State Budget Practice Report Cards and Budget Resource Guide
New Jersey was one of nine states given a D-minus average, the lowest possible grade, by the Volcker Alliance for its handling of pension and other postretirement obligations for fiscal 2015 through 2017. It was also one of nine states with an overall D for budget forecasting and six states with an overall D for using budgetary maneuvers to achieve balance.
The New Jersey grade for legacy costs, which includes public worker pensions and other postemployment benefits, primarily health care, reflects its longtime inability to fund either program in line with actuarial recommendations. The state had only 38 percent of the assets needed to meet obligations—it tied with Kentucky for the lowest funding level—and its $135.7 billion in unfunded pension liabilities was second only to California’s $174.1 billion.
Burdened as it is with retirement funding obligations, it is of little surprise that New Jersey also scored poorly in budget maneuvers, the second of five budgetary categories the Alliance evaluated. Such one-time actions included transfers from the New Jersey Turnpike Authority and the Clean Energy Fund to the general fund and the use of expected revenue from pending legal settlements for budget-balancing purposes.
The state’s D in budget forecasting reflects a failure to create multiyear expenditure and revenue forecasts to help it prepare for financial challenges. New Jersey fared better in the reserves and transparency categories, winning average B grades for the period. As with forty-seven other states, New Jersey’s transparency grade speaks to the absence of disclosure of deferred infrastructure replacement costs. Only Alaska and California publish such estimates.
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.