Following are our detailed findings and observations.1.The City incurred operating losses (“Change In Net Assets”) totaling approximately $1.5billion for the five fiscal years ended 6/30/08--- per the latest (fiscal year 2008) publiclyavailable audited Comprehensive Annual Financial Report (CAFR), page 199:Thousandsa.(312,790)b.(531,465)c.(131,893)d.(221,452)e.(281,556)TOTAL (1,479,156) ---or--- $1.5 BILLION2.The City’s deficiency in unrestricted assets [“Unrestricted (deficit)”] was $1.2 BILLION($1,174,429 thousands) at June 30, 2008--- per 2008 CAFR, page 15. In other words, theCity’s unrestricted assets were approximately $1.2 billion less than the already recordedliabilities that they will be required to satisfy.3.The $1.2 billion deficiency in unrestricted assets as of June 30, 2008 (which was createdessentially during fiscal years 2004-2008-see item 1) was basically financed, per page 15 of the2008 CAFR, by: (a) the $347,728,000 collateralized note payable to the municipal employees’pension trust; (b) the $643,413,000 combined accrued liabilities to the employees’ pensiontrusts (municipal-$285,462,000, police officers’-$318,567,000, and firefighters’-$39,384,000);(c) the $219,755,000 pension obligation bonds payable; and (d) the $272,941,000 accruedliability for other post employment benefits-----less, per pages 17 and 74 of the 2003 CAFR,(d) the $54,395,000 net accrued liabilities to the employees’ pension trusts at June 30, 2003(municipal-$92,386,000, police officers’-$19,221,000, and firefighters’-asset of $57,212,000).4.Thus, as of June 30, 2008, the City’s elected officials essentially had transferred financialownership of the City from the taxpayers to the City’s employees, about 43.7% of who do notlive in the City, according to documentation we have received from the City’s humanresources department. Very troubling, 63.3% of first responders (police officers andfirefighters) do not live in the City, versus just 30.0% of civilian employees, according to theCity’s human resources department.5. The City’s deficiency in unrestricted assets is so severe that in their yet to be completed auditfor fiscal year 2009 the City’s independent auditors apparently will have to address the auditreporting issue as to whether the City was a “going concern” as of June 30, 2009.6.Apparently the City has no idea yet as to what its operating loss (“change in net assets”)was for the fiscal year just ended June 30, 2009 or what its deficiency in unrestricted assetswas at June 30, 2009, and has no idea as to what is in store fiscally for fiscal year 2010. Thatis because the City does not keep its books on the full accrual basis of accounting (fullyaccruing its assets and liabilities) but once a year, via the audited Comprehensive AnnualFinancial Report (CAFR). And the CAFR cannot be completed until the (nearly always verysubstantial) annual audit adjustments are booked.