State Budget Practice Report Cards and Budget Resource Guide

Pennsylvania passed the revenue part of its fiscal 2018 budget four months late as lawmakers and the governor struggled to find ways to pay for $32 billion in planned spending. The impasse reflected a continuation of the fiscal stress that helped produce low grades in two of the five budgetary categories evaluated by the Volcker Alliance for fiscal 2015 through 2017.

The state got the lowest possible grade, D-minus, for its use of one-time maneuvers to balance the budget in 2017 and recorded a D average for all three years. Budgetary maneuvers include deferring recurring expenditures to future years, shifting expected future revenues into the current year, funding recurring expenditures with debt, and using asset sales or up-front revenues to help achieve balance. While the use of such devices can close current gaps, they may leave less cash available for future budgets.

Pennsylvania received an overall D-minus for its funding of legacy costs, which include public worker pensions and other postemployment benefits, principally health care. Its pension funding ratio—the amount of assets on hand relative to the plan’s obligations—was 56 percent, the fifth-lowest level among all states.

The state, which produces reasonably clear budgets and accompanying documents, earned straight B’s in transparency. Pennsylvania averaged a B in budget forecasting by adhering to best practices, such as producing multiyear revenue and expenditure forecasts. The grade was reduced in part by the lack of consensus revenue forecasts. These estimates, which typically include input from at least the executive and legislative branches, can help focus budget debates on expenditures rather the amount available to spend.

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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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