Kentucky

State Budget Practice Report Cards and Budget Resource Guide

Kentucky is one of fifteen states that didn’t get a single A in any of the five budgetary categories evaluated by the Volcker Alliance for fiscal 2015 through 2017.

The state’s worst grades came in legacy costs, where it got straight D’s. At only 38 percent, Kentucky’s pension funding ratio ties it with New Jersey for having the worst-funded state retirement system. Kentucky fared slightly better in the area of reserve funds, receiving a C in all three years studied. It lacks a disbursement policy for the legislature’s use of fiscal reserve funds, although there are some constraints on the executive branch.

The state’s best grades were B’s in all three years in the budget forecasting and transparency categories. Kentucky missed an A in forecasting because it doesn’t provide multiyear expenditure estimates, which can help stakeholders detect problems in balancing the budget that may not be felt for several years. The state’s expenditure forecasts extend only two years.

The transparency grade suffered from Kentucky’s lack of full disclosure of replacement costs for depreciated infrastructure, although state capital budgets do estimate some of these potential expenses. Only Alaska and California reveal overall infrastructure replacement costs.

Download Printable State Report Card

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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