State Budget Practice Report Cards and Budget Resource Guide

Colorado’s inadequate funding of public worker pensions left the state with an average grade of D in the legacy costs category, one of five budgetary areas evaluated by the Volcker Alliance over fiscal 2015 through 2017. The grade compares with a nationwide average of C for legacy costs.

The state has amassed only 60 percent of the funding needed to fulfill obligations of its pension plans and had an unfunded liability of almost $28 billion. The state’s comprehensive annual financial report in 2016 showed a contribution rate of about 18 percent of employee payroll costs, versus the 22 percent contribution that actuaries recommended to fund the plans adequately.

The state also dropped from a C in budget forecasting in 2015 to a D in the following two years. This reflects Colorado’s growing reliance on midyear budget adjustments to compensate for miscalculations in the amount needed for a higher education, personnel, education, and corrections.

Colorado received B’s from 2015 through 2017 in two categories: transparency of budgetary information and the use of reserve funds. In the former area, Colorado, like forty-seven other states, doesn’t disclose deferred infrastructure replacement costs. In the latter, like about two-thirds of other states, Colorado failed to tie its rainy day reserves to revenue volatility.

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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 2017 Volcker Alliance report, Truth and Integrity in State Budgeting: What Is the Reality? 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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