With California's very late publication last month, all fifty states have now produced audited financial reports for their 2022 fiscal year. The availability of these reports allows us to compare the balance sheet health of all state governments on an apples- to- apples basis because they all use the same accounting standard. Former California State Senator John Moorlach, a certified public accountant, has implemented a simple but powerful approach to analyzing state (and local) government finances. He takes the Unrestricted Net Position (UNP) for each state government and divides it by the state's population. UNP is a concept requiring some explanation. Net position is synonymous with net worth and is simply the difference between an organization's assets (e.g., cash, receivables, buildings) and liabilities (e.g., payables, bonds outstanding). These remaining balances may be tied up in illiquid assets, making them not readily available. Any residual assets that are not spoken for make up the government's "unrestricted net position".
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