State Budget Practice Report Cards and Budget Resource Guide
Hawaii was a leader among the fifty states in three of the categories evaluated by the Volcker Alliance for fiscal 2015 through 2017, receiving straight A’s in budget forecasting, budget maneuvers, and reserve funds. It followed best practices in every one of the broad criteria examined in all three of those budgetary fields.
In budget forecasting, Hawaii was one of just nine states to earn an average grade of A over the three years studied. Hawaii creates multiyear expenditure and revenue forecasts, which can allow it to predict the future impact of current actions and take steps to ameliorate future fiscal burdens they may create. In 2017, for example, Hawaii’s biennial budget package included tables disclosing multiyear revenue and expenditure forecasts through fiscal 2021.
At the opposite end of the spectrum, Hawaii received the lowest possible grade, a D-minus, in all three years of the evaluation for its public employee pension and public employee postretirement health care funding practices.
With only 62 percent of assets needed to meet obligations, Hawaii’s pension funding is 10 percentage points below the 2015 average for all states. The actuarially required contribution for Hawaii’s pensions for fiscal 2017 was $772 million, but the state appropriated only $555.9 million. Its net annual required contribution for postemployment health care for fiscal 2017 was $776.9 million, versus $409.7 million appropriated. Under a law passed in 2013, the state is scheduled to begin making full actuarially determined contributions for OPEB by fiscal 2019.
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.