State Budget Practice Report Cards and Budget Resource Guide

In 2018 Minnesota enacted a reform measure that included a commitment to increase annual contributions by the state, other participating employers, and employees to help address its $16.2 billion unfunded pension liability. As part of the deal, retired teachers and local government employees accepted benefit cuts. The legislation immediately eliminated $3.4 billion of future debt and put the state on track to have fully funded pensions in thirty years. 

The measure helped Minnesota raise its annual legacy cost grades to C in 2018 and 2019 from D, the second-lowest grade possible, in 2017 (legacy costs include public worker pensions and OPEB, or other postemployment benefits, principally health care). Meanwhile, the state’s pension funding rose to about 82 percent in 2018 from 63 percent the year before and stood at about 12 percentage points above the total for all states. 

Minnesota averaged top As in budget maneuvers and reserve funds. It is one of twenty-one states linking rainy day funds to revenue volatility, a technique cited as a best practice in the Volcker Alliance’s recent working paper, Rainy Day Fund Strategies: A Call to Action.

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 Act, which 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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