Rainy Day Fund Structures



Cover of Rainy Day Fund Structures reportRainy day funds are one of the most common tools states have to soften the blow of economic downturns and budget shortfalls.The underlying concept of a rainy day fund, often called a budget stabilization fund, is straightforward: When state finances are healthy, money is saved for use when the state’s economy takes a downturn (thus the term “rainy day fund”). The structure of rainy day funds varies across the states. Each state’s constitutional or statutory requirements determine the fund size, how deposits into the fund are made and how funds are withdrawn.