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Partnership forms to study state finances

An Andrew Young School of Policy Studies center has partnered with Volcker Alliance to study state and regional budget. | Photo courtesy of Forbes

The Center for State and Local Finance (CSLF) at Georgia State, one of several institutions partnering with Volcker Alliance, is conducting a study to help improve budgeting and fiscal sustainability in all 50 states.

Alex Hathaway is the principal researcher and leader of the center. The center’s intention for the project is to examine budget practices, debt, reserve funds and retiree health care, among others.

“The state budget affects every citizen in some way, but understanding how states maintain a balanced budget can be a very complex task,” Hathaway said. “Our research offers a clearer picture of the fiscal practices in the South and around the nation.”

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The project is currently in its third phase of research conducted by CSLF for the New York-based Volcker Alliance as part of its Truth and Integrity in Government Finance project.
The researchers are from eight universities, including Georgia State with its Andrew Young School of Policy Studies.

Hathaway said he hopes their research spurs state governments to improve transparency practices and leads to greater citizen trust and engagement.

Since 2016, CSLF has led research in the South while training graduate research assistants in the data gathering and technical writing needed to conduct analysis and produce public presentations to engage and inform stakeholders.

Hathaway is working on multiple reports for Georgia State that detail fiscal health in the South. Some of the reports so far have focused on rainy day funds and retiree health costs.

The rainy day funds for Georgia’s balance were higher than the national average from the 2015 fiscal year through the 2017 fiscal year. The 2018 fiscal year balance is not yet available, but the state’s reserves are expected to grow and will likely surpass the 6.7 percent national average.

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In addition, Georgia State’s research center received $100,000 in funding to expand this study of government fiscal integrity.

The Volcker Alliance revealed the State Budget Practice Report Cards and Budget Resource Guide for Georgia to provide insight into Georgia’s progress for budget maneuvers. The state received an A in the category of budget maneuvers for fiscal years 2015-2017 for its willingness to shun one-time actions to achieve balance.

“Georgia was among fifteen states in 2017 that substantially avoided practices such as using borrowing proceeds, municipal bond coupon premiums, or other up-front cash flows at the time of refinancing to pay for recurring expenditures,” the report stated.
In addition, more research provided by Hathaway focused on other post-employment benefits. Her policy brief, OPEB Funding Challenges: The U.S. Postal Service, targeted long-term liabilities such as pensions and other post-employment benefits.

The conclusion for this research cemented that many states may also struggle to curb long-term liabilities without strong prefunding mechanisms or substantive reforms to benefit coverage.