LANSING – Governor Rick Snyder set the stage for a dramatic restructuring of state government Monday with the unveiling of his administration’s report on state finances, revealing the state is mired in short-term borrowing to cover cash shortages and that private sector employees have sacrificed far beyond their public sector counterparts.

“Today is a great day. The information is depressing. The outcome, though, is the right thing. That’s where I’m excited,” Snyder told a jammed meeting of 400 at the Radisson Hotel Lansing for the Business Leaders for Michigan summit on the state’s fiscal health. “It’s not time to cry about it. It’s not time to whine about it. It’s time to go to work.”

Snyder’s issuance of the report fulfills a campaign promise to provide an easy-to-read document of the state’s basic finances in contrast to the legally required and more complex Comprehensive Annual Financial Report. He signaled big changes to the state’s budget would be coming when he presents his recommendation for the 2011-12 fiscal year to a joint meeting of the House and Senate Appropriations committees on February 17.

Immediately, a battle ensued over one of the most notable figures in the report.

Between 2000 and 2009, compensation, including salaries, wages, pensions and health benefits, for the average private sector worker fell 13 percent while it increased 19 percent for state government employees and 13 percent for local government employees, the report showed. Further, in 2000, average public sector compensation was 55 percent higher than average private sector compensation. But in 2009, state classified employee compensation was 113 percent higher on average than the private sector.

Officials representing public employee unions seized on the acknowledgement by those who put together the report that this data did not compare similar jobs in the public and private sectors, nor the educational attainment levels required for those jobs. Snyder and one of the report’s authors themselves urged caution in the analysis of those numbers, agreeing it was not an apples-to-apples comparison.

“It makes it a pretty meaningless report if you don’t do that,” said Ray Holman of United Auto Workers Local 6000, the largest state employee union. “Most state employees do have a college degree and more, and I think that was a huge gaping hole in their report.”

Roger Martin of Martin Waymire called the study misleading and incomplete, again citing the combining of all public sector for comparison to all private sector workers. While 55 percent of public sector workers have four-year college degrees, 31 percent of private sector workers do.

“They lump tens of thousands of public employees with four-year college degrees in with tens of thousands of private sector minimum wage and entry-level workers (teenagers, fast food jobs, car wash attendants, etc.) who do not have college degrees,” he said. “While it is absolutely true that workers in some public sector jobs make more than comparable workers in the private sector, the notion that public sector workers earn ‘double’ workers in the private sector is nearly laughable if it weren’t so absurd.”

Snyder disputed that the data was unfair.

“I outlined that it wasn’t apples to apples,” he said. “I’m happy to have people react to it whether they agree with it or don’t agree with it because that may bring other data forward that could be worthwhile to consider as part of this process.”

While the data on public sector employees versus private sector employees spurred the most immediate controversy, perhaps most striking was the revelation of the state running a persistent cash deficit since the 2002-03 fiscal year, ranging from $400 million to more than $1 billion. At the end of the 2009-10 fiscal year, the state had a negative cash balance of $400 million for its general and School Aid funds.

In eight of the past nine years, the state, unable to make scheduled payments for services, has taken out short-term borrowing at the beginning of each fiscal year that it pays back with interest at the end of the fiscal year.

So problematic has the state’s cash position been that for 10 years, with the School Aid Fund ending its fiscal year with no cash on hand, the state has temporarily diverted cash from other state funds into the School Aid Fund to keep K-12 schools operating, the report says.

“Each year, school operations continue only because money that had originally been designated for other purposes is temporarily re-routed into the School Aid Fund,” the report says.

The Constitution requires that short-term state borrowing in any given year not exceed 15 percent of unrestricted state revenues from the previous year, but report analysts said the state did not come close to hitting that threshold.

The report does not say how much in interest the state has paid on short-term borrowing in the period analyzed. Analysts were asked for that figure, but did not provide it prior to publication.

Among the other data that stood out:

? In the 2009-10 fiscal year, combined revenue for state and local governments was $82.5 billion, while those governments spent $84.8 billion, a $2.3 billion gap. “Big numbers,” Snyder said.

? The number of state employees has fallen 23 percent since 1990, while the number of local government workers has risen 5 percent and public school teachers 18 percent. However, the number of local government and teachers has fallen in the last four years.

? The state had just $720 million in unrestricted fund balances in its major funds in the 2009-10 fiscal year, or 1.5 percent of total expenditures from those funds. Ten percent is considered a sound amount. Michigan’s school districts averaged 5.2 percent of total expenditures in reserves. “Neither one meets a benchmark that would be considered acceptable,” Snyder said.

? The level of state debt per person has increased from $724 in 1979 (in 2010 dollars) to more than $2,430 in 2009 (also in 2010 dollars).

? State government had a cumulative public budget gap of $43.3 billion at the end of the 2008-09 fiscal year when including appraised pension obligations and contractually promised retiree health care obligations.

So anticipated was the report that Monday’s summit saw virtually all walks of life in the capital community represented: multiclient lobbying firms, educational organizations, state employee unions, business groups, legislators, former legislators, local government groups and nonprofit associations.

The report was commissioned by the Business Leaders group and conducted by the Lansing-based Anderson Economic Group with assistance from the Citizens Research Council of Michigan, Michigan Association of Certified Public Accountants and Michigan Government Finance Officers Association.

“What we’re talking about today is something that should have happened decades ago, generations ago,” Snyder said. “It’s time for us to step up and take responsibility for the present financial situation we’re in.”

Snyder insisted one should not draw conclusions about the type of budget he will offer in a little more than two weeks based on the fiscal document, but Holman said the document is a clear signal.

Holman said the focus on public employee compensation misses a basic reality.

“You could cut our pay in half or take away all state employees’ benefits, you’re still going to have a huge deficit,” he said. “There’s a lot more to balancing the budget than cutting state employee pay.”

Frank Houston, campaign director for the liberal umbrella organization, A Better Michigan Future, said he credited Snyder with pushing for greater transparency in state finances. But he also cautioned that the document tended to emphasize areas important to the business world. Basic quality of life issues also need to be considered.

“It’s obviously coming