In a year in which the collective score for financial transparency among the 50 states declined, New Mexico and West Virginia topped the scorecard for state governments providing residents with timely, credible public disclosure of all key aspects of their budget and spending practices.

The two top states each scored 87 out of 100 possible points in the scoring, as researched and compiled by Truth-In-Accounting (TIA), the Chicago-based nonprofit government spending watchdog. Indiana, Maryland, and New York completed the top five positions in the ranking. Kansas, Wyoming, Massachusetts, Utah, and New Hampshire filled out the balance of the top 10 positions.

Kentucky achieved the largest improvement from the previous year’s TIA scorecard, while the biggest decline was turned in by Delaware.

“Kentucky experienced the most significant improvement, with an 11-point gain primarily because the state

Annual Comprehensive Financial Report (ACFR) received a clean audit opinion for 2024 after receiving a qualified opinion in 2023,” the TIA report explained. “Delaware experienced the most significant decline in its transparency score, slipping from 78 to 55. This is primarily due to the disclaimer of opinion concerning its 2023 report. This is primarily due to the disclaimer of opinion issued for its state ACFR. Delaware’s Business-Type Activities and Unemployment Compensation Fund received a disclaimer of opinion because auditors were unable to obtain sufficient appropriate evidence to form an opinion on their financial statements. However, the state improved its timeliness score by publishing its 2024 ACFR in 176 days compared to 264 days for the prior year. While the report was released more quickly, the adverse audit outcome significantly lowered the state’s overall transparency score.”

The worst states in the TIA ranking included bottom-dweller Connecticut, followed by Georgia, North Carolina, California, and Illinois. Georgia received a disclaimer of opinion on its state ACFR, and the state’s measure its net pension liability is calculated using a different date from that of the annual report. The state also took 297 days to publish its ACFR.

Neither Connecticut nor North Carolina had audited reports for their largest pension plans, and their financial positions were greatly distorted by the presence of a large number “of complex and convoluted deferred items,” according to TIA. For California and Illinois, failure to make the 2024 ACFRs public, thus forcing TIA to rely on their 2023 ACFR, both of which received qualified (i.e. negative) opinions from auditors.

The ACFRs play a decisive role in the TIA scorecard, accounting for 50% of the overall rating for each state.

“The 2024 financial reports for Alaska, Arizona, California, Illinois, Missouri, Nevada, and Washington all received qualified opinions. The State of Alaska’s system for processing Medicaid payments relies on outside contractors, but the state did not get independent assurance that these contractors’ financial controls were reliable in FY 2024. Because of this, the auditors cannot confirm whether the Medicaid payments are accurately reported in the financial statements,” the TIA report said.

In Arizona’s case, the state could not sufficiently document a $231.1 million gap between a state fund’s cash balance and bank documentation. With California, the problem hinged on the state’s inability to certify that liabilities resulting from state actions were accurately represented in its 2023 ACFR.

“According to its 2023 ACFR, Illinois was unable to verify the payment activity of its Unemployment Compensation Trust Fund and therefore cannot confirm that its business activities were free from material misstatement. Missouri’s auditors were denied access to verify income tax revenues source documents to included tax returns, which make up approximately 24% of the government activities revenue and 27% of general fund revenue. Nevada’s General Fund was also unverifiable,” TIA reported.

In addition to the 50% scoring factor of ACFR, the TIA scoring accorded 10% to each of five other factors, including deferred items, off-balance sheet liabilities, timeliness, external auditors, and pension data timing.

The presence of California and Illinois among the lowest-rated states for financial transparency could become an issue in the 2028 presidential campaign. Golden State Governor Gavin Newsom is an all-but-declared candidate for the Democratic presidential nomination, as is Illinois Governor J.B. Pritzker. On the Republican side, Vice-President J.D. Vance’s home state of Ohio scored in the mid-pack, coming in at number 21, while Florida, Secretary of State Mario Rubio’s state, came in at number 30.