Reserves remain below pre-recession levels in most states.

• Position: News & Numbers

States have made halting progress in rebuilding their financial cushions since the Great Recession. Overall, states had enough money in general fund budget reserves in fiscal year 2007--just before the economic downturn--to run government operations for a median of 41.3 days. That number was just 29.1 days in fiscal 2015.

For many states, even pre-recession reserve levels were inadequate to plug the budget gaps that opened because of the 2007-09 recession. Still, only 18 states in fiscal 2015 were able to cover more days' worth of operating costs with their reserves--counting both rainy day funds and general fund end-of-year balances--than before the recession, according to data collected by the National Association of State Budget Officers (NASBO).

There was an uptick from fiscal 2014 to 2015 in the median number of days that states could operate just on their reserves, as 26 states reported an increase in overall reserves relative to operating expenditures. That expansion resumed a trend that occurred from fiscal 2011 to fiscal 2013. States' financial cushions had fallen in 2014, when officials looked to end-of-year balances to make up for a slowdown in tax collections.

Projections for fiscal 2016, the current budget year, show decreasing median reserves for the 45 states that reported complete data, with 34 state budgets anticipating lower levels relative to operating expenditures than in fiscal 2015. Those projections, however, are based on amounts appropriated in state budgets and routinely change significantly by the close of the fiscal year.

Since declining in the recession, states' financial cushions in aggregate have improved, largely because of growth in rainy day funds (rather than in end-of-year balances, which have been more volatile). States' rainy day funds in fiscal 2015 totaled $44 billion, which could cover a smaller share of day-to-day government expenditures than in fiscal 2013 and 2014, but more...