From the Institute for Truth in Accounting…
Chicago (November 29, 2010) Today, the Institute for Truth in Accounting released Wisconsin’s “Financial State of the State.” After an intensive review of the State’s 2009 audited financial report, the Institute determined the State is in a precarious financial position because it does not have the funds available to pay more than $14.4 billion of the State’s commitments as they come due. Each taxpayer’s share of this financial burden equals $7,400.
Wisconsin law requires a balanced State budget. “If governors and legislatures had truly balanced the State’s budget, no taxpayer’s financial burden would exist,” said Sheila Weinberg, founder and CEO of the Institute for Truth in Accounting (IFTA). She continued, “A State budget is not balanced if past costs, including those for employees’ retirement benefits, are pushed into the future.”
While Wisconsin reported total assets of $39.2 billion, the Institute’s review of the State’s 2009 financial report revealed that there are almost $1.4 billion of off-balance sheet retirement liabilities. The Institute also determined that more than $27.8 billion of the State’s assets cannot be easily converted to cash to pay State bills of almost $25.8 billion as they come due. These assets consist of capital assets, including infrastructure, buildings and land, and assets that are restricted by law or contract. The State does not have the funds needed to pay for more than $14.4 billion of State obligations.
Wisconsin law requires the adequate funding of pension benefits, but no such law exists for State employees’ and teachers’ retirement and healthcare benefits. The Institute’s study found obligations related to these benefits total more than $1.6 billion. This is a result of years of over-promising retirement benefits, while shortchanging funding. Since retiree’s healthcare benefits are not immediately payable in cash, Wisconsin’s politicians ignore these payroll costs when calculating “balanced” budgets. As of June 30, 2009, the State had set aside only 22 cents to pay for each dollar of healthcare benefits promised. As of that date only $450 million was deposited into the healthcare retirement systems, even though the actuaries calculated that a minimum of $2.03 billion should have already been contributed.
The Wisconsin “Financial State of the State”, available at www.truthinaccounting.org and Wisconsin.StateBudgetWatch.org provides this accounting by outlining the financial situation of the State, including unfunded liabilities to the State’s retirement systems.
About the Institute for Truth in Accounting
The Institute for Truth in Accounting (IFTA) is dedicated to promoting honest, accurate, and transparent accounting at all levels of government and business. As a non-partisan, non-profit organization, the IFTA works to expose accounting deficiencies while promoting better, more accessible delivery of accurate government financial data—and, in turn, providing a foundation for more informed public policy. The IFTA provides its expertise to develop more effective accounting standards and deliver accurate government financial information to policymakers, opinion leaders, and citizens, so they can all work for a more secure financial future. To learn more, please visit our website at www.TruthInAccounting.org.