State Budget Practice Report Cards and Budget Resource Guide
Minnesota won straight A’s from the Volcker Alliance for fiscal 2015 through 2017 in the budget maneuvers and reserve funds categories. Earning the top grade reflected the state’s adherence to best practices in the use of rainy day funds and other fiscal reserves, as well as its consistent ability to avoid using budget maneuvers such as one-time revenues, borrowings, asset sales, or other measures to achieve short-term budgetary balance.
The state did less well in handling legacy costs, where it received a C average over the three years. Even though Minnesota’s funding of its pension plan is 80 percent of liabilities, annual state contributions to pension funds are based on a statutory formula that generally is less than fund actuaries’ recommendation. On average, state pensions in 2015 had 72 percent of the assets needed to meet obligations.
Although Minnesota received an average mark of B in transparency because it does not disclose deferred infrastructure replacement costs, its consolidated website was one of the best in the nation. The site, run by the Department of Management and Budget, contains documents covering budget processes; current and previous budgets; the governor’s original budget recommendations; budget and economic forecasts; revenue and economic updates; debt; and other budget-related analyses.
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.