State Budget Practice Report Cards and Budget Resource Guide
Although Ohio’s rainy day fund balance was the equivalent of a record high of 8.5 percent of general fund expenditures in fiscal 2018, the state received a C average in reserve funds for that year and the two previous years. The grade reflected the absence of a link between revenue volatility and reserve fund policies. The state also lacks rules governing withdrawals, although it does have policies for replenishment.
Ohio fared better in transparency, notching a B average for fiscal 2016 through 2018. A web-based interactive budget lets users click through a series of charts for information derived from the state’s accounting system, including the breakdown of nontax and tax revenues and the portion of the budget spent on debt service, personnel, and equipment. Ohio missed receiving an A because it does not disclose deferred infrastructure replacement costs, a shortcoming shared by all but four states—Alaska, California, Hawaii, and Tennessee in 2017 and 2018.
Ohio also averaged a B in the budget maneuvers category. The state avoided one-time measures such as deferring recurring expenditures and funding spending with debt. Still, like thirty-two other states in fiscal 2017, Ohio used cash from special funds to help achieve general fund balance. For example, that year $255 million was transferred to the general fund from other government funds, according to the state’s comprehensive annual financial report.
Ohio’s worst grade was a D average in budget forecasting. The state does not provide multiyear revenue or expenditure forecasts beyond the second year of its biennial budget. It also lacks a formal consensus process for revenue estimating. The Legislative Service Commission and the governor’s office prepare separate revenue estimates, often discussing the results informally. While legislators can choose between the forecasts, they have tended in recent years to accept the more conservative outlook or average the two.
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.