State Budget Practice Report Cards and Budget Resource Guide

With the fourth-worst-funded public worker pension among states, Connecticut could manage no better than a D average in legacy costs—which include other postemployment benefits (OPEB), principally health care—for 2017 through 2019. 

Though the state has made its actuarially determined pension contributions in recent years, past shortfalls left the retirement system able to meet only 46 percent of its obligations in 2018, 24 percentage points below the total for all states. Connecticut’s failure to make actuarially determined contributions for OPEB also factored into its poor legacy costs mark and may saddle it with increased costs in the future as retiree ranks grow. 

The state fared slightly better in budget maneuvers, scoring a C average. The grade reflected a one-time budget shift of $400 million in federal reimbursements to fiscal 2019 from 2018. 

In contrast, Connecticut received a top average of A for reserve funds after introducing historical revenue volatility into its rainy day fund calculations. The move, cited as a best practice in the recent Volcker Alliance working paper, Rainy Day Fund Strategies: A Call to Action, resulted from legislation passed in 2017 and implemented in 2019. The policy shift was driven by swings in the state’s revenues from capital gains tax compounded by steeply progressive income tax rates. Connecticut also performed well in budget forecasting, posting a three-year average of A.

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 2020 Volcker Alliance report, Truth and Integrity in State Budgeting: The Balancing Act, 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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