State Budget Practice Report Cards and Budget Resource Guide

Washington’s budgetary grades are largely at the upper end of the fifty states in the Volcker Alliance’s evaluation covering fiscal 2015 through 2017. For example, the state recorded straight A’s in both budget forecasting and reserve funds over the three years.

Budget forecasting techniques are a strong suit for Washington, which is one of only nine states to earn a top overall grade in that category. Estimates are built by the state Economic and Revenue Forecast Council, which includes representatives of the legislative and executive branches, as well as the treasurer. Four times a year, the council adopts a bipartisan revenue review, which is then used to construct Washington’s operating budget.

The state was similarly strong in its use of reserve funds. It employed best practices in maintaining a positive reserve or general fund balance and in using reserve funds disbursement and replenishment policies.

In contrast, Washington’s grade in legacy costs, including pension plans and postretirement public employee health care, dropped to a D-minus in 2016 and 2017 from a C in 2015. Although the state has funded 87 percent of its pension liabilities—15 percentage points above the 2015 average for all states—it fell short in making actuarially required contributions to keep the funding level healthy. The contribution rate used for state pension funds met actuarial recommendations in the 2013–15 fiscal biennium but failed to meet that standard for the following fiscal period, which includes 2016 and 2017. Washington also didn’t follow actuarial funding recommendations for other postemployment benefits, principally retiree health care.

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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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