State Budget Practice Report Cards and Budget Resource Guide
Oil-rich North Dakota collected the full range of scores across the five budgetary categories evaluated by the Volcker Alliance for fiscal 2015 through 2017. While the state earned an A average—the highest possible—for its handling of reserve funds, it received a D-minus—the lowest possible grade—in budget forecasting.
North Dakota’s top performance in reserve funds is particularly important because of its dependence on volatile oil and gas revenues. The state not only set aside a sizable budget stabilization fund when fracking dollars began rolling in but also established polices on the use of the reserve and how it is to be replenished, a best practice. The stabilization fund is stocked by transferring cash at the end of each biennium from any general fund accounts exceeding $65 million. If there is not enough in the general fund to meet the target, the stabilization fund must retain its earnings until the reserve reaches the equivalent of 9.5 percent of general fund appropriations.
Its poor showing in budget forecasting reflects North Dakota’s failure to use consensus revenue forecasts and multiyear expenditure and revenue forecasts, as well as its lack of a reasonable, detailed rationale to support revenue growth projection at the time of the initial budget. The state, which for the most part avoided one-time measures to achieve budgetary balance, got an overall A in budget maneuvers. It received a C in transparency for not disclosing budgetary costs of tax expenditures or replacement costs of depreciated infrastructure.
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.