State Budget Practice Report Cards and Budget Resource Guide

Vermont landed B averages from fiscal 2015 through 2019 in four out of five budgetary categories. Its major weakness was reflected in its D in legacy costs, which includes public worker pensions and other postemployment benefits (OPEB), primarily health care.

The mark, the second-lowest possible, stems from Vermont’s lack of actuarially determined contributions for OPEB. The program had a net liability for state workers and teachers of $2.2 billion in 2019, a relatively high sum for a small state. While Vermont funded public worker pensions according to actuarial recommendations from 2015 through 2019, the pension funding ratio was 64 percent, 7 percentage points below the total for all states.

One element in each of the other four categories kept Vermont from attaining A averages. The state missed the top mark in reserve funds because it does not tie its budget stabilization fund to revenue volatility, a flaw shared by twenty-nine other states. Its weakness in transparency was an absence of reporting on deferred infrastructure maintenance, something forty-four other states also lack. In budget forecasting, Vermont had no multiyear expenditure forecasts.

The budget maneuvers grade reflected general avoidance of one-time measures to achieve balance, although the state did draw down general fund balances to support recurring expenditures in 2018.

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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 2021 Volcker Alliance report, Truth and Integrity in State Budgeting: Preparing for the Storm, 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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