Private equity firms widely distribute their prospectuses and offering materials to prospective wealthy investors as they trawl globally to raise capital for their costly, high-risk funds. Yet when state and local government pension stakeholders request prospectuses of the funds in which their pensions invest, PE firms claim these very same broadly disseminated documents are “trade secrets” exempt from disclosure under state public records laws. On the one hand, PE risks, fees, and questionable business practices are fully disclosed via prospectus to wealthy investors who can afford to gamble. On the other, government workers in severely underfunded pensions (many of whom have already seen their retirement benefits cut) and taxpayers who are on the hook for any public pension gambling losses, are intentionally kept in the dark. SEC and state securities regulators should demand that every PE investor, including public pension stakeholders, be provided with all material investment information related to these risky investments and end PE secret fleecing of government workers’ pensions.
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.