South Carolina

State Budget Practice Report Cards and Budget Resource Guide

.In fiscal 2015 through 2017, the three years covered by the Volcker Alliance’s evaluation of state budgetary practices, South Carolina earned top grades of A in budget forecasting and budget maneuvers. It did less well in reserve funds, transparency, and legacy costs. In the final category, the state received a D, the second-lowest grade.

The A in budget maneuvers reflected South Carolina’s avoidance of one-time measures to achieve budgetary balance, including deferring recurring expenditures, shifting revenues or costs, funding recurring expenditures with debt, and using asset sales and up-front revenues from financial transactions. Its forecasting methods comprised best practices such as multiyear revenue and expenditure projections and consensus revenue estimating, in which the executive and legislative branches agree on a single revenue figure that guides budget formation.

South Carolina’s B in reserve funds was based on positive balances, as well as on its policies for using and replenishing funds intended for budget emergencies. The state lost credit for not linking reserve policies with revenue volatility—a shortcoming of about two-thirds of all states. Straight C’s in transparency reflected the state’s lack of disclosure of tax expenditures and replacement costs for depreciated infrastructure.

Despite making pension fund contributions in line with actuaries’ recommendations, South Carolina received straight D’s in legacy costs. The contributions were not enough to overcome more than a decade of underfunding that left the state’s public worker retirement system with just58 percent of assets needed to cover obligations, 14 percentage points below the 2015 average for all states. South Carolina also did poorly in financing other postemployment health care benefits, setting aside only $964.2 million against liabilities totaling $9.8 billion.

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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