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.
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 2017. 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 eleven 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.