State Budget Practice Report Cards and Budget Resource Guide
Michigan stands out among the five states in the East North Central region for its absence of budget maneuvers: Its three-year top A average in the category for fiscal 2017 through 2019 was matched only by Indiana. During the three years, Michigan did not defer expenditures, accelerate revenues, fund recurring spending with debt, or use other mechanisms, such as asset sales, to maintain budgetary balance.
In budget forecasting, Michigan’s B average was the region’s highest. The state used a consensus revenue estimating process, provided information to back up projections of revenue growth, and relied on long-term revenue forecasts that looked three years into the future. Its average B in transparency was held down by Michigan’s absence of budgetary reporting on deferred infrastructure maintenance costs.
The state received a C average, its lowest grade, in legacy costs, which cover public worker pensions and other postemployment benefits (OPEB), principally health care. Its pensions were 63 percent funded in 2018, 7 percentage points below the total for all states. Michigan made the full actuarially determined contributions for pensions throughout the evaluation period but not for OPEB. The state’s 2018 comprehensive annual financial reports showed contributions below actuarially determined amounts in three of its four OPEB plans.
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.