Glencoe, Illinios, Oct. 25, 2022 (GLOBE NEWSWIRE) -- PRESS RELEASE: FOR IMMEDIATE RELEASE
Truth in Accounting Releases 13th Edition of the Financial State of the State Report
At the end of the fiscal year 2021, 31 states did not have enough money to pay all of their bills. This means that to balance the budget—as is required by law in 49 states—elected officials have not included the true costs of the government in their budget calculations and have pushed costs onto future taxpayers. While this year’s report has been highly affected by both Covid relief money and the stock market. Pension numbers hide a lot of facts which is of great concern in our opinion. Our research found state finances were positively impacted by Covid relief money and last year's record gains in the stock market. However, those numbers are deceiving since most stock market gains were only on paper and Covid money most likely won't be renewed. Citizens need to look past the budget rhetoric of the politicians and look at the annual comprehensive financial reports to understand the full financial snapshot of their government.
Main takeaway: Total debt among the 50 states amounted to $1.2 trillion at the end of the fiscal year 2021.
- Most of the states’ debt came from unfunded retirement benefit promises, such as pension and retiree healthcare liabilities.
- One of the ways states make their budgets look balanced, when they are not, is by shortchanging public pension and OPEB funds.
- This year, total pension debt accounted for $699 billion.
- Other post-employment benefits (OPEB), mainly retiree health care, totaled $665 billion.
- Overall, it appeared state debt improved due to increased market valuations of pension plans and federal Covid funding. Both of these are transitory in nature and it is expected that the improvements noted in 2021 will not continue into 2022.
- Market gains in this report have already been lost and Covid funding is waning.
- The majority of states were tardy when releasing their annual reports. On average, it took 224 days when 180 days is considered timely by the GFOA. California and Arizona have yet to release their fiscal year 2021 report.
- States use a pay-as-you-go system to fund pensions & OPEB. They only recognize what checks are due this month as a liability.
Who cares? Why does it matter? Cynicism and mistrust of our governments are rampant because citizens lack the financial knowledge they need to effectively interact with elected officials. And elected officials lack the incentive to show the real numbers because that might lose votes. Misleading financial information is detrimental to government accountability and transparency. Our representative forms of government are being undermined because citizens can’t effectively advocate for spending and taxing decisions with the wrong financial information.
