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. 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. This report is based on fiscal year (FY) 2020, which includes the onset of the pandemic and the most recent reports available for all 50 states.
The Financial Transparency Score Report measures the states on an easily understandable 0-100 scoring scale, with a perfect score of 100 signifying an ideal timely, truthful, and transparent performance. While no state earned a perfect score in this year’s analysis, TIA regards a score of 80 or above as noteworthy.
Now The Inquirer and Spotlight PA have obtained new internal fund documents that shed light on that consequential mistake. The material traces the error to “data corruption” in just one month — April 2015 — over the near-decade-long period reviewed for the calculation.
The error was small. It falsely boosted the $64 billion PSERS fund’s performance by only about a third of a percentage point over a financial quarter. Even so, it was just enough to wrongly lift the fund’s financial returns over a key state-mandated hurdle used to gauge performance.
The documents reveal that a fund consultant, Aon, blamed the mistake on its clerical staff for inputting bad data. The material also shows that even though the fund hired a consultant, the ACA Compliance Group, to check the calculations, the consultant made only limited checks, and skipped over the month with the critical errors.
Author(s): Joseph N. DiStefano, Craig R. McCoy, Angela Couloumbis
The Comprehensive Audited Financial Statement Report (CAFR) for the State of New Jersey, Division of Pensions and Benefits, as of June 30, 2020 appeared on the state website this month which means the actuarial reports should be out soon.
Financial Highlights Fiduciary Funds –Pension Trust Funds and Other Postemployment Benefit (OPEB) Plan (page 3)
Fiduciary net position decreased by $2.4 billion as a result of this year’s operations from $87.3 billion to $84.9 billion.
Additions for the year are $10.2 billion, which are comprised of member, employer, nonemployer, and employer specific and other pension contributions of $8.9 billion and net investment income of $1.3 billion.
Deductions for the year are $12.7 billion, which are comprised of benefits, refund payments, and transfers of $12.6 billion and administrative expenses of $62.0 million.