Iowa State Finances Are a Model of Good Government Accounting

Unlike in many states, Iowa's elected officials have only promised the amount of benefits they can afford to pay. Because of this, Iowa is in good health financially and considered a Sunshine State. The state has enough money to pay all of its bills with a surplus of $528.6 million, according to Truth in Accounting's (TIA) analysis of Iowa's most recent financial filings. When broken down, this equates to a taxpayer surplus of $500 for each Iowa taxpayer, which is not quite as good as in 2015, but much better than the national average of a $10,000 taxpayer burden.

These statistics are pretty good for Iowa, but what’s troubling is that state government officials continue to obscure large amounts of retirement debt on their balance sheets, despite new rules to increase financial transparency. This skewed financial data gives residents a false impression of their state's overall financial health.

Truth in Accounting is a Chicago-based nonprofit think tank that analyzes state financial reports when they are published. According to its analysis of Iowa’s CAFR for 2016, Iowa has $528.6 million available after bills have been paid, which breaks down to a $500 surplus per taxpayer. TIA's Taxpayer Surplus™ measurement incorporates both assets and liabilities, not just pension debt.

Because of an accounting rule implemented last year, Iowa had to report its pension debt on its balance sheet. This year, the state's reported pension debt grew from $833.9 million in 2015 to $1.1 billion in 2016. Despite reporting most of its pension debt, the state is still hiding retiree health care debt. Iowa's total hidden debt amounts to $578.3 million. A new accounting standard will be implemented in two years that will require states to report this debt on the balance sheet as well.

The bottom line is that Iowa has enough money to pay its bills, so it has received a "B" for its finances from Truth in Accounting. A "B" grade is given to states with a taxpayer surplus™ between $100 & $5,000.

See how Iowa compares to Illinois, Nebraska and the national average: http://www.statedatalab.org/c/zxCNXh3T2eec26e
Click on the link to go to an interactive chart at Truth in Accounting’s State Data Lab.