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. (link to the SEC Cease-and-Desist Order)

This disconnect is precisely why Truth in Accounting's work is so essential—and why education reform is a crucial part of the long game. If we want financial transparency in government, we need to teach future accountants, journalists, and citizens how the system actually works.

Despite the critical role state, local, and federal governments play in managing trillions of taxpayer dollars, most accounting students graduate without ever learning how public finances are actually reported.

Behind every economic policy—from infrastructure to healthcare, from tax cuts to social programs—is a budget. And behind every budget is an assumption about what money exists to spend. But what if those numbers aren’t telling the truth?

For decades, state and local governments have masked massive debts through accounting tricks and budget gimmicks, claiming balanced budgets while racking up unfunded pension and healthcare liabilities in the hundreds of billions.

This isn’t just an accounting problem—it’s a policy problem.

Despite laws requiring balanced budgets, state and local governments have long concealed the true costs of government through misleading budgeting and accounting practices. This lack of transparency has led to a dangerous cycle: when crises like the COVID-19 pandemic or the 2008 housing collapse occur, the federal government is compelled to bail out state and local governments with billions of taxpayer dollars. 

According to the most recent audited Financial Report of the U.S. Government, our nation’s true debt has climbed to $158.6 trillion, burdening each federal taxpayer with $974,000.

In a world where six-figure salaries are the norm for nonprofit CEOs, Sheila Weinberg stands apart. As the founder and CEO of Truth in Accounting, she has dedicated decades to exposing the government's flawed accounting and financial reporting rules, all without taking a dime in salary.

Compare that to many nonprofit executives who command hefty paychecks. In 2022 alone, the CEO of the American Red Cross earned over $700,000, and the head of the United Way pulled in nearly $2 million. 

The primary purpose of our Citizen-Heroes event and ongoing efforts is to make clear to the general public that the actual financial obligations of the US Federal government are far greater than is generally understood, primarily because the US Federal government has worked hard via FASAB to hide the actual financial obligations of the U.S. Federal Government.   

Imagine my surprise when I ran for Congress in 2012 only to find out that since 1950, the U.S. federal government has overspent its budget 71 of the last 75 years, bringing debt from $257 billion in 1950 ($3.3 trillion adjusted for inflation) to an unsustainable $36.2 trillion today thereby increasing our debt load ten-fold since 1950.

Each Citizen-Heroes participating in this effort has been fighting the good fight for financial transparency for over two decades and some for over three decades. While we understand the term hero is primarily reserved for soldiers in battle, our goal is to highlight exemplars of good citizenship here at home.

The authors of this letter recently came together in a Citizens-Hero Conference to make clear that the real financial obligations of the U.S. Federal government range from $123.8 trillion to about $200 trillion depending on the accounting methodology used to account for the promises the U.S. federal government has made regarding Social Security and Medicare.  

When the Financial Data Transparency Act (FDTA) is fully implemented and state and local governments’ financial reports become machine-readable, both bond issuers (such as state and local governments) and bond buyers (investors) will experience significant benefits.

The Financial State of the Cities report found that 54 cities did not have enough money to pay their bills. Each city has some form of a balanced budget requirement, but this new report shows that cities have not met the intent of their requirement and have pushed costs onto future taxpayers.

Truth in Accounting believes the California wildfires are a horrific tragedy that highlights the real-life impact of public policy. As a nonpartisan organization, we look at the numbers. But as people, we see the human toll, and our hearts go out to the people's suffering.