New Jersey has recently passed a law mandating the provision of a more accessible version of a crucial state financial report to the public. This new legislation requires the publication of a “plain language” analysis of the Annual Comprehensive Financial Report (ACFR) prepared by the Office of the State Auditor.
Prominent state accountants and business groups have applauded this new law, as it aims to make the financial report more user-friendly and comprehensible to both the public and lawmakers.
The simplified financial report will need to cover the latest updates regarding revenue collections, budget reserves, and long-term obligations, including bonded debt and pension commitments for public workers, among other aspects, all presented in an easy-to-understand format.
One significant change brought about by this law is that the State Auditor is now obligated to appear annually before lawmakers in Trenton to discuss the latest ACFR. This move is expected to increase public awareness of the state’s overall fiscal health, shedding light on aspects that often go unnoticed during the annual budget debates among lawmakers.
Aiysha Johnson, the Executive Director and CEO of the New Jersey Society of Certified Public Accountants, has emphasized the importance of this new law in educating everyone about the state’s financial situation. She believes it will enhance transparency and contribute to better policymaking.
Key information about New Jersey’s fiscal condition is currently disclosed annually by the Office of the State Auditor. However, the existing report is often considered difficult to decipher, even by lawmakers. Additionally, the report is lengthy, spanning hundreds of pages, and tends to be overlooked or ignored, despite its coverage of billions of dollars in assets and liabilities.
For example, the most recent report, released earlier this year, highlighted New Jersey’s progress in reducing bonded debt and improving nonbonded debt related to pension benefits. However, it received little public attention or media coverage.
The new law, enacted by Lt. Gov. Tahesha Way, requires the Office of the State Auditor to produce an annual analysis of the report in a user-friendly format. This summary must include a five-year overview of revenue collections and projections, details about long-term obligations like bonded debt and retiree pension and healthcare liabilities, and comparisons of New Jersey’s financial condition with neighboring states. The user-friendly report will also be posted online for public access.
Furthermore, the state auditor will be required to present the latest report annually to the Assembly and Senate budget committees before May 31, well in advance of the July 1 deadline for the adoption of a new annual budget, as stipulated by the state Constitution.
Michele Siekerka, President and CEO of the New Jersey Business & Industry Association, believes that publishing and discussing this user-friendly version of the financial report will advance fiscal transparency goals. She emphasizes that the more engaged taxpayers are in understanding the state’s financial situation, the better informed public policy decisions can be made, enhancing the state’s competitiveness with others.
Both the New Jersey Business & Industry Association and the New Jersey Society of Certified Public Accountants collaborated closely with lawmakers during the drafting of this fiscal transparency legislation. The bill received bipartisan support as it made its way through both houses of the Legislature earlier this year. Johnson of the New Jersey Society of Certified Public Accountants views this law as critically important for promoting a better understanding of the state’s complete financial picture, including aspects like long-term liabilities and independent authorities.