States have accumulated nearly $1.2 trillion in pension liabilities, but only 19 percent, or $229 billion is currently being reported on state balance sheets.
That means $956 billion in retirement liabilities are effectively being hidden, according to a new report by Truth In Accounting, a non-profit that advocates for transparency in government accounting.
That imbalance will change, says the study, when the second of two new pension accounting requirements issued by the Government Accounting Standards Board take effect next year.
The first, GASB 67, which became effective in fiscal year 2014, required state-sponsored pension plans to report their net pension liability.
The second new requirement, GASB 68, will make state pensions report total unfunded liabilities on the face of their balance sheets when they file on fiscal year 2015.
Up until now, the vast majority of pension liabilities were excluded from state's financial statements.
Truth In Accounting calculates the overall fiscal health of each state, applying GASB 68 to assess total pension liabilities.
Below is a list of the what study calls the "sinkhole states" — those with the highest level of state debt when it is divided up amongst the population.
With each sinkhole state, we've listed each total debt, the amount of unfunded pension liabilities, and the amount each resident would have to pay to balance each state's books.
1. New Jersey
Total debt: $185.6 billion
Unfunded pension liabilities: $85 billion
Debt per resident: $52,300
2. Connecticut
Total debt: $72.2 billion
Unfunded pension liabilities: $26.3 billion
