State Budget Practice Report Cards and Budget Resource Guide
Pennsylvania has struggled for years with a severe discrepancy between revenues and expenditures, which has bred a reliance on one-time actions to balance budgets. The use of such measures explains why Pennsylvania was the only state to average a D-minus, the lowest grade possible, in budget maneuvers for fiscal 2016 through 2018.
During that time, stalemates between the governor and legislature delayed budget passage and repeatedly threw the state into fiscal crisis. Pennsylvania, which also experienced budget impasses between 2007 and 2009, did badly in 2017 and 2018 in all four major criteria for that category: deferring recurring expenditures, shifting revenues and costs, funding recurring expenditures with debt, and using asset sales and upfront revenues to balance the budget.
In addition to using more common budget-balancing maneuvers, such as transferring $530 million to its general fund from special funds in fiscal 2018, the state, along with seven others, funded recurring expenses with debt in fiscal 2017 and 2018.
Pennsylvania also fared poorly in legacy costs, earning a D average—even though it made its full actuarially recommended pension contributions in 2017 and 2018. But the years that Pennsylvania skimped on contributions left it with a pension funded level of 55.3 percent as of 2017, versus 127 percent in 2000. It also failed to make the recommended contribution for other postemployment benefits, mainly health care.
In reserve funds, Pennsylvania earned a three-year average of C. Though its grade was bolstered by the use of policies to control the disbursement and replenishment of money in its rainy day fund, the state lost credit because the fund was almost empty in fiscal 2017 and 2018.
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.