NJCPA Supports Plain English Report on State’s Financial Health
November 15, 2022
Statement by Ralph Albert Thomas, CPA (DC), CGMA, CEO and Executive Director, NJCPA
The New Jersey Society of Certified Public Accountants (NJCPA) supports a bipartisan bill (A4090) that would require the state auditor to publish each year a “plain language” summary of New Jersey’s current financial condition, including the latest information on state debt and other long-term liabilities. This will help to ensure that residents, lawmakers and the press have a clear understanding of New Jersey’s economic strengths and weaknesses.
Lawmakers, the media and the public typically focus almost exclusively on the annual state budget and overlook New Jersey’s overall financial health, which is covered in great detail in the Annual Comprehensive Financial Report (ACFR). The ACFR contains critically important items not covered by the annual budget, such as billions of dollars in unfunded liabilities, billions in spending and debt and financial information on the state’s independent authorities.
The ACFR provides a sobering picture of New Jersey’s financial position — for fiscal year 2020 the state had net liabilities of $221 billion — but the document is very long (the 2020 edition is 420 pages) and filled with technical accounting language difficult for a layperson to follow and is typically ignored. Many people do not even know that it exists. Furthermore, there is no statistical comparison of key items to comparable states that would help to put the state’s fiscal health in perspective.
This bill requires the state auditor to release annually a brief, user-friendly report on the ACFR. This would make lawmakers, the media and the public more aware of the state’s true financial condition. This summary would also include per capita comparative statistics from Mid-Atlantic and Northeast states. The same facts and figures and other important details about the state’s finances would also have to be presented by the state auditor in person each year during public hearings on the budget. The measure would also compel the auditor to analyze the accuracy of annual state revenue projections and detail any structural budget imbalances, along with the regular review of the state’s recession preparedness.
Together with the New Jersey Business & Industry Association, we started the discussion on this valuable topic. Now we urge lawmakers to do their part by enacting this bill, which has already passed the Assembly. It will help to keep information involving our state’s finances as clear and understandable as possible.
We believe this legislation would play a critically important role in educating all parties on the state’s comprehensive fiscal state, which will bring more transparency and provide for better policy making.