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.
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 2016 through 2018. 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.