South Dakota

State Budget Practice Report Cards and Budget Resource Guide

South Dakota’s budget practices garnered no average lower than B for fiscal 2017 through 2019, a result shared by only three other states. Its two highest marks, top A averages, were awarded in budget maneuvers and legacy costs. 

In budget maneuvers, the 2017 budget was bolstered by $13 million in unclaimed property holdings that the state liquidated, but South Dakota has since eschewed such one-time revenue measures to achieve budgetary balance. In legacy costs, which cover public worker pensions and other postemployment benefits (OPEB), principally health care, it was one of two states in 2018 whose pension was 100 percent funded. South Dakota has no OPEB liabilities. It eliminated them through a program in 2014 and 2015 that ended subsidies for retiree health coverage. 

South Dakota averaged Bs in transparency, budget forecasting, and reserve funds. Like most states, its transparency mark took a hit from a lack of disclosure of deferred infrastructure maintenance costs in budget documents. In budget forecasting, South Dakota was one of twenty-one states without a consensus revenue estimating process. The reserve funds grade reflected a failure to tie rainy day fund deposits to historical revenue volatility, a practice missing in twenty-nine states.

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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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