Institute finds nationwide state-level total of $900 billion in off-balance sheet debt; Oklahoma in lower-middle tier

A new and intensely detailed review of the financial “state of the states” places Oklahoma in the lower-middle tier of American states as of Fiscal Year 2010. Assessment of the state by the Institute for Truth in Accounting will presumably improve in forthcoming assessments, due to significant pension reforms enacted in 2011. 

Despite bright spots in a handful of states, the institute in its second annual assessment concluded, “All the states together have more than $900 million in off-balance sheet liabilities, and the taxpayer burdens in most states continue to grow.” Weinberg blamed poor budgeting rules and outdated accounting principles for the inadequate transparency and lack of disclosure of true debt in most states.

The assessment is entitled “The Financial State of the States.”  

To be clear on the point involving pensions, the institute contends that as of FY 2010, Oklahoma had retirement liabilities of $16.2 billion that were “not clearly disclosed.”  

In the latest analysis of comprehensive information, Oklahoma was thirty-second among the 50 states, with a burden of $12,600 in debt per taxpayer. 

The institute’s analysis concludes that Oklahoma has $33.3 billion in assets – but only $11.5 billion in assets available to pay bills, leaving the projected debt per taxpayer. Specifically, $16,013,589,000 are “capital assets”, while $5,776,473,000 are “restricted assets,” leaving the balance available to pay debts. 

In the critical analysis of the Institute for Truth in Accounting, “The $12.6 billion shortfall represents compensation and other costs incurred in prior years that should have been paid in those prior years. Instead these costs have been shifted to future taxpayers.”  As of FY 2010, Oklahoma’s government had set aside “only 64 cents to pay for each dollar of retirement benefits promised.” In all, unfunded employees’ retirement benefits amounted to more than two-thirds (68 percent) of the state’s bills. 

The institute’s analysis is derived from data in Oklahoma’s June 30, 2010 audited Comprehensive Annual Financial Report (CAFR) and actuarial reports of the various state government retirement plans. 
The five worst states (and their respective debt per taxpayer) – ranked from number 50 to number 46 — were Connecticut ($49,000), New Jersey ($35,800), Hawaii ($32,700), Illinois ($31,600) and Kentucky ($23,200). 

The five worst states are characterized as “sinkhole states” in the analysis, which notes that one state, Hawaii, had a $ billion jump in unfunded health care obligations in a single year. Additionally, four of the five states saw per-taxpayer burdens increase over the last year. 

In dramatic contrast, the five best states  (and their surplus per taxpayer) were Alaska ($21,200+), Wyoming ($20,200+), North Dakota ($9,500+), Utah ($2,600) and Nebraska ($2,400). Also carrying a surplus as of FY 2010, in the institute’s analysis, was South Dakota ($1,400+).

The institute characterized the best five as “sunshine states,” noting that per-taxpayer surpluses grew larger over the past year in four of the five. 

The remaining states ranged from $300 in debt per taxpayer for Montana, to Connecticut’s crushing $49,000 per taxpayer. 

Sheila Weinberg, founder and CEO of the Institute for Truth in Accounting, summarized her perspective on the broad picture with these words, in a comments sent to CapitolBeatOK: “Antiquated government budgeting rules and accounting standards are to blame. States pay only what is due during the current budget year which does not take in account true long-term obligations on their balance sheets. Hundreds of billions of dollars of retirement liabilities are not reported, which pushes these costs onto future taxpayers.”