CHICAGO — A new accounting rule is requiring California to come clean about its hidden pension debt, but the state continues to exclude billions of pension and health care debt from its financial reports. This information is released today in a report titled, The Financial State of California, by Truth in Accounting (TIA), a Chicago-based think tank that analyzes government financials.
Because this pension rule was not required in previous years, state officials used outdated accounting methods to calculate the state’s debt. As a result, California's reported pension debt increased from $11 billion in 2014 to $74.5 billion in 2015. However, state officials are still not reporting the correct figures.
“We’ve been encouraging state officials to report all of the state’s pension debt for years and we’re glad to see some progress finally being made,” said Sheila Weinberg, Founder and CEO of TIA. "However, the state is still not reporting the correct pension debt, because state officials are using last year's pension numbers."
According to TIA’s calculations, California has $78.9 billion of pension debt. Because state officials are reporting only $74.5 billion, they are excluding $4.4 billion off the balance sheet. In addition, state officials are also hiding $58.2 billion of retiree health care benefits.
“Many residents in California are counting on State Controller Betty T. Yee and Governor Jerry Brown to be honest and make sound policy decisions,” said Weinberg. “Excluding $62.6 billion of retirement debt from financial reports provides inaccurate data for taxpayers and puts current and future benefits at risk. It’s unacceptable.”
TIA researchers recalculated California's overall financial position and discovered the state needs $239.3 billion to completely pay its bills. When this debt is divided amongst California taxpayers, each taxpayer owes $20,900 – the state’s taxpayer burden.
Data is derived from the state of California's June 30, 2015 audited Comprehensive Annual Financial Report and retirement plans' actuarial reports.
Founded in 2002, Truth in Accounting is dedicated to educating and empowering citizens with understandable, reliable, and transparent government financial information. Sheila Weinberg is a Certified Public Accountant with more than 30 years of experience in the field.
Contact: Katherine Oxenreiter
312.589.5104
press@truthinaccounting.org
koxenreiter@truthinaccounting.org
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