South Dakota

State Budget Practice Report Cards and Budget Resource Guide

South Dakota was one of only eight states to receive an A average for fiscal 2016 through 2018 in legacy costs, which include public employee pensions and other postemployment benefits (OPEB), chiefly health care. Wisconsin is the only other state whose pension system is 100 percent funded as of 2017. South Dakota also had no OPEB liability, as it stopped subsidizing these benefits in 2015. 

Its B average in budget forecasting reflected an absence of consensus revenue estimates as South Dakota’s one significant shortcoming. The state Bureau of Finance and Management, an executive branch agency, prepares revenue estimates with no input from the legislature.

In budget maneuvers, South Dakota averaged a B, with the annual mark slipping from A in 2016 to B in 2017 and 2018. In 2017, for example, the state paid for recurring expenditures with about $13 million in one-time cash from unclaimed property.

South Dakota also averaged a B in the transparency category. Like all but four states in 2017 and 2018, it failed to disclose deferred infrastructure replacement costs. The lack of such data may complicate a state’s efforts to stir enthusiasm for repairing roads, bridges, and buildings before they fall into a dangerous state of disrepair.

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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 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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