U.S. state and local governments are required to report expenses of service functions in a Comprehensive Annual Financial Report (CAFR). Gain access to a recent CAFR. Go to the “Financial Section” of the CAFR and look for the section of “Basic Financial Statements.” Turn to “Statement of Activities.”

Look for the expenses of programs or functions (often listed as the first column). As this statement is prepared on the accrual accounting basis, these annualized expenses can be used to represent the annual cost of these functions or programs. Work in an Excel file to 1. List the three most expensive functions/program activities of the

“primary government.”

2. Calculate the percentages of each of these function costs in “total primary government.”

3. Compare the expenses of these functions over last year’s figures to see the difference (last year’s figures should be available in last year’s CAFR).

4. Write a statement to describe these expense differences.

5. Find the population statistics in the “Statistical Section” of the CAFR.

The CAFR should have the population of last ten years. If it doesn’t, you need to call the agency to get the figure. Use it to compute “total primary government expenses per capita.” Compare it with the number in the previous year to see the trend. Are the services becoming more expensive in this government? Extend this analysis to include the data of the previous three years. Do you observe any trend of cost change in “total primary government expenses per capita” for the past three years?