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—at the federal, state and local levels—face in the coming decades.

State and local governments lag far behind public companies in providing financial transparency to stakeholders. Federal securities law requires public companies 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. Most publish their financial reports as standard PDF files, many of which are converted image files that are not searchable.

Complicating matters further, not all local governments follow accounting standards generally accepted in the United States, meaning the financial statements of different units of government may not be easily comparable. The Government Accounting Standards Board creates accounting standards specifically for state and local governments to follow, but many simply choose not to comply or are required by state law to use a different basis of accounting.

The double standard means that financial information about penny stocks is far more accessible and standardized than financial information about your city or local school district. 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 is created by extracting key elements from government financial reports using proprietary software and the values are subsequently confirmed by human review to ensure data integrity. While we do not extract every element of the financial statements, we do extract key values from both balance sheets and income statements as well as the notes to these statements. This includes liabilities such as: traditional bonded debt (such as general obligation bonds), loans, pension liabilities and retiree healthcare debt, compensated absences (e.g., accrued sick leave), and other liabilities. We also extract total values for revenues and expenditures to allow for analysis of key financial ratios like debt-to-income that could be used to evaluate the creditworthiness of state and local governments and to easily compare one unit of government against another. Users can also compare these many spending and debt figures on a normalized per capita basis and can evaluate the total debt burden faced by taxpayers who live in overlapping jurisdictions such as a city, county, state and school district.

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 at Reason Foundation, please contact Managing Directors Mariana Trujillo mariana.trujillo@reason.org and Jordan Campbell jordan.campbell@reason.org.

Variable Definitions

Balance Sheet

Total Assets: Total assets represent the combined value of all resources owned by a government. These assets include both financial and nonfinancial resources, such as cash, investments, receivables, land, buildings, and infrastructure like roads and bridges. Financial assets provide liquidity and can be used to meet immediate financial obligations, while nonfinancial assets contribute to the long-term operational capacity and service delivery of the government.
Current Assets: Resources expected to be used within one year, including cash, short-term investments, and receivables.
Total Liabilities (Total Debt): Total amount of debt and other obligations owed by a government. Liabilities are monies currently owed for services already rendered or products already purchased, or promises to make future payments against past borrowing. The liabilities reported here therefore reflect the accumulation of debt-financed spending by state and local governments.
Current Liabilities: Current liabilities are those total liabilities that are due to be paid within one year.
Non-Current Liabilities (Long-Term Debt): Calculated variable. Obligations that are not due within one year, including long-term bonds, pension liabilities, OPEB liabilities, and other long-term obligations. Non-current liabilities are calculated by subtracting current liabilities from total liabilities.
Pension Liability: Calculated variable. Net pension liability representing unfunded pension benefits promised to employees. In most instances, unless otherwise noted, this is a net net pension liability, meaning net pension assets (if available) are subtracted from the net pension liability figure. This can occur when there are multiple pension systems within the entity.
OPEB Liability: Calculated variable. Net OPEB liability representing unfunded post-employment benefits like health care promised to employees. In most instances, unless otherwise noted, this is a net net OPEB liability, meaning net OPEB assets (if available) are subtracted from the net OPEB liability figure. This can occur when there are multiple pension systems within the entity.
Bonds, Loans, & Notes*: Calculated variable. Total debt instruments issued by the government, including bonds, loans, and notes payable. This variable is calculated from seperate bonds, loans, and notes varaibles and aggregated, the vast majority of the dollar amounts stem from bonds.
Compensated Absences: Liability for earned but unused vacation and sick leave compensation owed to employees.
Net Position*: Calculated variable. The difference between total assets and total liabilities, representing the government's equity or net worth. Calculated as: Total Assets - Total Liabilities.

Income Statement

Total Revenues: Income from taxes, fees, grants, and other sources that fund government operations and services.
Total Expenses: Cost of providing services, including salaries, benefits, supplies, and infrastructure maintenance

Financial Analysis

Debt Ratio*: Calculated variable. The debt ratio is a financial metric that represents the proportion of a government's total assets that are financed by outstanding debt. This ratio is calculated by dividing the total liabilities by the total assets. The resulting figure provides a snapshot of the financial leverage and stability of the government entity, indicating the extent to which it relies on borrowed funds to finance its operations and investments.
Current Ratio / Liquidity Ratio*: Calculated variable. Calculated as current assets divided by current liabilities. Measures a government's ability to pay short-term obligations
Free Cash Flow*: Calculated variable. Calculated as Total Revenue - (Total Expenses + Current Liabilities). Measures ability to repay debts and fund operations after accounting for short-term obligations. In reality, many governments refinance maturing debt by issuing new bonds, which can meet obligations even as net position deteriorates. However, if spending routinely exceeds revenues and a government continues to roll over its debt, bond purchasers may charge higher effective interest rates or may even refuse to provide any new financing.

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:

[The BARS] manual prescribes a financial reporting framework that differs from…GAAP in the following manner:

Financial transactions are recognized on a cash basis of accounting as described below.
Component units are required to be disclosed; but are not included in the financial statements.
Government-wide statements, as defined in GAAP, are not presented.
All funds are presented, rather than a focus on major funds.
The Schedule of Liabilities is required to be presented with the financial statements as supplementary information.
Supplementary information required by GAAP is not presented.
Ending balances for proprietary and fiduciary funds are presented using classifications that are different from the ending net position classifications in GAAP.

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.

Special Cases

Consolidated City/County Governments

The U.S. Census identifies 33 consolidated city-county governments (i.e., entities with funcstate = C), meaning an active government consolidated with another government under a single set of officials.

Twenty two of these entities are aggregated in county total in our calculation. These entities are shown in the lists of counties and municipalities. But their values are aggregated in the county only.

State	City/County
Alaska	Juneau City and Borough
Alaska	Sitka City and Borough
Alaska	Wrangell City and Borough
California	City and County of San Francisco
Colorado	City and County of Broomfield
Colorado	Denver County
Florida	Jacksonville
Georgia	Athens-Clarke County Unified Government
Georgia	Consolidated Government of Columbus-Muscogee County
Georgia	Georgetown-Quitman County
Georgia	Macon-Bibb County
Hawaii	City and County of Honolulu
Kansas	Greeley County
Kansas	Wyandotte County
Kentucky	Lexington-Fayette Urban County
Kentucky	Louisville/Jefferson County Metro Government
Louisiana	New Orleans
Montana	Anaconda-Deer Lodge County
Montana	City & County of Butte Silver Bow
Pennsylvania	Philadelphia
Tennessee	Lynchburg, Moore County Metropolitan Government
Tennessee	Nashville-Davidson County

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

The remaining six consolidated entities had not been collected for the year 2023 as of the time of validation. These include: Anchorage Municipality, AK, Trousdale County, TN, Echols County, GA, Chattahoochee County, GA, Richmond, GA, Webster, GA.

Counties Reported in Municipalities

The following counties are reported within municipal ACFRs because they are categorized as either F (fictitious entities created to fill the Census Bureau’s geographic hierarchy) or B (active governments that are partially consolidated with another government but have separate officials providing primary general-purpose functions).

These include: Baltimore City, MD; St. Louis, MO; Chesapeake, VA, Norfolk, VA, and Virginia Beach, VA; and Baton Rouge, LA..

These entities are included in municipal totals but are excluded from county-level aggregations.

District of Columbia

District of Columbia is included in municipal totals but is excluded from county-level aggregations.

Missing Counties

While not all counties in the United States produce annual financial reports on a timely or even regular basis, there are some states where a large proportion of county financial reports are unavailable. We investigated the state requirements for these counties to report and reasons why they may not report on a timely basis. Below, we provide this explanation for counties in: Alabama, Arkansas, Connecticut, Massachusetts, Missouri, Oklahoma, South Dakota, Texas, West Virginia, and Vermont:

Alabama counties are required to publish financial statements by December 31st of each year for the fiscal year ending September 30 in a newspaper of general circulation within the county. Those statements must contain an itemized report of receipts and disbursements of cash, outstanding indebtedness and a listing of financial resources. District attorneys may bring civil actions to compel compliance with this requirement, but direct penalties for failure to publish were repealed in 2007.
Arkansas counties are required to publish annual financial reports by March 15 of each year detailing transactions of the prior fiscal year. These reports must be published in a newspaper published within the county, the newspaper having the largest circulation within the county, or on the county’s website. There is no penalty prescribed in statute for failure to comply.
Connecticut counties were abolished as governing entities in 1960 and governing authority was devolved to municipalities. These entities exist purely as geographical regions and do not have their own budgets or revenue streams.
A majority of Massachusetts counties were abolished as governing entities between 1997 and 2000 and no longer have their own budgets or revenue streams. Remaining county governments include: Barnstable, Bristol and Norfolk.
Missouri counties with cash receipts greater than $10,000 are required to submit annual financial reports to the state auditor. The state auditor grants counties the option of either formatting financial statements in a format prescribed by the state auditor or filing an independent audit report. The state auditor’s office maintains audit reports submitted by local governments on its website and local governments may be fined $500 per day for failure to timely submit financial reports. Notwithstanding the potential penalty, many local governments remain seriously delinquent in financial reporting.
Oklahoma counties are required by Oklahoma Statute §68-3002 to publish financial statements by October 1 of each year for fiscal years ending June 30. These statements must be published in a local newspaper or a newspaper of general circulation within each county. The Oklahoma Office of the State Auditor and Inspector also retains the annual financial reports of some counties on its website.
South Dakota counties release audited financial statements on a biennial, rather than annual basis and not all counties are aligned on the cadence of these reports. In many cases, the most recent available financial statements are for the two-year period ending March 1, 2022 and no balance sheet is scheduled to be released, now or in the future, containing year-end 2023 values. In other cases, counties are delinquent in reporting 2023 financial information. As counties complete their financial audits, they are required to submit audited financial statements to the Department of Legislative Audit, which makes these reports available on its website.
Texas counties face differing financial reporting requirements based on population. In general, county auditors are required by Texas statute §114.025 to present an annual financial report to county commissioners and district judges. However, there is no requirement that these reports be published in a local newspaper or on a county website, nor remitted to a state agency.
West Virginia counties are required to publish financial statements in by October 15th of each fiscal year in a format prescribed by the State Tax Commissioner. These statements must by published as a legal advertisement within the county.
Vermont counties are limited in authority and function primarily as judicial administrative units. As such, they do not produce detailed financial statements and financial reporting requirements are focused at the municipal level.

School District Special Cases

Several complicating factors characterize certain school districts. We summarize these factors below.

Blended Component Units. Some school districts are managed as blended component units of the city or county where they are located. In these cases, the financial data of the district is generally inseparable from the respective city or county government. We are able to extract limited data from supporting schedules or notes to the financial statements despite being unable to separate school district data from the information presented in the main financial statements. The situation applies to the following school districts:

Boston Public Schools (MA)
New York City Public Schools

For Boston Public Schools, Reason Foundation apportioned net pension and OPEB liabilities owed by the City of Boston based on full-time equivalent employees working in public schools relative to other city functions, as presented in the Statistical Section of the ACFR..

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. A further complicating factor is that the National Center on Education Statistics, a division of the U.S. Department of Education upon whom Reason Foundation relies for supplementary school district information, characterizes New York City Schools as 32 distinct school districts, despite New York City’s ACFR not making that distinction. To estimate liability values for the New York City school districts identified by NCES, we extract information from the supporting schedules and apportion those values pro rata across the NCES-defined school districts based on student enrollment. In some other cases, we were unable to extract data for blended component units. For example, this includes TN Metropolitan Nashville Public Schools (MNPS) and D.C. Public Schools.

School District Liabilities Assumed by Other Units of Government. In some cases, school district financial reports do not include all the liabilities attributable to those districts because the liabilities have been assumed by a different unit of government. This affects the following districts:

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.
Hawaii 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.

Other Special Cases

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.

We estimated financial data for 19 individual schools in Delaware using statewide school district data from the Delaware Department of Education. For each school, we calculated its share of total state enrollment and used this as a weighting factor. These weights were then applied to selected financial variables from the Delaware school district dataset, proportionally distributing values down to the individual school level.

In Montana, some financial reports cover multiple NCES-recognized school districts. For example, Billings Elementary and Billings High School are recognized as two separate school districts by NCES, but they are included in the same financial report under “Billings Public Schools.”

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.

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.

Supplementation of Financial Data

School Districts. The National Center of Education Statistics (NCES), a division of the U.S. Department of Education, enrollment and other data for every school district in the United States and Reason Foundation relies on this data to supplement the financial information we extract from financial statements. NCES categorizes school districts as one of the following 10 types:

Regular local school district that is NOT a component of a supervisory union
Local school district that is a component of a supervisory union
Supervisory union administrative center (or county superintendent's office serving the same purpose)
Regional Education Service Agency (RESA)
State agency providing elementary and/or secondary level instruction
Federal agency providing elementary and/or secondary level instruction
Independent Charter District
Other education agencies
Specialized public school district
Non-categorized

For our purposes, we have excluded categories 6 (Federal agency providing elementary and/or secondary level instruction), 7 (Independent Charter District), and Non-categorized. The total number of school districts in the remaining seven categories is 15,049.

States: Population data for U.S. states is drawn from the 2020 Census.

Counties: The U.S. Census Bureau’s Population Division provides population data for 3,144 counties that we match against county financial data to produce per-capita statistics.

Municipalities: The municipalities included in this analysis are entities classified by the U.S. Census Bureau under the following summary levels: State-Place (SUMLEV 160), Incorporated Place (SUMLEV 162), Consolidated City (SUMLEV 170), and Place within consolidated city (SUMLEV 172) .

Because multiple municipalities within the same state sometimes share the same name, there is a risk of incorrectly attributing ACFR data to the wrong population. For example, Michigan has two towns with the identical name “A” - one with a population of 1,000 and the other with a population of 2,000. However, financial reports or their cover pages do not always specify the exact location or address of the municipal headquarters, making it difficult for our algorithm to distinguish between the two. Despite our best efforts to mitigate these errors, there remains a possibility that the populations of such towns were inadvertently swapped, which could result in inaccurate per-capita calculations. This risk is naturally limited to small jurisdictions because large or populous jurisdictions are easy to identify based on the magnitude of ACFR values.

Urban population is based on the 2020 Census urban population data.