Report: Nebraska gets A for debtload but underreports retirement liabilities

Posted: Sep 03, 2014 1:38 PM
Report: Nebraska gets A for debtload but underreports retirement liabilities

By Deena Winter | Nebraska Watchdog

LINCOLN, Neb. — Nebraska is sixth best in the nation when it comes to having enough money to pay all its outstanding bills, but it massively underreports how much it owes for retirement benefits, a new report says.

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DEBTLOAD: Nebraska has enough money to pay all its bills, even though it underreports its retirement liabilities, according to a new report.

Truth in Accounting, an economic think tank based in Chicago, named Nebraska one of just a handful of “sunshine states” with more than enough money to pay its bills. The state has $4.3 billion in liquid assets and owes about $3 billion, for a surplus of $1.3 billion — or $2,200 per taxpayer.

“Unlike most states, Nebraska has the money needed to fund state employees’ retirement benefits and other outstanding bills,” the report said. “Nebraska is in good financial shape because the legislators and governors have only promised citizens and employees what they can afford to deliver.”

However, Truth in Accounting says Nebraska’s retirement liabilities are “massively underreported” at $1.1 million. Its detailed analysis of the state’s assets and liabilities, including unreported pension and retirement health liabilities, found $772.5 million in retirement benefits promised but not funded.

“Because of the confusing way the state does its accounting, only $1.1 million of these liabilities are reported on Nebraska’s balance sheet,” TIA wrote.

State Data Lab

The report says unfunded employee retirement benefits represent 26 percent of state bills, as state employees have been promised $772.5 million in pension benefits. The good news is Nebraska has the money to pay for the liabilities.

Sheila Weinberg is a certified public accountant who founded Truth in Accounting to give Americans the facts about the feds’ and states’ actual financial condition. The group goes through states’ financial statements and actuarial reports to determine their true financial condition.

“They seem to be responsible,” Weinberg said of Nebraska. “The state did not get into the situation providing the employees with retiree health-care benefits, which most states got into trouble with.”

She says state officials are kidding themselves and the public by using antiquated accounting practices to pretend their budgets are balanced, even when they’re running structural deficits by hiding their true retirement debt off balance sheets. She likens it to a person ignoring credit card debt.

States report $64 billion in unfunded pension liabilities, but a closer look shows closer to $578 billion, according to the group.

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