CHICAGO — A new accounting rule is requiring Massachusetts to come clean about its hidden pension debt, but the commonwealth continues to exclude billions of pension and health care debt from its financial statements. This information is released today in a report titled, The Financial State of Massachusetts, by Truth in Accounting (TIA), a Chicago-based think tank that analyzes government financials.
Because this pension rule was not required in previous years, officials used outdated accounting methods to calculate the commonwealth’s debt. As a result, Massachusetts' reported pension debt increased from $2.4 billion in 2014 to $26.3 billion in 2015. But officials are still not reporting the correct figures.
“We’ve been encouraging government officials to report all of the commonwealth’s pension debt for years,” said Sheila Weinberg, Founder and CEO of TIA. “We’re glad to see some progress finally being made, but officials are still not reporting the correct pension debt because they are using last year's pension numbers.”
According to TIA’s calculations, Massachusetts has $32.7 billion of pension debt. Because commonwealth officials are reporting only $26.3 billion, they are excluding $6.4 billion from the balance sheet. In addition, commonwealth officials are also hiding $11.8 billion of retiree health care benefits.
“While this year is an improvement, Comptroller Thomas G. Shack III and Governor Charlie Baker need to be even more transparent by reporting all pension and retiree health care debt,” said Weinberg. “The time to act is now, especially with the Senate recently approving a $39.5 billion spending plan.”
TIA researchers recalculated Massachusetts' overall financial position and discovered the commonwealth needs $74.9 billion to completely pay its bills. When this debt is divided amongst Massachusetts taxpayers, each owes $30,300 – the commonwealth’s taxpayer burden.
Data is derived from the commonwealth of Massachusetts' June 30, 2015 audited Comprehensive Annual Financial Report and retirement plans' actuarial reports.
Founded in 2002, Truth in Accounting is dedicated to educating and empowering citizens with understandable, reliable, and transparent government financial information. Sheila Weinberg is a Certified Public Accountant with more than 30 years of experience in the field.
Katherine Oxenreiter
312-589-5104
koxenreiter@truthinaccounting.org
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