Sheila Weinberg founded TIA in 2002 to encourage the federal government to issue financial information in a manner that allows citizens and their elected officials to make informed and knowledgeable financial decisions. TIA believes that recognizing both short and long-term financial consequences of public decisions leads to a more sustainable government.
In 2005, TIA supporters encouraged the organization to analyze budgeting and accounting practices in its home state of Illinois. This study exposed a cumulative spending deficit (of then $20 billion), despite the state’s constitutional requirement to balance the budget. TIA researchers also discovered that Illinois did not report all liabilities for public employees’ pensions or OPEB such as health and dental care. When those liabilities were included, TIA’s analysis showed that in 2005 the state was actually more than $70 billion in debt. To make matters worse, Illinois continually delayed issuance of its year-end financial report until after the next fiscal year’s budget process had been completed. Late reporting prevented citizens and public officials from having the current information needed to make critical decisions, resulting in uninformed decisions.
These findings called for a similar study of all 50 states’ budgeting and accounting practices. This project investigated both the methods that states used to calculate their budgets and the accounting principles they used to create their CAFRs. Results from this study were published in February 2009 in “The Truth about Balanced Budgets – A Fifty State Study.” TIA researchers found every state except Vermont had a balanced budget requirement, yet almost all ran annual deficits in the millions, and some cases, billions of dollars.
TIA researchers found that states use deficient budgetary and accounting rules, which tend to overstate revenues and understate expenses. States systematically ignored costs incurred in the current budget year, but not paid until a later date. In addition, accounting principles available to states actually allowed them to omit some direct liabilities from their balance sheets.
Among the questionable budgeting and accounting techniques was treatment of pensions and OPEB, such as retiree health care benefits. Budgets, and associated financial accounting, actively ignored the true costs of compensating public sector workers. The retirement portion of compensation costs was not considered nor reported in the states’ primary accounting statements. TIA’s study found under these principles, states report balanced budgets while accumulating large debts and deferred liabilities.
Since 2009, TIA has released its annual "Financial State of the States" study, exposing the truth about each state’s financial position.
As the Association of Government Accountants has stated,
“ . . . it is difficult to overstate how efficient reporting of government financial information contributes to a healthy democracy. Without accurate fiscal information, delivered regularly, in an easily understandable format, citizens lack the knowledge they need to interact with—and cast informed votes for—their leaders. In this regard, a lack of government accountability and transparency undermines democracy and gives rise to cynicism and mistrust." (Association of Government Accountants, 2008)
Since all levels of government derive their just powers from the consent of the governed, government officials are responsible to report their actions and the results in ways that are truthful and comprehensible to the electorate. Providing accurate, useful, and timely information to citizens, the news media, and other government officials is an essential part of government responsibility. The lack of transparency in financial information, state budgets, and financial reports makes it difficult for state governments to meet this responsibility.
This is the motivation and foundation for the non-partisan mission of TIA: To educate and empower citizens with understandable, reliable, and transparent government financial information. TIA is a non-profit, politically unaffiliated organization composed of business, governmental, and academic leaders interested in improving financial reporting. TIA makes no policy recommendations beyond improvements to budgeting and accounting practices that will enhance the public’s understanding of their governments’ financial matters.