State Budget Practice Report Cards and Budget Resource Guide

Nebraska’s string of high average grades for fiscal 2017 through 2019—two As and two Bs—was broken only by a C in reserve funds.

While forty-three states had rules to guide the disbursement of rainy day funds during the evaluation period, Nebraska did not. It also failed to link its Cash Reserve Fund balances or contributions to historical revenue volatility. These policies were among best practices that a recent Volcker Alliance working paper, Rainy Day Fund Strategies: A Call to Action, urged states to adopt. 

One of Nebraska’s A averages was in budget forecasting. The Nebraska Economic Forecasting Advisory Board provides the state’s consensus revenue estimates. The board’s nine members, who are appointed by the unicameral legislature and the governor, must have expertise in economics or tax policy. The board meets at least twice annually to consider revenue estimates provided by the executive branch’s Revenue Department and the legislature’s Fiscal Office. Nebraska’s revenue and expenditure forecasts cover four years, one year more than the Alliance’s minimum standard for grade credit.

The state also averaged an A in legacy costs, which cover public worker pensions and other postemployment benefits (OPEB), principally health care. For 2017–19, Nebraska exceeded the actuarially determined contribution to its pension system; it was one of only seven states with pensions funded at 90 percent or higher as of 2018. Its OPEB plan was too small to play a role in its category grade. 

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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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