State Budget Practice Report Cards and Budget Resource Guide
West Virginia averaged a B in budget maneuvers for fiscal 2016 through 2018. Such actions include using one-time revenue measures to pay for recurring expenditures. The state collected annual B marks in 2016 and 2018 but a C in 2017.
The 2017 grade resulted from the state’s refinancing of $28 million in bonds. West Virginia received a premium over the face value of the bonds in the transaction, a fairly common feature of such sales nationwide. But rather than spread the upfront premium over the life of the bond, which matures in 2026, the state used the cash for near-term operating expenses.
West Virginia also scored a B average in budget forecasting. Its major weakness was a failure to use consensus revenue forecasts, a best practice ensuring that all parties involved in developing the budget agree to the same revenue figure. Instead, the governor’s office develops the revenue forecast with minimal legislative input.
The state’s poorest showing was in legacy costs, where it averaged a C. This was largely attributable to its failure to make the annual actuarially determined contribution for public workers’ other postemployment benefits (OPEB), principally health care. As of June 30, 2017, West Virginia had an unfunded OPEB liability of $2.5 billion, slightly more than its general fund collections in 2018.
Because West Virginia has established policies for disbursement and replenishment of its reserve funds, it earned a B average in that category. It missed making an A by failing to tie reserves to revenue volatility.
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.