State Budget Practice Report Cards and Budget Resource Guide
South Dakota ranked among the best-performing states in the Volcker Alliance’s examination of budget practices across the nation for fiscal 2015 through 2017. It earned straight A’s in budget maneuvers and legacy costs, and averaged B’s in the other three categories evaluated.
The state’s only low grade—a D for budget forecasting in 2015—improved to a B the following two years thanks to an executive order signed by Governor Dennis Daugaard after the start of fiscal 2015. That order put in place requirements for forecasts for the current fiscal year and three succeeding fiscal years. It also required input from the governor’s Council of Economic Advisors and the use of other relevant financial planning information.
South Dakota was one of only seven states to post A’s on legacy cost practices in all three years. This is a slightly lower hurdle for South Dakota than for other states, as it has no liabilities for postretirement health benefits and thus no need to fund them in advance.
The state did similarly well in avoiding budget maneuvers, which include deferring recurring expenditures, shifting costs and revenues, funding recurring expenditures with debt, and using asset sales and up-front revenues.
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.