At the beginning of this week, it emerged the Chinese province Liaoning have been fabricating its economic figures from 2011 to 2014 as officials sought to improve their reputation with the country’s head policymakers. According to the reports, Liaoning’s figures had been inflated by as much as 20% during the period.

For many China watchers, the Liaoning situation wouldn’t have come as a surprise, but as it turns out, it’s not just Chinese provinces that are struggling with numbers.

Pension Burdens Rise As Liabilities Double In Just A Few … –

Image source: Wikimedia Commons

California Governor Jerry Brown Admits $1.5 Billion Budget Error

It has emerged over the past two days that Californian mathematicians are also struggling to compute the state’s budget. The LA Times reports that the administration of California Governor Jerry Brown admitted at the end of last week that it had discovered a $1.5 billion error in the state budget. This week, the administration stated that the $1.5 billion omission was down to a “math error.”

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As it turns out, fiscal planners who were overseeing the budget double counted certain cost savings and simply forgot to incorporate other expenses altogether. The LA Times reports there were two major mistakes:

–  A double counting of state savings from a program that coordinates health, behavioral and long-term care services with local government. That error understated expenses by $913 million.

–  A forgotten state government cost from two counties — San Mateo and Orange — enrolling in the coordinated program, which meant missed expenses of $573 million.

Such a severe miscalculation may seem incompetent at first glance but in a state budget where there are thousands of different lines to complete every year, such a mistake may be easy to make. However, when put in context of California’s wider fiscal plans, the $1.5 billion miscalculation stands out as a large red herring. Indeed, off the back of the first set of numbers, Governor Brown predicted a $1.6 billion deficit for the state and earmarked $3.2 billion of spending cuts to help balance the books. Furthermore, these actions were taken after the miscalculation became known to policymakers. The error was reportedly discovered last fall and was not officially reported to the Joint Legislative Budget Committee until January 13.

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Now the error has been discovered and is in the public eye, Californian lawmakers will have to correct their mistake in one way or another. But the big question is, if it has taken more than three months to emerge that Californian’s budget compilers have missed $1.5 billion of transactions, how many other “math errors” could be hidden in the figures?

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