(The Center Square) – California ranks as the seventh worst state for financial transparency, according to a new study released Tuesday by Truth in Accounting.
TIA is an Illinois-based nonprofit that examines government accounting data at the state and local level.
California received 72 out of a possible 100 points.
This is the fourth year TIA has studied the financial transparency of each state’s comprehensive annual financial report (CAFR) and the ninth year the group has ranked the timeliness of each state’s CAFR.
“The criteria used to develop our transparency score provide a ‘best practices’ framework for government officials and citizens that can be used to improve their government’s transparency and accountability,” the report’s introduction reads.
California was the only state to score zero out of a possible 10 points for timeliness. While the new study is based on each state’s fiscal year 2019 data, TIA had to use fiscal year 2018 figures from California as it took the state more than 500 days to release its CAFR.
“The Government Finance Officers Association says 180 days should be the target, but private companies have their financial statements prepared in 45 days,” said Sheila Weinberg, founder and CEO of TIA. “We think 100 days is adequate.”
Weinberg said part of the problem in California is how the state government is structured.
“The comptroller is an elected office, but they have no direct authority over state agencies,” she said. “All they can do is ask the various departments to complete their reports.”
California received two out of a possible five points for having an independent auditor issue an opinion on the CAFR.
“Only 14 states have an outside firm perform their audit,” Weinberg said. “When you have an internal agency doing the audit, you have to wonder how objective they are. While California’s comptroller is elected, there is some independence there but not as much as having a private CPA firm do the audit.”
California also scored two out of five points for both online accessibility and including net pension liabilities.
“Many states do not include pension and retiree health care liabilities on their balance sheets and then claim to have a budget surplus,” Weinberg said. “We think it is important during annual budget talks for legislators and voters to know how much debt you have.”
Weinberg said California claims to have a $23 billion budget surplus, but because of pension liabilities it is actually several hundred billion dollars in debt.