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    Entries in rainy day funds (2)

    Wednesday
    Jan112017

    Have States Reached Their Savings Limit?

    After several years of growth, the amount states are socking away in rainy day funds has slowed.
    BY  JANUARY 11, 2017

    Rainy day savings deposits appear to be plateauing.

    After six straight years of squirreling away money, budgeted figures for fiscal 2017 show a slight dip in rainy day fund balances across the 50 states. States now have a median 4.9 percent of annual expenditures saved for the fiscal year, down from 5.1 percent the previous year.

    What's more, four states -- Illinois, Nevada, New Jersey and North Dakota -- now show no budget reserve funds, up from two states last year. The overall shift is a signal that tighter financial times could be ahead for states as a whole.

    The findings are based on Governing's analysis of projected 2017 budget data from the National Association of State Budget Officers. Given that roughly half of states are now expecting budget shortfalls for 2017, budget reserve balances could dip more than projected.

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    Thursday
    Jan282016

    Having a Rainy Day Fund, But Not Knowing How to Spend It

    Some states have millions in savings that they don't know when or how to use. A new report suggests ways to better manage their money.
    BY  JANUARY 28, 2016

    As state lawmakers head into the budget-writing season, some will face the unpleasant task of figuring out how to fill projected shortfalls. In most cases, that conversation will include a debate on whether to withdraw cash from the state’s rainy day fund.

    Some states count on their rainy day savings during recessions to limit budget cuts, while others strive to put away enough savings to avoid cuts altogether. But many states lack clear guidance about when to take money out of rainy day accounts, for what purposes and how much.

    Rainy day funds have been around for decades. Among the 46 states that have them, only half have laws that clearly express what they're seeking to achieve with them, according to a recent Pew Charitable Trusts report. Two states -- Wyoming and Kentucky -- lack any statutory or constitutional direction about their purpose or proper use.

    That means legislators have to argue each time finances become a problem.

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