From The Truth in Accounting Institute…
Montana’s “Financial State of the State”
Chicago (November 11, 2010) — Today, the Institute for Truth in Accounting released Montana’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 $753 million of the state’s commitments as they come due. Each taxpayer’s share of this financial burden equals $2,400. Montana law requires a balanced state 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.”
While Montana reported total assets of more than $12.5 billion, the Institute’s review of the state’s 2009 financial report revealed that there is more than $1 billion of off-balance sheet retirement liabilities. More than $7.5 billion of the state’s assets cannot be easily converted to cash to pay state bills of $5.76 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 $753 million 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 $1.1 billion. This underfunding has recently been exasperated by drastic declines in the market value of retirement systems’ assets. As of June 30, 2009, the state had set aside only 67 cents to pay for each dollar of benefits promised. As of that date only $2.4 billion was deposited into the retirement systems, even though the actuaries calculated that a minimum of $3.5 billion should have already been contributed.