State Budget Practice Report Cards and Budget Resource Guide
Iowa’s conservative budgeting practices helped it achieve top A average grades for fiscal 2015 through 2019 in budget maneuvers and legacy costs. In four of the five years studied, the state had an unblemished record in avoiding any of the one-time maneuvers—such as special fund transfers or deferring expenditures—that many states have used to achieve balance. Only in 2017 did Iowa slip slightly: When the state faced a projected gap between revenues and expenditures, it enacted $25.1 million in special fund transfers to the general fund as part of that year’s budget.
In legacy costs, Iowa’s annual contributions to its public worker pension were aligned consistently with actuarial recommendations; in 2019, its pension funding ratio was 85 percent, 14 percentage points above the total for all states. Iowa’s minimal retiree health care offerings mean that its liability for other postemployment benefits (OPEB), primarily health care, was too small to factor into its grade in the category.
Iowa’s C average in transparency reflected a failure to report on tax expenditures annually or biennially—something forty-two other states do. The most recent tax expenditure report was dated 2015. Its C in budget forecasting stemmed from its short horizon for revenue forecasts, which cover only two years. Thirty-two states have projections that look ahead for three years or more. Iowa budget documents also lack explanations to support projections of revenue growth.
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 2015 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.