State Budget Practice Report Cards and Budget Resource Guide

Maryland’s skill at budget forecasting, one of five budgetary categories evaluated by the Volcker Alliance over fiscal 2015 through 2017, won it the top average grade of A. Its handling of legacy costs landed the state near the bottom, however, with a D average for its funding of public employee pensions and other postemployment benefits (OPEB), principally health care.

For all three years studied, the state failed to make the contribution to OPEB that its actuaries had recommended. While it also failed to do so for pensions in 2015, it did make its full contribution in the following two years. The retirement system’s actuary projects that the system will reach a funding level of 80 percent by 2021, up from 68 percent in 2015.

Maryland’s C average in the budget maneuvers category is largely attributable to shifting revenues and costs to achieve balance, as well as to funding recurring expenditures with debt. Its C in reserve funds is due primarily to the state’s failure to establish sufficient controls over the disbursement of rainy day fund monies, while its B for transparency reflects basic adherence to best practices save for its lack of disclosure of costs to replace depreciated infrastructure. Maryland’s A in budget forecasting reflects its adherence to best practices for the most part, including the use of long-term expenditure and revenue estimates.

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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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