From the Institute for Truth in Accounting...
Chicago (January 6, 2011) -- Today, the Institute for Truth in Accounting released Michigan's "Financial State of the State." After an intensive review of the State's 2009 audited financial report the Institute determined the State is in a precarious financial position because it does not have the funds available to pay more than $50.1 billion of the State's commitments as they come due. Each taxpayer's share of this financial burden equals $16,400.
Michigan state law requires a balanced budget. "If governors and legislatures had truly balanced the state's budget, no taxpayer's financial burden would exist," said Sheila Weinberg, founder and CEO of the Institute for Truth in Accounting (IFTA). She continued, "A state budget is not balanced if past costs, including those for employees' retirement benefits, are pushed into the future." The Institute reviewed 2009 data because the September 30, 2010 financial reports for Michigan have not yet been made available. Weinberg added, "How can legislators and the governor be making decisions without timely financial data?" While Michigan reported total assets of $50.2 billion, the Institute's review of the state's 2009 financial report revealed that there is more than $39 billion of off-balance sheet retirement liabilities. More than $29.1 billion of the State's assets cannot be easily converted to cash to pay State bills of $71.2 billion as they come due. These assets consist of capital assets, including infrastructure, buildings and land, and assets the use of which is restricted by law or contract. The State does not have the funds needed to pay for more than $50.1 billion of state obligations.
Most of the obligations relate to state employees' and teachers' pension and retirement healthcare benefits. Years of over-promising retirement benefits, while shortchanging funding, have resulted in the state's retirement systems being underfunded by $40.8 billion. As of September 30, 2009, the state had set aside only 52 cents to pay for each dollar of benefits promised. As of that date only $43.4 billion was deposited into the retirement systems, even though the actuaries calculated that a minimum of $84.2 billion should have already been contributed.
The Michigan "Financial State of the State", available at www.truthinaccounting.org and Michigan.StateBudgetWatch.org provides this accounting by outlining the financial situation of the State, including unfunded liabilities to the State's retirement systems.
About the Institute for Truth in Accounting
The Institute for Truth in Accounting (IFTA) is dedicated to promoting honest, accurate, and transparent accounting at all levels of government and business. As a non-partisan, non-profit organization, the IFTA works to expose accounting deficiencies while promoting better, more accessible delivery of accurate government financial data--and, in turn, providing a foundation for more informed public policy. The IFTA provides its expertise to develop more effective accounting standards and deliver accurate government financial information to policymakers, opinion leaders, and citizens, so they can all work for a more secure financial future. To learn more, please visit our website at www.TruthInAccounting.org.