State Budget Practice Report Cards and Budget Resource Guide

Pennsylvania has struggled for years with a severe discrepancy between revenues and expenditures, which has bred a reliance on one-time actions to balance budgets. The use of such measures explains why Pennsylvania was the only state to average a D-minus, the lowest grade possible, in budget maneuvers for fiscal 2016 through 2018.

During that time, stalemates between the governor and legislature delayed budget passage and repeatedly threw  the state into fiscal crisis. Pennsylvania, which also experienced budget impasses between 2007 and 2009, did badly in 2017 and 2018 in all four major criteria for that category: deferring recurring expenditures, shifting revenues and costs, funding recurring expenditures with debt, and using asset sales and upfront revenues to balance the budget.

In addition to using more common budget-balancing maneuvers, such as transferring $530 million to its general fund from special funds in fiscal 2018, the state, along with seven others, funded recurring expenses with debt in fiscal 2017 and 2018.

Pennsylvania also fared poorly in legacy costs, earning a D average—even though it made its full actuarially recommended pension contributions in 2017 and 2018. But the years that Pennsylvania skimped on contributions left it with a pension funded level of 55.3 percent as of 2017, versus 127 percent in 2000. It also failed to make the recommended contribution for other postemployment benefits, mainly health care.

In reserve funds, Pennsylvania earned a three-year average of C. Though its grade was bolstered by the use of policies to control the disbursement and replenishment of money in its rainy day fund, the state lost credit because the fund was almost empty in fiscal 2017 and 2018.

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 2018 Volcker Alliance report, Truth and Integrity in State Budgeting: Preventing the Next Fiscal Crisis 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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