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.
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 2015 through 2019. 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.