The Best and Worst Run States in America: A Survey of All 50

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1. North Dakota
> Debt per capita: $2,481 (18th lowest)
> Credit rating (S&P/Moody’s): AAA/Aa1
> Unemployment rate: 2.8% (the lowest)
> Median household income: $59,029 (15th highest)
> Poverty rate: 11.5% (8th lowest)

North Dakota is the nation’s best-run state for the fourth consecutive year. The state’s position at the top is largely due to its abundant natural resources, which helped fuel the state’s oil boom over the past several years. The mining industry contributed 2.5 percentage points to North Dakota’s 6.3% economic growth in 2014 — the fastest growth rate of any state. The state, with its nation-leading 2.8% unemployment rate, has attracted large numbers of workers seeking high-paying jobs that require relatively little experience or education. Net migration over the five years through 2014 accounts for 6.6% of North Dakota’s current population, the largest share of any state. The remarkable population growth is a testament to the state’s economic strength over the past several years.

Despite the rapid growth, North Dakota may be overly reliant on its resources. With oil prices plummeting in the past year, the total number of mining jobs dropped by 17.2% over the 12 months through October. Without a strong mining industry, could North Dakota keep its high ranking? That will be the true test of a well-run state.

2. Wyoming
> Debt per capita:
$1,747 (7th lowest)
> Credit rating (S&P/Moody’s): AAA/ N/A
> Unemployment rate: 4.0% (11th lowest)
> Median household income: $57,055 (18th highest)
> Poverty rate: 11.2% (5th lowest)

For years, Wyoming has placed well in the annual ranking of best-run states. One factor may be the state’s relatively manageable size. Home to just over half a million people, Wyoming is the least populated state in the country. Wyoming’s state budget proceedings are particularly well run. According to an annual report on corruption from The Center for Public Integrity, Wyoming earns the third highest marks for its budgetary process. Wyoming’s rainy day fund is equal to 54.1% of annual general fund expenditures, the second largest state rainy day fund in the nation. Only in Alaska is the share larger, and the average state’s reserve is equal to only 5.4% of spending. Furthermore, Wyoming’s debt as a percent of annual revenue is only 13.5%, the smallest share in the country, contributing to its second-place ranking. By contrast, the average state’s debt as a percent of annual revenue is 51.3%.

Wyoming residents are also relatively well off financially. Only 11.2% of Wyoming residents live in poverty, the fifth lowest poverty rate of any state.


3. Iowa
> Debt per capita:
$2,140 (12th lowest)
> Credit rating (S&P/Moody’s): AAA/Aaa
> Unemployment rate: 3.5% (6th lowest)
> Median household income: $53,712 (21st highest)
> Poverty rate: 12.2% (14th lowest)

With the highest possible credit rating from both Moody’s and S&P, as well as a stable outlook, Iowa is one of the best-run states in the country. Competent management has likely led to many of the positive outcomes in the state. More than 92% of adults in the Hawkeye State have graduated from high school, a higher share than in all but a handful of other states. Also, Iowa’s unemployment rate is one of the lowest in the country. As of October, only five states had a lower unemployment rate than Iowa.

Home values in Iowa are increasing at a much faster rate than they are across the nation. The value of a typical home in Iowa rose by nearly 8% from 2010 through 2014, much faster than the nationwide increase of less than 1% over that time. The relatively rapid rise in home values may indicate rising incomes, increased demand, or a combination of the two.

4. Nebraska
> Debt per capita:
$981 (2nd lowest)
> Credit rating (S&P/Moody’s): AAA/ N/A
> Unemployment rate: 2.9% (2nd lowest)
> Median household income: $52,686 (24th highest)
> Poverty rate: 12.4% (16th lowest)

In much of the Midwest, agriculture-driven states have benefitted from the stability of the industry, and Nebraska is no different. Though the agriculture industry was impacted by the recession, the economic damage it sustained was minor in comparison to many other U.S. industries. Like its neighbors, Nebraska has had low unemployment for years. The state’s current unemployment rate of 2.9% is the second lowest in the country behind only North Dakota.

Nebraska collects $2,508 per capita each year in taxes, less than the national average of $2,657. Still, the state has a relatively balanced budget. The state government could pay 80% of its pension fund obligations. Nebraska’s government debt in 2013 of just $981 per state resident was the second smallest in the country.

5. Minnesota
> Debt per capita:
$2,487 (19th lowest)
> Credit rating (S&P/Moody’s): AA+/Aa1
> Unemployment rate: 3.7% (8th lowest)
> Median household income: $61,481 (10th highest)
> Poverty rate: 11.5% (8th lowest)

A typical household in Minnesota earns $61,481 annually, significantly more than the $53,657 the typical American household earns. With a solid tax base, the state is able to collect $3,854 per capita annually, a larger tax revenue than all but a handful of other states. Perhaps the state is better able to manage its finances as a result. The state’s debt is equal to less than 30% of its annual revenue. By contrast, the average state’s debt as a percent of annual revenue is 51.3%.

Few states allocate a larger share of their annual budget to education than Minnesota. On average, states spend 35.6% of annual budgets on education, while Minnesota spends 42.9%. Higher spending may partially explain the higher educational attainment among state residents, which in turn contributed to Minnesota’s high ranking. After Alaska, Minnesota is home to the highest share of adults with a high school diploma. Additionally, 34.3% of adults in the state have a bachelor’s degree, higher than the national rate of 30.1%.