State Budget Practice Report Cards and Budget Resource Guide
Indiana notched A averages in budget maneuvers and reserve funds for fiscal 2016 through 2018.
The state’s A in budget maneuvers resulted from its ceasing the use of debt in 2018 to fund recurring expenditures, a strategy it employed the year before. The A for reserve funds reflected Indiana’s policies for withdrawals and replenishments of cash as well as consideration of revenue volatility. The state’s transparency grade rose to a B in 2018 from C in 2017, thanks to significant improvements in the disclosure of tax expenditure information. Two 2015 laws require consistent and detailed reporting on tax expenditures from the state budget office and the Legislative Services Agency, which provides fiscal and management analysis for lawmakers. Although the initial set of required reports was published in late 2016, the first year the reports could be used in budget preparation was fiscal 2018.
Indiana received a three-year average grade of B in legacy costs. Although it funded pensions at the level recommended by actuaries, the state set aside only 65 percent of the assets needed to meet obligations to retired workers as of 2017—versus 78.5 percent in neighboring Ohio. Indiana came close to meeting its actuarially recommended funding level for other postemployment benefits. With retiree health care benefits that are significantly more modest than those in many other states, Indiana does not face fiscally draining long-term costs in this area.
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.