State Budget Practice Report Cards and Budget Resource Guide
Tennessee received straight A’s for its lack of budgetary maneuvers and its handling of fiscal reserves, two of the five budget categories evaluated by the Volcker Alliance for fiscal 2015 through 2017. The state’s funding of legacy costs and its budget transparency practices earned B marks, while its lone C was in budgetary forecasting.
Its top grade in budget maneuvers—one-time actions to achieve balance—reflected Tennessee’s refusal to defer recurring expenditures, shift costs and revenues from one year to another, fund recurring expenditures with debt, or use asset sales or up-front revenues to keep the budget balanced. The A in reserve funds was driven by Tennessee’s legislative mandate that the state, to the extent practicable, offset revenue shortfalls with reductions in expenditures before tapping the rainy day fund.
Tennessee’s lower grade in budget forecasting stemmed from the lack of multiyear expenditure or revenue forecasts, which can make it difficult to do meaningful long-term financial planning. The state estimates revenues and expenditures for only two years in budget documents, although it does disclose longer-term projections for the state lottery fund.
Budget transparency was generally in line with best practices, save for an absence of disclosures about deferred infrastructure costs, a shortcoming shared by all states except Alaska and California.
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.