Truth in Accounting ranked Vermont 48th out of 50 states in terms of a Financial Transparency Score. While EAI often discusses what programs should or shouldn't be in state budgets, the results of those budgets are found in a government’s comprehensive annual financial report (CAFR). A CAFR is produced annually by governments and is audited by certified public accountants. The ranking is a composite score based on 8 criteria of different weights.
Vermont scored decently well in “timeliness” (of publishing) receiving a 7 out of 10 possible points. We also got 10 out of 10 points for “Off-Balance Sheet Liabilities,” but every New England state received a perfect score there as well. In terms of accessibility, we were nearly perfect with 4 out of 5 points. Then again, every New England State got a 4, except Rhode Island. “Pension data timing” refers to a state measuring the net pension liability using the same date as the CAFR. Like all New England states, we scored a 2 out of 5 in this area, suggesting we can all do better at using the same data.
A CAFR needs to be searchable with useful links from the table of contents and bookmarks, in order to score well in “Navigation." We tied with Maine for lowest in New England, receiving a 1 out of 5 score. In the external auditors’ category, Vermont got a 3 out of 5. Evidently, Vermont did not meet the full criteria for out CAFR being audited by an auditor who is not an employee of the government.
Finally, the big separator, 'Auditor Opinion.' Truth in Accounting says that “Vermont received a low transparency score primarily because its pension plans do not produce separate audited financial reports. Instead, their GASB 68 reports are unaudited. As a result, we deduct 25 points from the Clean Opinion criteria, which is dependent upon opinions from both the state CAFR and the largest pension plan CAFR.”
Some of these categories may take several years to implement solutions and get the proper sign-offs. Some, like 'Navigation,' can be easily improved. It shouldn't be very hard to include a few links in our state's CAFR, table of contents and bookmarks. Regardless, there is room for improvement in 7 of the 8 categories. Vermont's bureaucrats owe it to the Vermont people to become transparent. In an era where even the most personal of decisions are becoming opportunities for government to have their say by banning or taxing 'undesirable goods and services,' Vermonters ought to know how much all of these insidious programs are costing.
To see the full report, click here.
David Flemming is a policy analyst at the Ethan Allen Institute.