Sheila Weinberg
This year, state officials across the country are required to come clean about state pension debt. But there’s one problem: many states are still hiding pension debt from taxpayers and California is one of them.
Truth in Accounting (TIA), a Chicago-based think tank that analyzes government financials, recently released a report on California’s finances.The Financial State of California report reveals that while California state officials are being more transparent about their financial information, they are still hiding a massive amount of debt from taxpayers and ignoring a new rule. To give you an idea of the current plights of California’s financial reporting, let’s break down the numbers.
According to TIA’s calculations, California has $78.9 billion of pension debt – not $74.5 billion like California state officials report. This means $4.4 billion of pension debt is hidden from state taxpayers. To top it off, $58.2 billion of retiree health care debt is also excluded off the state’s balance sheet, so the grand total of California’s hidden debt is $62.6 billion.
Believe it or not, the $62.6 billion of hidden debt is an improvement when compared to previous years. In 2014 California had $111 billion of hidden retirement debt and in 2013 the state had $113 billion of hidden retirement debt. These astronomical amounts are being pushed on to future generations.
When we recalculate California’s financials with the $62.6 billion of hidden retirement debt, California owes a total of $335.4 billion in bills. Subtract the $96.1 billion of available assets and the state has a total of $239.3 billion of debt. When this debt is divided equally amongst taxpayers, each taxpayer owes $20,900. Do you have $20,900 to pay the state of California?
The ability for state officials to exclude debt off financial documents is alarming. Imagine not counting the balance owed on your credit card when applying for a mortgage or not including the remainder of your student loans on your tax forms. The government holds its citizens, corporations and businesses accountable for disclosing this financial information, but the government does not hold itself to the same standards of transparency.
With Governor Brown’s and legislators’ recent framework agreement on a new budget, the time to turn around the state’s finances is now. To be knowledgeable participants in their state’s financial decisions, like pension reform, citizens need accurate, timely and transparent financial information. It’s the duty of State Controller Betty T. Yee and Governor Jerry Brown to provide such information.
Sheila Weinberg is the Founder and CEO of Truth In Accounting, a Chicago-based think tank that analyzes government financial reporting. Weinberg is a Certified Public Accountant with more than 30 years of experience in the field.