State Budget Practice Report Cards and Budget Resource Guide
Although it finished fiscal 2017 with a budget surplus, Louisiana dealt with a revenue shortfall during the year by moving money to its general fund from the rainy day fund and other special funds to pay for ongoing expenditures. The move was one of many budget maneuvers during fiscal 2016 through 2018 that left the state with a D average, the second-lowest grade possible, in the category.
Louisiana also used cash generated from a bond refinancing to cover operating costs in fiscal 2017, although less than it did in 2016. Further, $61 million in planned Medicaid spending deferred in 2016 was deferred again, to fiscal 2019.
The state did poorly in legacy costs, as well, posting a D average for the three years studied. It had a pension funded ratio of 65.6 percent as of 2017, about three percentage points below the US total. It also fell short in funding other postemployment benefits (OPEB), primarily health care. In 2017, for instance, it funded less than a third of the actuarially determined contribution for OPEB.
In contrast to budget maneuvers and legacy costs, Louisiana’s reserve fund practices earned it an A average in that category. The state has clear policies governing the disbursement and replenishment of reserve fund dollars. For example, reserves cannot be tapped unless the official revenue forecast for the current year is less than the previous year’s revenues or if a deficit is projected because of a decrease in the official forecast. In addition, a two-thirds vote of the legislature is required to use the fund.
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 2016 through 2018. 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.