Date of Award

Fall 2022

Document Type

Dissertation Restricted

Degree Name

Doctor of Public Administration (DPA)

Department

Public Policy and Administration

Committee Chairperson

Jeremy Phillips, Ph.D.

Committee Member

Amanda Olejarski, Ph.D.

Committee Member

Michelle Wade, Ph.D.

Abstract

During the past 40 years, nearly all states have incorporated Budget Stabilization Funds, also known as Rainy Day Funds, into their budgeting processes to prepare for revenue shortfalls that result from economic downturns. This project furthers our understanding of how states utilize Budget Stabilization Funds and whether the countercyclical device meets its intended purpose by addressing four questions: 1) What factors influence a state to access its Budget Stabilization Fund? 2) What factors affect Budget Stabilization Fund size? 3) Are states with stringent deposit and withdrawal rules more likely to save funds in unreserved undesignated fund balances than Budget Stabilization Funds? and 4) Are states saving enough to cover fiscal stress? This study finds that state use of Budget Stabilization Funds has changed somewhat over time. States seem to be utilizing Budget Stabilization Funds as they are intended rather than for extraneous purposes at least some of the time. Policymakers still manipulate or bypass Budget Stabilization Funds, particularly when they have less discretion over deposits and withdrawals, and states with more stringent Budget Stabilization Fund rules are more likely to save money in unreserved undesignated fund balances. This study finds that overall states seem to be better prepared for fiscal shock with their reserves than they have been in the past.

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