructure cost by half (see page 85 to affirm San Jose’s interest costs roughly equal to loan principal, and/or think of a typical home mortgage).
  • Removes needs for emergency and contingency funds, like San Jose’s $37 million (page 100).
  • North Dakota has a public bank for at-cost credit that results in it being the only state with annual increasing surpluses rather than deficits.

To be clear of what we have, including San Jose, under our current banking model: the Big Banks demand public subsidies (so-called “bailouts”) while gambling with over $200 TRILLION in derivatives with the same fraudulent methods as the subprime gambling. They’re not even banks anymore; deriving most of their income from subsidies and apparent market manipulations.

Monetary reform: total benefits of this elegantly powerful solution are ~$3 trillion annually; similar to every US household receiving a 60% increase in income.

  • Creates debt-free money that directly pays for public goods and services.
  • Because infrastructure investment produces more economic performance than the investment cost, we have overall falling prices rather than inflation.
  • This produces the game-changing triple benefits of the best infrastructure we can imagine, up to full employment, and lower overall prices.

I’ll keep reporting with Kimberly’s response from Finance, and Mayor Liccardo’s policy analyst Dylan Simon’s responses in his learning about public banking and monetary reform until the mayor has a policy position regarding public banking and monetary reform.


Carl Herman is a National Board Certified Teacher of US Government, Economics, and History; also credentialed in Mathematics. He worked with both US political parties over 18 years and two UN Summits with the citizen’s lobby, RESULTS, for US domestic and foreign policy to end poverty. He can be reached at

Note: has blocked public access to my articles on their site (and from other whistleblowers), so some links in my previous work are blocked. If you’d like to search for those articles other sites may have republished, use words from the article title within the blocked link. Or, go to, paste the expired link into the box, click “Browse history,” then click onto the screenshots of that page for each time it was screen-shot and uploaded to webarchive. I’ll update as “hobby time” allows; including my earliest work from 2009 to 2011 (blocked author pages: herehere).