State Budget Practice Report Cards and Budget Resource Guide
Iowa won top A grades from the Volcker Alliance for its handling of legacy costs, primarily public worker pensions and postretirement health care, over fiscal 2015 through 2017. The state requires full actuarially based funding for its pensions each year and thus maintains reasonably high funding levels. Since fiscal 2015, Iowa has contributed more than its pension plan actuaries recommended—after a decade in which the state did not appropriate the full amount.
Iowa also received an A in 2015 and 2016 for avoiding one-time budget maneuvers, but that grade dropped to a B in 2017, when it transferred more than $25 million from nongeneral fund sources into the general fund. The sum included about $12 million from the Grow Iowa Values Fund, which provides cash for economic incentives, and smaller amounts from other funds, including the Cultural Trust fund and the strategic investment fund.
Iowa’s budget forecasting garnered lower marks, with a C in 2015 and 2016 and a D in 2017 as the state resorted to midyear budget adjustments to keep its books in balance. For 2017, the Senate approved such an adjustment, making $117.8 million in expenditure cuts to prevent a projected state budget shortfall. Iowa’s forecasting grade also suffered from the state’s lack of multiyear revenue estimates.
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.