State Budget Practice Report Cards and Budget Resource Guide
Colorado received a D average—the second-lowest mark possible—in legacy costs for fiscal 2016 through 2018. This was largely because it had set aside only 47.1 percent of the assets needed to meet public employee pension obligations while failing to make actuarially recommended contributions to the retirement system. The state’s pension funded ratio was the fifth worst in the US and about 21 percentage points below the total for all states as of 2017. Colorado was saved from getting an even lower grade in legacy costs by making its actuarially recommended contributions for other postemployment benefit costs—principally health care—the other component in the category.
Colorado received an average of B in reserve funds, a notable achievement in that, unlike many other states, it lacks a designated rainy day fund. Even so, the state has policies for the use and replenishment of its general fund balance, which indicates that it possesses a budgeting tool strongly resembling a traditional rainy day fund for emergencies.
In budget maneuvers, Colorado scored a three-year average of C but showed an improving trend: It registered a B for fiscal 2018 because it ceased deferring recurring expenditures. Specifically, it stopped shifting payroll costs for the state university system to the first day of the next fiscal year. Absorbing the full 2018 payroll in the same year created a budget that better reflected the state’s actual financial condition.
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 2016 through 2018. 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.