Colorado

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.

Download Printable State Report Card

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 presented here are taken from the 2018 Volcker Alliance report, Truth and Integrity in State Budgeting: Preventing the Next Fiscal Crisis which proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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