North Carolina

State Budget Practice Report Cards and Budget Resource Guide

North Carolina earned B averages for its handling of legacy costs, transparency, and general avoidance of one-time budget maneuvers, while getting overall C marks for its reserve funds and forecasting practices—the five budgetary categories evaluated by the Volcker Alliance for fiscal 2015 through 2017.

The B in legacy costs was largely attributable to North Carolina’s lack of funding of other postemployment benefits, principally retiree health care, relative to actuaries’ recommended contributions. The reverse was true with pensions, which have 96 percent of the assets needed to meet obligations to workers. In fiscal 2016, the state funded 105 percent of its actuarially determined contribution to the Teachers’ and State Employees’ Retirement System.

North Carolina’s B for transparency generally reflected best disclosure practices, including having a consolidated budget website and displaying debt tables and tax expenditure costs. Like forty-seven other states, however, North Carolina failed to disclose deferred infrastructure replacement costs; Alaska and California are the only exceptions.

The C for reserve funds is a result of North Carolina’s lack of a link to revenue volatility and a detailed policy to control when rainy day reserves can be used.

Download Printable State Report Card

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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