Illinois ranks as one of the least financially-transparent states in the nation.
That’s according to a new report from the nonpartisan watchdog organization Truth in Accounting, and based on fiscal year 2019 data, the most recent year available.
Illinois is listed as the eighth-worst state in the country, scoring 73 out of 100 possible points. It’s an improvement by one point from last year’s report, though the state slipped one spot in the overall rankings.
The state ranked 49th, ahead of only California, in the timeliness of delivering its Comprehensive Annual Financial Report. The Government Financial Officers Association standard for states to publish that data is 180 days after the end of the fiscal year, but TIA said they should ideally be available within 100 days.
“Citizens and taxpayers deserve timely recording,” said Bill Bergman, director of research at Truth in Accounting. “We get balance sheets that tell us the financial condition of the government at a given point in time. Trouble is, if we don’t find out until five or six months later, it’s not really that point in time.”
Bergman said the consequences of the delay could be far-reaching because decisions in Springfield could have been made without a proper understanding of the state’s financial numbers.
“The late reporting is something that disrupts the budgeting process,” Bergman said. “When you don’t have the latest audited financial statements at the time you’re developing budgets, you’re not budgeting for the future with an informed set of information.”
The organization measures each state’s Comprehensive Annual Financial Report against a framework of best practices. The scores are based on eight criteria: accessibility, searchability, if the state used an outside auditor, the auditor’s opinion, timeliness of the report, percentage of off-balance sheet liabilities, pension data timing, and deferred items.
The study also dings Illinois for distorting its net financial position due to misleading and confusing deferred items.
“Those items are ways in which governments can smooth in the impact, for instance, of bad investment results into their balance sheet,” Bergman said. “They can defer the recognition of a massive loss, if one arrives, over a future timeframe.”
He argues that the state’s massive unfunded pension liability makes this category, in which Illinois finished dead last among the 50 states, even more important to address.
“The large pension plans have an incentive, potentially, to take more risk in order to get out from behind the problem,” Bergman said. “Timely financial reporting would help us understand sooner than later what that exposure is.”
New York and Utah ranked at the top of this year’s overall rankings, while Connecticut came in at No. 50.
