State Budget Practice Report Cards and Budget Resource Guide

As recently as 2017, Massachusetts relied heavily on one-time measures to balance budgets, including the tapping of special funds to meet general expenses and the deferring of payments for MassHealth, the state’s Medicaid and children’s health insurance program. It received a D, the second-lowest grade available, in budget maneuvers that year. But stronger tax collections enabled the state to reduce its use of such techniques, helping it earn a C average in the category for 2017 through 2019. Even so, Massachusetts continued to push school costs onto local governments while using special funds and proceeds from the Tobacco Master Settlement Agreement to cover general fund spending needs. 

Massachusetts fared more poorly in legacy costs, which cover public worker pensions and other postemployment benefits (OPEB), principally health care. It was one of only seven states averaging a D-minus, the lowest grade possible. Its $94 billion in pension liabilities are the tenth highest in the country and are funded at about 61 percent, 9 percentage points below the total for all states. Its annual funding of pensions and OPEB also fell short of the amounts that actuaries deemed necessary to move toward full funding. 

Massachusetts was one of eighteen states to receive a top A average in reserve funds. According to the National Association of State Budget Officers, the state put aside almost $2.6 billion, or 5.7 percent of general fund expenditures, in 2019. Its policies are in line with best practices cited in the Volcker Alliance’s recent working paper, Rainy Day Fund Strategies: A Call to Acton, with funding tied to revenue volatility, surpluses used for replenishment, and the reasons for fund disbursements clearly delineated.

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 Actwhich 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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