State Budget Practice Report Cards and Budget Resource Guide
Tennessee stands with Alaska and California as the three states receiving an A average in transparency for fiscal 2016 through 2018. It scored a B average in Volcker’s 2017 report, Truth and Integrity in State Budgeting: What Is the Reality?, in which we cited a lack of disclosure concerning deferred infrastructure replacement costs in budget documents. However, annual infrastructure reports prepared under statute by the Tennessee Advisory Commission on Intergovernmental Relations provide information equivalent to budgetary disclosures.
Tennessee’s weakest grade was in budget forecasting, in which it averaged a C. Though the state produced consensus revenue estimates and explained the logic behind projections, it failed to disclose multiyear expenditure and revenue forecasts. Instead, Tennessee publicly projected revenues and expenditures for only two years.
The state has an almost fully funded public employee pension system, with 96.2 percent of the assets needed to meet promised obligations as of 2017, versus a US state total of 68.6 percent. Its B average in legacy costs stems from a failure to make actuarially recommended contributions to support other postemployment benefits, chiefly health care. The state has historically made about half of the annual contribution suggested by actuaries.
Tennessee scored an A average in reserve funds. It has policies for disbursing and replenishing reserves and ties goals for fund balances to revenue volatility.
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.