(The Center Square) – A report published this week by Truth in Accounting finds Kentucky could be more transparent about its financial reporting.
The Bluegrass State received a score of 63 out of 100. That put Kentucky tied with Ohio for 43rd among the 50 states.
The organization considers a score of 80 or higher as “noteworthy,” with 22 states achieving that designation. Utah earned the highest score with an 88.
The report grades states on eight factors. The largest is that the state government’s annual report and the annual report for its largest pension plan receive clean opinions from an independent auditor. Out of 50 points, Kentucky received 35 points.
In the 2020 report, Kentucky scored a 76 overall and earned 50 points for clean auditor opinions.
COVID-19 played a prominent role in Kentucky’s scores going down, and the organization said that was true for other states as they faced audit issues with CARES Act federal funding and unemployment insurance.
The annual report from Kentucky State Auditor Mike Harmon’s office found several issues with the unemployment program, which was expanded to allow more people to claim benefits because of the pandemic.
When Harmon released the first volume of the state’s audit in February, about a dozen of the audit’s findings were related to the unemployment program. That included the discovery of 16 state employees who received unemployment benefits for a part-time position while working for the state. Those 16 individuals were found out of a sample of 37 state workers who filed for and received unemployment.
Truth in Accounting also found that Kentucky’s “net position” was “distorted by misleading and confusing deferred items.” As a result, the state received no points out of 10 possible in that category.
Other issues of concern were that the annual report was not easily accessible online (three out of five possible points) and the use of an independent auditor that’s not a state employee conducting the report (two of five points). The state also only got two points out of five for not using the same date for its pension liability as it used for the annual report.
The report comes on the heels of another Truth in Accounting report that gave Kentucky a failing grade for its financial state. That report, released in late September, found the state’s debt equaled a taxpayer burden of $26,000.
Kentucky ranked 44th in that report.
Besides Ohio, all but one other neighboring state ranked higher than Kentucky in the transparency report.
Virginia received an 86, which was the sixth-highest score among the states. Tennessee and West Virginia were right behind at 84, in a five-way tie for seventh.
Indiana was in a six-way tie for 14th with a score of 82.