The transparency of U.S. states’ financial reporting in disclosing pension and OPEB liabilities of their statewide retirement systems has improved thanks to new regulations, but states still have a far way to go in reporting those liabilities, said an annual report from Truth in Accounting.
The report said there are a total of $628 billion in pension liabilities.
“Very simply, the state and local governments under the GASB accounting standards for decades have been accumulating large obligations that haven’t been reported on the face of their balance sheets,” said Bill Bergman, director of research at Truth in Accounting, in a telephone interview. “They can be found in the footnotes or the actuarial valuation reports, but they haven’t clearly reported these to the citizens our governments serve.”
Mr. Bergman said as a consequence, despite balanced budget requirements in 49 out of the 50 states, pension liabilities are giving states major stress.
New GASB regulations — GASB 67 and GASB 68 — that require greater transparency have helped, but there is still more states can do, especially when it comes to the timeliness of financial reporting.
The report analyzes consolidated financial annual reports of the 50 states and ranks the states by the share of overall debt with which each individual taxpayer is burdened. New Jersey ranked 50th, with an individual taxpayer burden of $52,300 per person.
According to the report, New Jersey has a total of $140 billion in combined pension and other post-employment benefit liabilities, while only $40 billion appears on the balance sheet.
The rest of the bottom five, from 45 to 49, are Massachusetts, Kentucky, Illinois and Connecticut. The top five, all of which have what the report calls a taxpayer surplus, are Alaska, North Dakota, Wyoming, Utah and North Dakota.
The full report is available on the organization’s website.
