State Budget Practice Report Cards and Budget Resource Guide
Minnesota received an A average in reserve funds for fiscal 2016 through 2018. The state not only ties its reserves to revenue volatility but also has well-established policies for disbursing and replenishing rainy day assets. In fact, its statute governing rainy day fund disbursements is more detailed and farsighted than that of many other states. Use of the reserve “should be governed by principles based on the full economic cycle rather than the budget cycle,” according to Minnesota law. “The budget reserve may be used when a negative budgetary balance is projected and when objective measures, such as reduced growth in total wages, retail sales, or employment, reflect downturns in the state’s economy.”
Minnesota also earned an A average in budget maneuvers by avoiding one-time actions to achieve budgetary balance. The top marks contrast with its D average in legacy costs. The state did not fully fund public worker pensions in accordance with actuarial recommendations, and the governor vetoed a 2017 measure increasing pension contributions and lowering cost-of-living raises for retirees. (Similar legislation was signed into law in May 2018, after the research cutoff for this report card. The act should put the pension system on a more sustainable path.) In 2017, Minnesota’s pension funded ratio was 63.3 percent, five percentage points below the US state total.
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.