Tennessee

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.

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 2018 Volcker Alliance report, Truth and Integrity in State Budgeting: Preventing the Next Fiscal Crisis 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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