Minnesota earns ‘C’ grade for its fiscal health: report

Repeated decisions by elected officials have left the state of Minnesota with a debt burden of $9.7 billion, according to Truth in Accounting's (TIA) analysis of Minnesota’s most recent financial filings. That burden equates to $4,700 for every taxpayer.

What’s most concerning about Minnesota’s financial condition is that government officials have misled the public by failing to disclose significant amounts of retirement debt on the state’s balance sheet, despite new rules to increase financial transparency. This skewed financial data gives Minnesota’s residents and taxpayers a false impression of the state’s overall financial health.

However, thanks to strong performance in the financial markets in the last couple of years, Minnesota’s public pension liabilities have decreased, according to Truth in Accounting CEO Sheila Weinberg.

"Minnesota's taxpayers are on a roller-coaster ride because of major gains in the financial markets,” Weinberg said. “The state's pension plan actuaries estimate Minnesota will have to contribute significantly less to the funds, which is why the state's net pension liability decreased dramatically."

Truth in Accounting is a Chicago-based nonprofit think tank that analyzes state and municipal financial reports when they are published. According to its report for 2017, Minnesota had $30.7 billion worth of bills and $21 billion in available assets after capital and restricted assets were excluded. This results in a $9.7 billion shortfall and a $4,700 Taxpayer Burden™, which is each taxpayer's share of state bills after its available assets have been tapped. TIA's Taxpayer Burden indicator incorporates both assets and liabilities, not just pension debt.

And because of an accounting rule implemented two years ago, Minnesota must report all of its pension debt on the balance sheet. At the end of the 2017 fiscal year, the state’s reported pension debt was $40.5 billion. And while it reported all of its pension debt, Minnesota continues to hide most of its retiree health care debt, also known as other post-employment benefits. Its total hidden debt comes out to $314.2 million. A new accounting standard will be implemented next year that will require state and local governments to report this debt on the balance sheet.

The bottom line is that Minnesota would need $4,700 from each of its taxpayers to pay all of its bills, which is why it received an “C” grade for its fiscal health.

You can read the full report here.