State Budget Practice Report Cards and Budget Resource Guide
Michigan’s B average in budget maneuvers for 2016 through 2018 shows the progress the state has made over a number of years in reducing its reliance on one-time actions to cover fiscal imbalance during and immediately after the Great Recession. The state scored an A in 2018 after getting Bs the previous two years.
In 2018, Michigan did not defer expenditures, accelerate revenues, fund recurring expenditures with debt or use other mechanisms, such as asset sales, to bolster spending. However, it extended a debt maturity in 2016 through a bond refinancing and used $10 million of one-time money for ongoing costs in 2017.
The lowest average grade Michigan received was a C in legacy costs. In 2017 and 2018, the state came close to making its actuarially determined contributions for pensions and other postemployment benefits, largely health care. This raised its annual grade to a B in both of those years from a D in 2016, when annual contributions for pensions fell short. Because of previous underfunding, Michigan still had a low pension funded ratio of 65.1 percent as of 2017, more than three percentage points below the US total.
The state earned a B average in the budget forecast category. Its only shortcoming was the lack of multiyear expenditure forecasts in each of the three years studied.
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.