Rainy Day Reserves
We explain the impact of the global financial crisis on rainy day reserve funds and why one size doesn’t fit all.
Predicting a recession is next to impossible. Thus the importance for reserve funds. States can use surplus revenues to fund education, unemployment insurance and Medicaid initiatives in the event of a recession. However, determining when to build these reserves and how much to allocate to them is dependent on a number of factors, including each state’s revenue structure and financial flexibility.