About

The Government Financial Transparency Project at Reason Foundation is dedicated to raising policymaker and public awareness of the scope and scale of governmental debt, a challenge that threatens the fiscal health and economic trajectory of many states, municipalities, and counties across the United States.

The mission of the Government Finance Transparency Project is to bring clarity, offer solutions, and foster understanding of the financial challenges that U.S. governments—federal, state and local—face in the coming decades.

State and local governments lag far behind public companies in providing financial transparency to stakeholders. Public companies are required to provide financial statements in a standardized, machine readable format to facilitate easy data collection, aggregation, and analysis. By contrast, states and local governments like municipalities, counties and K-12 school districts are not subject to this same requirement for modern data publication, instead publishing their audited Annual Comprehensive Financial Reports (ACFRs) in not-easily-searchable PDF files.

The double standard means that financial information about penny stocks is far more accessible than financial information about your local school district or state pension obligations. This inaccessibility directly impedes public financial transparency and impacts the ability of policymakers and taxpayers to understand the true financial health, indebtedness, and sustainability of the governments they fund, watchdog, and administer.

Through this project, Reason Foundation aims to unlock this trapped financial data and make it accessible and usable for policymakers, researchers, media and interested citizens nationwide. Our database covers not just traditional bonded debt (such as general obligation bonds); it covers all state and local pension and retiree healthcare debt, outstanding bonds, compensated absences (e.g., accrued sick leave), and other liabilities. The data also has the potential to show which governmental units are most heavily burdened by pension obligations, where per capita governmental debt is highest, how COVID-19 has affected government finances, and more.

Reason Foundation is a national 501(c)(3) public policy research and education organization with expertise across a range of policy areas related to government finance, including public pensions, K-12 education finance, transportation, and infrastructure. For more information about the Government Finance Transparency Project at Reason Foundation, please contact Research Director Geoff Lawrence at geoff.lawrence@reason.org.

Methodology

Non-Financial Data

• The 100 most populous municipalities and counties were selected according to 2020 Census data. The top 100 largest schools were determined by National Ceneter for Education Statistics (NCES) enrollment data
• Values used to calculate the Per Capita were sourced from the 2020 census. Population numbers have been kept consistent throughout different years in the report to better enable per capita comparisons. Per Student values are sourced from the NCES and are varied by year due to large fluctuations in student population during the COVID-19 pandemic.
• ’Partisan Lean’ of states was extracted from FiveThirtyEight's Partisan Lean initiative on GitHub.

Financial Reports

This Reason Foundation data visualization project aggregates and displays financial information extracted from hundreds of audited government financial statements covering Fiscal Years 2020 through 2022, and it represents the first project of its kind to systematically compile data from the audited annual comprehensive financial reports (ACFRs) of state and local governments across the United States into a single database.

Although ACFRs are public documents and the standards for creating and structuring them are highly systematized by the Government Accounting Standards Board, there is currently no requirement for these reports to be published in a machine-readable format. Without machine-readable formatting, the extraction and compilation of state and local governments’ financial data becomes a laborious project. This barrier impedes bondholders, financial analysts, taxpayers, and citizens from conducting cross-jurisdictional analyses to evaluate how one government entity is performing in relation to others.

By contrast, the Securities and Exchange Commission requires any private entity that issues publicly traded securities in the United States to file financial reports in a machine-readable format called XBRL.

The financial and accounting data compiled herein underwent a rigorous validation process with multiple checkpoints, enabling us to accurately distill and compile this data into a series of charts and graphics comparing the performance of one jurisdiction against others. The data collected does not include every element of the financial statements, but captures key values from the government-wide Statements of Activities and Net Position as well as certain calculated ratios intended to aid users in financial statement analysis. A listing of the included data is provided below:

Notes on Some Entities

General Purpose

Many local governments use a regulatory basis for financial reporting and do not follow generally accepted accounting principles (GAAP) for state and local governments in the United States. Each “regulatory basis” is prescribed in state law as determined by each state legislature and may diverge significantly from GAAP. For entities using a regulatory basis, external auditors generally note an adverse opinion on financial statements and improper accrual of liabilities. States that prescribe a regulatory basis include:

• Arkansas:
  • Arkansas Code Annotated, § 14-59, § 10-4-412
• Indiana:
  
  • State of Indiana, State Board of Accounts, “Accounting and Financial Reporting Regulation Manual,” Issued January 2011 (Revised February 2020)
• Kansas*:
  • Kansas nominally requires local governments to follow GAAP, but automatically grants a waiver to any entity that requests one. Kansas law prescribes an alternative regulatory basis for entities that don’t wish to follow GAAP. See Kansas Revised Statutes § 75-11
• Kentucky:
  • Kentucky Revised Statutes § 65-900 to § 65-925
• Missouri:
  • Missouri Revised Statutes § 105.145
• New Jersey:
  • New Jersey Permanent Statutes § 40A:5-1
• Oklahoma*:
  • Oklahoma Statutes § 11-17-105
• Vermont:
  • Vermont Statutes Annotated § 24-1681 to § 24-1686
• Washington*:
  • Revised Code of Washington § 43.09.200 to § 43.09.280

*Local governments may choose between GAAP or regulatory basis.

The regulatory bases prescribed by these states may include standards of measurement, recognition, presentation or disclosure that differ substantially from each other and from GAAP, which limits the comparability or usefulness of this information. In many cases, the basis of accounting also differs from GAAP in that accounting records are maintained only on a cash or modified accrual basis, but not full accrual.

For these entities, we can extract reported values of revenues and expenditures, but these values may omit expenses related to depreciation or amortization of assets. Further, all the balance sheet information is either heavily distorted or unavailable for these entities.

In addition, seven states, including Alabama, Delaware, Illinois, Nebraska, New York, South Carolina and South Dakota have no state laws specifying the accounting standards that local governments should follow. Despite the lack of requirement, many local governments often choose to implement GAAP in order to improve their creditworthiness.

Finally, Texas allows counties with less than 225,000 in population to follow relaxed standards of financial reporting. As a result, many rural Texas counties may not make substantive financial reporting available.

Specific Notes on States that Follow Regulatory Bases

Local governments in Arkansas follow a regulatory basis of accounting not in accordance with GAAP. As Madison County describes in footnotes to its financial statements: “The regulatory basis of accounting is not in accordance with generally accepted accounting principles (GAAP). GAAP require the following major concepts: Accrual basis of accounting for government-wide financial statements, including depreciation expense, modified accrual basis of accounting for fund financial statements, separate identification of special and extraordinary items, inclusion of capital assets and debt in the financial statements, inclusion of the net pension liability in the financial statements, and applicable note disclosures. The regulatory basis of accounting does not require the previously identified concepts.” As a result, Reason Foundation is unable to collect data for most long-term liabilities and assets, while revenue and expenditure items also may contain timing differences than those that would be recognized under GAAP.

The State of Indiana hosts a portal that includes financial reports for most local governments within the state. However, these reports are limited to a trial balance, comparison of budget to actual figures by account, and other direct outputs of each governmental unit’s accounting system. These reports do not include fully compiled financial statements comparable to those required by accounting practices generally accepted in the United States, inclusive of a Statement of Activities, Statement of Net Position and required footnotes. This information may be enlightening for various purposes, but it is not directly comparable to the formal financial statements published by reporting units in other states.

Local governments in Kansas have the option to follow GAAP or produce a regulatory basis financial report that contains no form of a balance sheet and only presents the ending amount of cash on hand. Reason Foundation is only able to extract a value for the "Ending cash balance,” which we also interpret to be the only current asset. As Reno County explains in the footnotes to its financial statements "The KMAAG regulatory basis does not recognize capital assets, long-term debt, accrued receivables and payables, or any other assets, liabilities or deferred inflows or outflows." As a result, both current and long-term groups of assets and liabilities are underrepresented in the values Reason Foundation is able to extract from these reports.

Local governments in Kentucky follow a regulatory basis of accounting that is fully cash-based rather than accrual. As Marshall County explains in the footnotes to its financial statements: “This regulatory basis of accounting differs from GAAP primarily because the financial statement format does not include GAAP presentations of government-wide and fund financial statements, cash receipts are recognized when received in cash rather than when earned and susceptible to accrual, and cash disbursements are recognized when paid rather than when incurred or subject to accrual. These financial statements include no reporting of accrued liabilities, accumulation of assets, nor net position of the entity. They further include no depreciation nor other aspects to be expected of accrual based accounting. Cash balance is the only reported asset that Reason Foundation is able to extract.

Local governments in Missouri follow a regulatory basis of accounting that is fully cash-based rather than accrual. As Worth County explains in the footnotes to its financial statements: “The financial statements are prepared on the cash basis of accounting; accordingly, amounts are recognized when received or disbursed in cash. This basis of accounting differs from accounting principles generally accepted in the United States of America. Those principles require revenues to be recognized when they become available and measurable or when they are earned, and expenditures or expenses to be recognized when the related liabilities are incurred." These financial statements include no reporting of accrued liabilities, accumulation of assets, nor net position of the entity. They further include no depreciation nor other aspects to be expected of accrual based accounting. Cash balance is the only reported asset that Reason Foundation is able to extract.

Local governments in New Jersey follow a regulatory basis of accounting prescribed by the New Jersey Department of Community Affairs and financial statements are presented only on a modified accrual basis. Financial statements in New Jersey include a balance sheet that accrues receivables with offsetting reserve accounts and accounts payable and prepaid revenues, along with summaries of revenues and expenditures by account. Neither capital assets nor long-term liabilities are reported on the face of the financial statements.

Local governments in Oklahoma have the option to follow GAAP or produce a regulatory basis financial report that is fully cash-based rather than accrual. As Cimarron County explains in the footnotes to its financial statements: “Basis of accounting Title 19 O.S. § 171 specifies the format and presentation for Oklahoma counties to present their financial statement in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) or on a regulatory basis. The County has elected to present their financial statement on a regulatory basis in conformity with Title 19 O.S. § 171. The regulatory basis is fully cash-based rather than accrual based, meaning it includes no provisions for depreciation, recognition of long-term liabilities, nor accrual of assets. The regulatory basis focuses exclusively on available financial resources of the reporting entity at the date of the financial statements” (page 7). Reason Foundation is only able to extract from these reports the values of ending cash on hand, along with revenues and expenses, the timing of which may differ from those which would be recognized under GAAP.

Local governments in Washington follow a regulatory basis of accounting prescribed by the State Auditor’s Budgeting, Accounting and Reporting System (BARS). As Grant County explains in the footnotes to its financial statements:

Reason Foundation is generally only able to extract values for ending cash balance from these reports, along with revenues and expenditures although these values may differ in timing from those that would be produced in conformity with GAAP.

County Special Cases

Several entities in this analysis are cities that have consolidated their operations and financial reporting with the overlapping county. Effectively, these jurisdictions are merged into a single administrative entity. These consolidated governments include Nashville-Davidson (TN), Jacksonville-Duval (FL), San Francisco, Honolulu, Denver, and Philadelphia. Due to their structure and financial reporting practices, these entities cannot be fairly separated into distinct city and county categories. These entities are included in the larger category of counties within this report because their geographic and jurisdictional boundaries match those of the formerly independent counties.

Connecticut abolished all county governments in 1960.

Most county governments in Massachusetts have been eliminated, including: Franklin, Berkshire, Hampshire, Hampden, Worcester, Suffolk and Middlesex. Dukes and Barnstable Counties are the only county governments that remain and produce GAAP-compliant financial reports.

Five New York counties form a part of New York City and are consolidated within the New York City financial reports.

In Vermont, county governments perform very limited functions, which primarily include maintaining the courthouse and a county jail. The principal administrative officers of the county are judges. Reason Foundation has elected not to collect financial statements for these counties because these governments are not comparable to county governments found in other states.

School Districts

DC Public Schools are not reported discretely nor as a component unit of Washington, D.C. ACFRs.

Baltimore City Public School System (MD): Pension and OPEB obligations of Baltimore City Schools are paid by the State of Maryland and the City of Baltimore and the corresponding liabilities are found within the financial statements of those entities.

Boston City Schools (MA) are administered as a division of the City of Boston and do not prepare discrete financial statements. Notes to the city's financial statements indicate total revenues and expenses incurred for this function, along with liabilities owed to school employees. However, the financial statements provide no basis for apportioning the city's other accounts for the schooling function. As a result, we cannot present total liabilities, total assets, nor other key financial values.

Knox County Schools (TN) are a discretely presented component unit of Knox County.

The Chesterfield County School Board (VA) is a discretely presented component unit of Chesterfield County. Certain financial data of the component unit is presented on the face of the basic financial statements. However, it is not possible to apportion net pension and OPEB liabilities based on these statements nor the descriptions contained within notes to the financial statements.

Detroit Public Schools (MI) holds no capital assets as a result of 2016 legislation that split the school district into two separate legal entities. All capital assets are held by Detroit Public Schools Community District (DPSCD), while liabilities associated with bond issuance and other debt obligations remain with Detroit Public Schools. All operating revenues and expenses are also recognized within DPSCD. Detroit Public Schools will continue to collect $18 million of property tax revenue to pay down its remaining liabilities and, thereafter, Detroit Public Schools will be dissolved as an entity.

Hawaii school districts do not recognize liabilities owed for retirement and OPEB benefits because these programs are administered and funded by the Hawaii Department of Education and the related liabilities are reported within the State of Hawaii’s financial statements.

San Francisco Unified School District (CA): Auditors declined to render an opinion on the accuracy of the district's financial statements, citing "significant operational disruption" resulting from the replacement of the district's employee management and payroll system. Net pension and OPEB liabilities were incalculable because the district was unable to provide its current year contributions toward these benefits. Auditors noted additional deficiencies, including $40 million expensed within the general fund as "committed for other" in violation of GAAP requirements for specificity of classification.

Estimated Values

1. Reason Foundation had to apportion financial values for public schools in New York City. The National Center for Education Statistics (NCES) designates 32 different districts within New York City and Reason Foundation relies on this source to extract information about student count and related data. The New York City Department of Education is a blended component unit of New York City and New York City’s financial statements do not discreetly apportion these districts within its financial statements. Reason Foundation collects NCES data and apportions New York City’s reported financial values to each NCES district pro rata based on student enrollment.

For example:

• NYC DOE’s total liabilities for year 2020 = $59,391,179,000
• NYC DOE’s total enrollment for year 2019-2020 = 956,634
• Enrollment of New York City geographic district #10 for year 2019-2020 = 53,277
• Estimated total liability for New York City geographic district #10 in 2020 = (53,277 / 956,634) * $59,391,179,000 = $3,307,622,187

Find the full calculations for Reason Foundation’s estimations of financial values for New York City schools here.

2. Boston Public Schools are a blended component unit of the city and its finances are consolidated with those of the city, meaning there are no discrete financial values presented for the school system. Reason Foundation estimates these values by apportioning the information that is presented based on the proportion of full-time equivalent employees working in public schools relative to other city functions.

For example, the city's FY21 ACFR lists FTE school employees at 10,149 (9,528+621) in FY21 (p. 150). That's 53.82% of total city FTEs. Citywide net pension liability is $1,406,402,000 and OPEB liability is $2,196,724,000. If we apply that ratio, the calculated pension liability is $756,926,000 and OPEB is $1,182,277,000. More detailed calculations are available here.

Reason Foundation is unable to calculate other financial values for Boston Public Schools.

3. Metropolitan Nashville Public Schools are a blended component unit of Davidson County, Tennessee and so financial reporting is not presented discreetly for the school system. However, certain information about school revenues and expenditures and employee pension plans are available in the footnotes. Reason Foundation estimates each value for the school system in different ways, according to the table below:

4. Henrico County Schools (VA) is a discreetly reported component unit of Henrico County. Financial values for this entity are observed in the Henrico County ACFR.

5. Delaware school district finances are managed directly by the Delaware Department of Education, which has created its own reporting framework for school districts called First State Financials. The State of Delaware manages local school districts as governmental funds and assumes responsibility for district expenses and liabilities, control of revenues, and ownership of assets. Some summary financial information about Delaware school districts are made available in the unaudited statistical section of the State of Delaware’s ACFR.

Miscellaneous Notes

For our purposes, we have excluded categories 6 (Federal agency providing elementary and/or secondary level instruction) and 7 (Independent Charter District). The total number of school districts in the remaining seven categories is 14,290.

2. State: 50 states

3. List of counties are drawn from U.S. Census Bureau, Population Division. This only includes counties categorized as “A” - active government or “C” - Active government consolidated with another government with a single set of officials. It excludes these NY counties that are consolidated within New York City: Kings County, Queens County, New York County, Bronx County.