Report  Stabilization Fund & Long-Term Liability Financing Task Force Final Report

Among the most critical considerations for a state’s fiscal health are the adequacy of its budgetary reserves, its commitment to mitigating long-term liabilities, and its mechanisms for doing so. In recent years, Massachusetts has made significant strides in building the Commonwealth Stabilization Fund, the state’s main budgetary reserve. Going into Fiscal Year (FY) 2025, the fund balance stood at more than $8.1 B, compared to $670 M in FY 2010, the last fiscal year before the state began implementing major policies to grow the fund. In addition, the Commonwealth has continued to prioritize paying down its unfunded pension liability – currently on track to pay off its legacy liability ahead of the FY 2040 statutory deadline. 

Despite this progress, it is essential that the Commonwealth continues to examine its fiscal policies on a regular basis. Ongoing consideration of best practices around reserve building and liability reduction will help ensure a more stable fiscal environment, particularly during economic downturns. These reviews can also help pinpoint new long-term liabilities that may require fiscal support in the future, such as natural disaster relief, planning, and mitigation. 

The Stabilization Fund and Long-Term Liability Financing Task Force was established in 2024 to examine the current state of the Commonwealth’s policies around these issues. Given the importance of long-term planning and vigilant analysis of the state’s fiscal strengths and weaknesses, the work of this group is an important first step in refreshing certain policies while maintaining others that have been successful over the years.