In August 2025, Illinois Governor JB Pritzker signed legislation boosting pensions for Chicago police and firefighters, a move projected to cost the city $11 billion over 30 years. Despite warnings from Chicago’s Chief Financial Officer about the “devastating” financial impact and a police pension fund that is currently funded below 20%, the state pressed forward. 

State pension plans, particularly those for public employees like teachers, firefighters, and government workers, are subject to various federal regulations, including IRS rules and other federal laws, to ensure compliance with tax, nondiscrimination, and retirement benefit standards. These rules apply because state pensions often receive tax advantages (e.g., tax-deferred contributions) and may opt out of Social Security; therefore, they must align with federal standards to maintain their tax-qualified status or avoid penalties. Below are detailed examples of how state pensions fall under IRS rules and other federal regulations, with a focus on key provisions and their implications.

The retirement benefits landscape is complex, but one federal law stands out for its role in regulating private-sector pensions: the Employee Retirement Income Security Act (ERISA). Enacted in 1974, ERISA introduced accountability, transparency, and worker protections. 
 

States face a significant loss of federal dollars as temporary pandemic-related programs that were initiated in 2020 come to an end and national fiscal pressures rise.

Dear teachers who light the spark of curiosity in young minds, firefighters who charge into the inferno to save strangers, police officers who stand as sentinels in the night, and all you public sector warriors who stitch the fabric of our communities together – this is for you.

As the federal government grinds to a halt today, it’s not just a temporary inconvenience; it's a stark reminder of the chronic fiscal irresponsibility that elected officials on both sides of the aisle have perpetuated for decades, hiding the true cost of government behind opaque accounting practices.

In an era where fiscal accountability is more critical than ever—amid ballooning government debts, pension shortfalls, and economic uncertainties—timely access to government financial data should be a cornerstone of our republic. Yet, our new report reveals a troubling reality: seven U.S. states are lagging far behind in releasing their annual comprehensive financial reports (ACFRs), casting a shadow over their fiscal health and undermining public trust. Our 16th annual Financial State of the States report, released in September 2025, analyzes the balance sheets of all 50 states for fiscal year 2024 (ending June 30, 2024, for most). While it paints a broader picture of state finances—with 25 states unable to cover their bills and a collective $832 billion in unfunded pension and retiree health care liabilities—the spotlight on reporting delays underscores a systemic flaw in government transparency.

Our sixteenth annual Financial State of the States (FSOS) report provides a comprehensive analysis of the fiscal health of all 50 states. 

In 2013, the Securities and Exchange Commission (SEC) charged the State of Illinois with securities fraud for misleading municipal bond investors about its pension funding obligations. The SEC’s investigation found that Illinois, between 2005 and 2009, misrepresented the risks associated with its pension funding schedule when offering more than $2.2 billion in municipal bonds. The state failed to disclose that its statutory plan significantly underfunded pension obligations, thereby increasing financial risks. In 2013, Illinois agreed to a cease-and-desist order to resolve SEC charges under Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933.

As the national debate intensifies over the solvency of Social Security, Truth in Accounting (TIA) is urging policymakers and the public to look deeper: beyond “trust fund” projections and into the silent erosion of benefits through inflation.

Nevada has become the last state in the nation to release its annual financial report for fiscal year 2023, which ended more than 780 days ago. While Illinois finally published its overdue report earlier this month, Nevada continues to lag, as we are missing two years of data.

To make matters worse, Nevada’s state websites and phone systems have been down for several days due to a widespread cyberattack. This outage has blocked public access to crucial government services. It also makes it impossible for our researchers to verify the state’s financial position in the lead-up to the release of our Financial State of the States report. 

Illinois has finally released its audited Annual Comprehensive Financial Report (ACFR).

The bad news:  It’s for the fiscal year that ended June 30, 2023.

According to the Government Finance Officers Association (GFOA), states should release these reports within 180 days of the fiscal year’s end. Illinois blew past that deadline—releasing its 2023 report a staggering 774 days late, setting a new national record.
 

Illinois’ chronic delay in publishing its annual financial reports is more than just a bureaucratic hiccup. It’s a breakdown in fiscal accountability. The state’s fiscal year 2023 ended over two years ago, and yet that report has never been released. Fiscal year 2024’s report isn’t available either. In the corporate world, “timely” generally means publishing audited financial statements within 90 days. The Government Finance Officers Association (GFOA) standard for governments is more lenient—180 days—but Illinois has blown far past even that generous benchmark. This level of delay would be unacceptable in nearly any other context where stakeholders rely on financial transparency.