How do you know when you are making an impact?
Truth in Accounting has a few ways of recognizing whether or not we make a difference. But this week, we received the best kind of recognition. The Director of Budget Policy from New Jersey Governor Phil Murphy’s office contacted us. If you don’t remember, they ranked last in our Financial State of the States report this year.
Our report stung a little based on their email. They asked us some tough questions, and we are excited to provide answers based on our unbiased assessment of their data. In law, the term is Res ipsa loquitur, or "the thing speaks for itself." This is how our reports are written. We let things speak for themselves.
We now have the ear of the Director of Budget Policy for New Jersey. This is significant. We are happy to explain our reporting methodology and emphatic call for Fact-based accounting. This would be the first step in fixing the problems facing New Jersey and other states and municipalities.
Here are our comments addressing their questions and offering generic answers for any state:
We report only what information is currently available. We do not consider information not presented in a prior or current report.
Our primary data source comes from the audited Annual Comprehensive Financial Reports for states and local governments, but we also consider the reports produced for pension plans. Our data combines these reports, as indicated below.
Governments do not clearly disclose and/or explain their financial status or actions. As trained accountants, we diligently attempt to decipher the data provided to best represent a government's financial status. This work takes a great deal of time and expertise. We hope governments will become more transparent so that ordinary taxpayers can understand the truth about their government’s financial condition.
Here is their specific question: “you [TIA] assert that ‘the state’s portion of the Net Pension Liability increased because the State assumed new pension responsibilities from their local governments.’ I wonder if you could please elaborate on this point. In reaction to your report, our Treasury staff briefly reviewed the 2021 ACFR, and could not find any statements in the ACFR or in the State Appendix that suggested there was a recent change that shifted local costs to the State.”
Our response came directly from the state’s pension plan allocation schedules.
These schedules indicated the state’s share of the Net Pension Liability for the Public Employees’ Retirement System and the Police and Firemen’s Retirement Systems increased from 2020 to 2021.
Is it interesting that the Director of Budget Policy was unaware of this? Could it be complacency, complicity, or conspiracy?
We welcome questions about our reports. Every effort is made to represent the entities exactly as they represent themselves. In fact, it is our hope to work with governments like the state of New Jersey to provide taxpayers with clearer and more transparent financial information. Government financial information should speak for itself, Res ipsa loquitur!
Without your support, these wins can’t happen. Thank you!
Onward and upward!