State Budget Practice Report Cards and Budget Resource Guide
Arizona’s C average in budget maneuvers for fiscal 2015 through 2019 shows that the state has failed to wean itself from practices that push recurring expenditures into the future to achieve balance. The state began rolling over payments to school districts about a dozen years ago and did not cease doing so in the study period, which contributed to its C average in budget maneuvers. The maneuver shifted about $931 million of scheduled spending from fiscal 2018 into fiscal 2019 and deferred the same amount again from 2019 to 2020. Another frequently used maneuver: shifting revenues from special funds to the general fund to maintain balance. In 2019, Arizona made $204 million of such transfers.
The state also posted a C average in legacy costs, which includes funding of public worker pensions and other postemployment benefits (OPEB), primarily health care. Over the five years studied, Arizona made an actuarially determined OPEB contribution only once, in 2015. Its 2019 pension funding ratio was 64 percent, 7 points below the total for all states.
In contrast, solid reserve fund policies earned Arizona its sole top A average. It is one of twenty states to consider revenue volatility in the policies that guide its Budget Stabilization Fund. Arizona’s two B averages were in budget forecasting and transparency. In the former, it failed to use the consensus method of revenue forecasting: Although the state’s Joint Legislative Budget Committee produces revenue projections, the governor and legislature are not required to accept them.
To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.
The report cards found here contain grades of the state's budgetary practices during the fiscal years of 2015 through 2019. Each state received marks in five critical categories, based on their adherence to best practices in several key budgeting indicators. The five categories covered methods used to achieve budgetary balance as well as how budgets and other financial information are disclosed to the public.
States received grades of A to D-minus (there are no “failed states”) for their procedures in estimating revenues and expenditures; their use of one-time actions to balance budgets; how they oversee and use rainy day funds and other fiscal reserves; the adequacy of their funding of public worker retirement and other postemployment benefits; and the quality of transparency of budget and related financial information. The grades are based on research conducted by public finance and budgeting professors and students at eight US schools of public administration or policy. The universities’ research efforts were augmented by Volcker Alliance staff, data consultants at Municipal Market Analytics, and special project consultants Katherine Barrett and Richard Greene.
State Budget Sources
State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses is a resource published by the Volcker Alliance designed to help public officials, policy advocates, journalists, academics, and concerned citizens fully understand the critical fiscal decisions that governors and legislators must make. The guide includes the links below to budgets for this state as well as legislative analyses of budget bills and treasurers’ or comptrollers’ monthly state cash-flow statements; capital spending plans; reports on public-worker pension funding and returns; and reports by local and national fiscal research organizations, bond rating firms, and associations of state fiscal and finance officials.