Louisiana lawmakers heading back to a new session have already tapped the state Rainy Day Fund to fill budget shortfalls. A new report recommends the state tighten up rules on how that pile of money should be used.
The Pew Trust says lawmakers need to keep an eye on the Rainy Day Fund, much like people use their savings accounts.
The House and Senate earlier this month went along with Governor Bobby Jindal’s idea to use more than $28 million in fund money to prevent more cuts in higher education.
Pew spokeswoman Brenna Erford says Louisiana is among more than half of the 46 states that have “Rainy Day” funds that don’t clearly outline the purpose of that money.
“It’s good that Louisiana has a fund," she said. "It’s also worth noting that there was an effort to modify the fund this past legislative session. This initiative passed your state legislature but it failed the public vote that was needed to amend the constitution.”
The fund is restricted under the constitution that no more than one-third can be used in a year. It’s currently got about $515 million in reserve.
“We see that in the years when withdrawals were made, including over the Great Recession, exactly one-third of the fund was withdrawn in each of those years," she said. "Now, to withdraw during times of economic distress is very appropriate, but it seems to have one-third of the fund as a limitation on the total withdrawal – that’s pretty constrained.”
Pew recommends that states establish targets for saving, along with rules for spending.
