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.
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.