State Budget Practice Report Cards and Budget Resource Guide
America’s biggest state economy earned top average A grades for 2017 through 2019 for a lack of budget maneuvers and strong rainy day fund and budgetary transparency policies. But California continues to be dogged by $247 billion in unfunded public worker pension obligations. The state’s handling of this liability, along with its large unfunded liability for other postemployment benefits (OPEB), principally health care, reduced its average in legacy costs for the period to D-minus—making it one of only seven states to receive the lowest possible mark.
While the state made its full actuarial contributions for fiscal 2017 to 2019 to the state’s public employee pension system, it did not do so for the pension for teachers. For example, the $7.7 billion in fiscal 2018 fell about 20 percent short of meeting the actuarially determined amount. California’s total pension funding level dropped to 68 percent in 2018—2 percentage points below the total for all states—from 70 percent in 2016.
The state’s OPEB liability was $86.5 billion in fiscal 2018, with its annual contributions meeting just 54 percent of the amount needed to reach full funding over thirty years.
California was one of only four states to score a three-year average of A in transparency. Like Alaska, Hawaii, and Tennessee, it earned the top grade by disclosing the estimated cost of deferred infrastructure maintenance in budget documents. Most recent estimates put California’s liability at $67 billion. Additionally, each year’s budget presents a five-year infrastructure plan that provides an extensive accounting of the state’s infrastructure needs.
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 2017 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.