Mercatus State Ranks – 2017

The Mercatus Center just released their 2017 ranking of states by fiscal condition:

Based on the FY 2015 comprehensive annual financial reports of the 50 states, this study ranks states’ fiscal solvency using 13 metrics that assess the extent to which the states can pay short-term bills and meet longer-term obligations. State finances are analyzed according to five categories of solvency: cash, budget, long-run, service-level, and trust fund. These five categories are combined to produce an overall ranking of state fiscal solvency.

New Jersey solidified its hold as the worst of the worst with a per capita debt of $16,821, compared with a nationwide average of $4,272 and $12,118 for fiscal basket-case Illinois, but with an explanation:

The Management Discussion and Analysis of these states’ CAFRs makes it clear that the recognition of net pension liabilities is a significant factor in driving net position downward. The net pension liabilities of these states are based on GASB 68’s recommendation that states measure their liabilities based on a blended discount rate. In practice, and contrary to expectations, this has meant that most states continue to value their pensions using high discount rates, rather than the lower “blended rate.” New Jersey is an exception. In FY 2015, the state applied a more  conservative set of assumptions to value the unfunded liability, and, as a result, reports a far larger unfunded liability. Other states, such as Illinois, continue to use more generous assumptions. The end result is that New Jersey, by reporting a more accurate unfunded liability, performs more negatively in long-run solvency.

The Mercatus people were good enough to provide excel spreadsheets that included unfunded pension (at ‘risk-free’ interest rates) and OPEB liabilities along with regular debt which we will examine in future blogs but for now here are the rankings:

8 responses to this post.

  1. Posted by Anonymous on July 12, 2017 at 5:00 pm

    NJ is no longer the Garden State it’s the Pardon State – all debts are forgiven!


  2. Posted by Anonymous on July 12, 2017 at 5:58 pm

    The Coke heads forgot the Feds. Put the printing presses out of business and the Feds come in at 51!


    • Posted by Anonymous on July 12, 2017 at 7:10 pm

      There you go again, trying to shift the focus AWAY FROM the HUGE State & Local Public Sector pension-driven financial mess.

      Earth to dopey …..NJ doesn’t have a money-printing press.


  3. Posted by Anonymous on July 12, 2017 at 7:57 pm

    I’m curious what self serving interests ALL actuaries have in perpetuating DBP? If only DCP existed how would the pension actuaries do, I guess blog…..


    • Posted by Anonymous on July 12, 2017 at 8:32 pm

      Actuaries whose business focuses on Public Sector DB Plan valuation engagements would lose this business if DB Plan disappeared from the Public Sector. A big deal for them, but a minor part of the actuarial profession.

      I hope that the worst of this group is help financially accountable for their roll in this mess, but note that in many cases it IS limited because BY STATUE they MUST use assumptions that are clearly outside (or at the far far extremes of) the “reasonable” range.

      What we REALLY NEED is for our self–interested Elected Officials to have a fiduciary obligation to the Taxpayers. They are clearly the MOST to blame for the financial mess most Cities and States now find themselves. Realistically thought……….. since the Public Sector Union/Elected-Official “collusion” has been going on for decades (i.e., the ludicrously excessive DB pension and benefit “promises”) current Elected Officials often get “blamed” for not fixing something that THEY did not create, and for which ALL OPTIONS are so painful that nobody wants to even discuss them.

      That’s why when these DB Plans fail (and MANY will) they will fail VERY quickly and catastrophically.


  4. Posted by Anonymous on July 15, 2017 at 8:17 am

    Time for the Fed govt to stop the presses and cut their P&B like the rest of us!



    • Posted by Anonymous on July 15, 2017 at 10:45 am

      “Cuts” to federal pensions to equal your State/Local Public Sector pension ?????

      Really, when State & Local pensions are 2 to 3 times MORE generous right now…….. Fed DB Plans having a 1% per-year-of-service “formula factor”.


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