State Budget Practice Report Cards and Budget Resource Guide
Massachusetts earned an average grade of D in budget maneuvers for fiscal 2016 through 2018, the second-lowest mark possible. It has relied heavily on one-time actions to close a long-term gap between revenues and expenditures after passing tax cuts in 2000 without either sufficiently reducing spending or growing its economy to cover shortfalls. As a result, Massachusetts has chronically deferred recurring expenditures to future years.
The state relies by statute on consensus revenue estimates, yet it received only a C average in budget forecasting. Its budgetary revenue and expenditure projections do not extend beyond the current fiscal year, thus providing leaders with incomplete information about potential budget stresses.
Massachusetts was one of just six states to receive the lowest possible average of D-minus in legacy costs. It failed to make the full contribution recommended by actuaries for public employee pension funds and other postemployment benefits, principally health care, in all three years studied. Its pension funded ratio in 2017 was 59.9 percent, about nine percentage points below the US total.
The state’s lone A average was in the reserve funds category: Massachusetts’s rainy day fund contributions are tied to revenue volatility, and the state has clear policies for replenishing and disbursing money it has set aside.
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.