State Budget Practice Report Cards and Budget Resource Guide
Iowa was one of only six states to earn top A averages in legacy costs and budget maneuvers for fiscal 2017 through 2019.
In legacy costs, which include public worker pensions and other postemployment benefits (OPEB), mainly health care, Iowa funded 84 percent of pension obligations in 2018, 14 percentage points above the total for all states. It provides annual contributions to its three pension plans in line with actuarial recommendations and even exceeded that amount in fiscal 2018. Iowa’s OPEB liability was too small to play a role in its legacy costs grade.
The state received the budget maneuvers grade despite a revenue shortfall in 2017 that led to a transfer of $25.1 million into the general fund from other funds. Iowa received a B average in reserve funds. With $762.1 million put away in its two rainy day funds and clear policies for both use and replenishment of that money, it adhered to most of the best practices cited in the recent Volcker Alliance working paper, Rainy Day Fund Strategies: A Call to Action. The state missed getting an A because it does not consider revenue volatility in establishing goals for its reserve funds. The state’s lowest average was a C in budget forecasting. Iowa earned credit for using consensus revenue estimates. It failed to provide details to support growth projections and did not disclose a long-term revenue estimate covering more than two years.
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 2017 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.