On Tuesday, the citizen organization Truth in Accounting (TIA) published the transparency grades states earned during Fiscal Year 2020. While Texas did not earn the worst score, state officials have room for improvement when it comes to being financially transparent with citizens.
“To encourage the publication of transparent and accurate government financial information, Truth in Accounting has created a transparency score for financial reporting by the states,” the organization stated. “This report focuses on important-but-obscure annual financial reports on file in statehouses across the country and measures their contents against widely accepted best practices from the private sector.”
TIA used a simple 0-100 grading system. “While no state earned a perfect score in this year’s analysis, TIA regards a score of 80 or above as noteworthy,” TIA stated.
Colorado earned the worst grade with 46, while Utah earned the highest grade of 86.
Texas earned a grade of 77 out of 100.
TIA graded states based on eight different factors in that particular state’s annual comprehensive financial report:
- A clean opinion from an independent auditor. Texas scored 50/50.
- A net position undistorted by “misleading or confusing” deferred items. Texas scored 0/10.
- All retirement liabilities are reported on the state’s balance sheet. Texas scored 10/10.
- The state’s report was published within 100 days of the government’s fiscal year-end. Texas scored 7/10.
- The state’s report is easily accessible online. Texas scored 4/5.
- The state’s report is easily navigable and searchable online. Texas scored 4/5.
- The state’s report is audited by an independent auditor who is not a government employee. Texas scored 0/5.
- The state’s report measures the net pension liability using the same date as the annual report. Texas scored 2/5.
Based on these criteria, Texas’ score neither rose nor fell from that of last year.
“Texas scored around the national (50-state) average in our latest report. The state received a clean audit opinion on its financial statements and the highest grade on this element of our score, avoiding difficulties that afflicted more than a few other governments in a pandemic year,” Bill Bergman, Truth in Accounting’s director of research, told Texas Scorecard. “Texas continued to deliver relatively timely financial statements, but the key word there is ‘relatively.’ Most all state governments could and should do a much better job getting audited financial statements into the hands of their citizens and legislators sooner, especially … where governments overly rely on more timely but sometimes less-than-truthful reporting in government budget documents.”
Bergman noted another critique. “Texas’ auditors are not fully external, private, independent auditors, leading it to a low score on one of our Transparency Score elements.”
Financial transparency isn’t the only area where TIA found Texas has room for improvement. In their annual Financial State of the States report, published this September, TIA found Texas was again a “Sinkhole State,” and that our “overall financial condition worsened” even though the state government received COVID aid from federal taxpayers.