State Budget Practice Report Cards and Budget Resource Guide

Ohio’s D average in budget forecasting for fiscal 2017 through 2019 resulted from multiple weaknesses in the way the state charts its future path. One of only seven states to receive the second-lowest possible mark in the category, Ohio failed to produce at least three-year estimates for revenues or expenditures. It also does not employ consensus revenue forecasting for the budget, leaving that task to the executive branch. While the Legislative Service Commission, a bipartisan agency, prepares its own revenue forecasts, they are not used directly in formulating a budget.

Ohio earned C averages in budget maneuvers, reserve funds, and legacy costs, the last of which includes public worker pensions and other postemployments benefits (OPEB), principally health care.

The state’s reserve funds grade benefited from statutory conditions for replenishing the Budget Stabilization Fund from surpluses, a recommended practice in the Volcker Alliance’s recent working paper, Rainy Day Fund Strategies: A Call to Action. However, statutes offer little guidance for use of the reserve beyond mentioning “purposes of cash management.”

The state’s C average in legacy costs stemmed from underfunding of annual OPEB contributions. Though Ohio appropriated for pensions in line with actuarial determinations, the most recent information available (for fiscal 2017) shows that its contribution for the Ohio Highway Patrol Retirement System was $5.6 million, versus the actuarially determined amount of $30 million. In 2017, the state made no OPEB contributions for the State Teachers Retirement System of Ohio, although actuaries called for $339 million. 

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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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