State Budget Practice Report Cards and Budget Resource Guide
In its $41.3 billion budget for fiscal 2019, as well as in the four prior spending plans studied, Massachusetts relied on budget maneuvers—one-time measures—to achieve balance, which resulted in the state’s earning a C average in the category.
For example, the state used bond refunding transactions in fiscal 2019, structured with new repayment schedules that allowed it to forgo principal payments due in fiscal 2019 and 2020. The largest transaction refinanced $225 million in bonds maturing in 2019–20 and amortized them through 2027, with no principal due until fiscal 2021 and the bulk owed after 2023.
The state also relied on other maneuvers, including expenditure deferrals, the transfer of special fund dollars to the general fund, and asset disposals to generate revenue. In fiscal 2017, the sale of the vacant Edward J. Sullivan Courthouse in Cambridge netted $30 million for operating expenditures. Massachusetts also failed to make actuarially determined contributions to its public employee pension plans in all years studied, which led to an average of D-minus, the lowest grade possible, in legacy costs. In 2018 and 2019, Massachusetts funded the state workers’ and teachers’ retirement systems at 73 percent and 75 percent, respectively, of actuarial recommendations. The state’s pension overall funded ratio was 59 percent in 2019, 12 percentage points below the total for all states. Massachusetts also failed to provide actuarially recommended annual contributions for its other postemployment benefits (OPEB), largely health care, for all five years.
The state fared best in the reserve funds category. Its funding policies were linked to revenue volatility, a practice deployed in nineteen other states, which earned Massachusetts a top A average.
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.