State financial transparency worsens in new Truth in Accounting report

By AI, Created 4:41 PM UTC, May 18, 2026, /AGP/ – Truth in Accounting says state governments are becoming less transparent in their audited financial reporting, with 2026 scores slipping nationwide. New Mexico and West Virginia led the rankings, while Connecticut, Georgia and several large states lagged because of delayed reports, weak audit results and hidden retirement liabilities.

Why it matters: - State financial reports are supposed to show taxpayers the real condition of government finances. - Truth in Accounting says weaker transparency can hide retirement debt, delay accountability and make it harder for lawmakers and investors to judge fiscal health. - The report gives each state up to 100 points for disclosure practices tied to audited financial statements.

What happened: - Truth in Accounting released its 2026 Financial Transparency Score report on May 12, evaluating how well each state discloses its true financial condition through audited reports. - The report found that overall transparency scores worsened from the prior year. - New Mexico and West Virginia tied for the top score at 87 out of 100. - Indiana, New York and Maryland followed among the top-performing states. - Connecticut posted the lowest score, followed by Georgia, North Carolina, California and Illinois.

The details: - The report measures state Annual Comprehensive Financial Reports, or ACFRs, using audit quality, timeliness, retirement liability reporting, pension data accuracy and accounting distortions tied to deferrals. - Kentucky had the biggest improvement, gaining 11 points after receiving a clean audit opinion in 2024 after a qualified opinion in 2023. - Delaware had the biggest drop, falling from 78 to 55 after a disclaimer of opinion tied to insufficient audit evidence for unemployment fund balances and financial activity. - Delaware and Georgia were the only states to receive disclaimer audit opinions for their 2024 financial reports. - Alaska, Arizona, California, Illinois, Missouri, Nevada and Washington received qualified audit opinions. - Connecticut, North Carolina and Vermont each lost 25 points because their largest pension systems did not issue separate audited financial reports. - Georgia received a disclaimer of opinion on its state ACFR and took 297 days to publish the report. - California and Illinois had not published their 2024 ACFRs by the report’s research cutoff date. - Nevada had not issued its fiscal year 2023 financial report as of August 25, 2025, so researchers relied on 2022 data. - Kansas, Michigan and Oklahoma were flagged for keeping significant retirement liabilities off their balance sheets, mainly tied to teachers’ pension systems. - Kansas had the highest share of hidden retirement debt at 65%. - California, Connecticut, Delaware, Illinois, Massachusetts, New Jersey, Pennsylvania, Texas and Wisconsin received zero points for severe balance sheet distortions tied to deferred inflow and deferred outflow calculations.

Between the lines: - The report suggests the problem is not just late reporting, but also the structure of state accounting itself. - Deferred inflow and deferred outflow calculations tied to pensions and retiree health benefits can make balance sheets harder to interpret, even when reports are filed. - States with delayed, qualified or disclaimer opinions are signaling more uncertainty around the reliability of their numbers.

What’s next: - Truth in Accounting says taxpayers, lawmakers and investors need timely and accurate reporting to assess state finances. - The full Financial Transparency Score 2026 report is available from Truth in Accounting. - Continued attention is likely to focus on states with delayed ACFRs, unreported pension liabilities and weak audit opinions.

The bottom line: - The latest scorecard paints a worsening picture of state-level financial transparency, with a small group of states leading and several large ones still obscuring key liabilities.