State Budget Practice Report Cards and Budget Resource Guide

Indiana notched A averages in budget maneuvers and reserve funds for fiscal 2016 through 2018.

The state’s A in budget maneuvers resulted from its ceasing the use of debt in 2018 to fund recurring expenditures, a strategy it employed the year before. The A for reserve funds reflected Indiana’s policies for withdrawals and replenishments of cash as well as consideration of revenue volatility. The state’s transparency grade rose to a B in 2018 from C in 2017, thanks to significant improvements in the disclosure of tax expenditure information. Two 2015 laws require consistent and detailed reporting on tax expenditures from the state budget office and the Legislative Services Agency, which provides fiscal and management analysis for lawmakers. Although the initial set of required reports was published in late 2016, the first year the reports could be used in budget preparation was fiscal 2018.

Indiana received a three-year average grade of B in legacy costs. Although it funded pensions at the level recommended by actuaries, the state set aside only 65 percent of the assets needed to meet obligations to retired workers as of 2017—versus 78.5 percent in neighboring Ohio. Indiana came close to meeting its actuarially recommended funding level for other postemployment benefits. With retiree health care benefits that are significantly more modest than those in many other states, Indiana does not face fiscally draining long-term costs in this area. 

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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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