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

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6. Utah
> Debt per capita:
$2,395 (16th lowest)
> Credit rating (S&P/Moody’s): AAA/Aaa
> Unemployment rate: 3.6% (7th lowest)
> Median household income: $60,922 (13th highest)
> Poverty rate: 11.7% (11th lowest)

With a top credit rating from both S&P and Moody’s, Utah is one of the best-run states in the country. Each year, Utah spends 46% of its budget on education — no state allocates a larger share. Greater investments in education lead to better outcomes down the road. Only 11.7% of Utah residents live in poverty, one of the lowest rates of any state and significantly lower than the 15.5% national poverty rate. Lower poverty rates often accompany higher median incomes, and Utah is no exception. A typical household in the Beehive State earns about $60,922 annually, versus the nationwide median household income of $53,657.

According to an annual report on corruption from The Center for Public Integrity, Utah earns near perfect marks for its budgetary process. With responsible budgetary practices, Utah has assets on hand to cover 80% of all state pensions. The average pension funded ratio among all states is 72%, by contrast.

7. Texas
> Debt per capita:
$1,470 (6th lowest)
> Credit rating (S&P/Moody’s): AAA/Aaa
> Unemployment rate: 4.4% (19th lowest)
> Median household income: $53,035 (23rd highest)
> Poverty rate: 17.2% (tied-12th highest)

Texas is home to close to one-third of all U.S. crude oil reserves — the nation’s largest share. The state is also the leader in oil, natural gas, and electricity production. The state has 27 petroleum refineries within its borders, and it is the only state in the continental U.S. with an independent electric grid.

The state’s abundant natural resources have been exploited since the turn of the 20th century, helping to fuel economic prosperity. However, much of the opportunity has been unevenly distributed, and Texas residents struggle with several poor social outcomes. While the state’s economy and labor force grew faster than all but one other state last year, the state’s Gini coefficient, which measures inequality, is worse than in most states. Also, just 82.2% of adults have a high school diploma, nearly the lowest percentage of any state, and 19.1% of adults do not have health insurance, the highest figure nationwide.


8. Colorado
> Debt per capita:
$3,045 (21st lowest)
> Credit rating (S&P/Moody’s): AA/Aa1
> Unemployment rate: 3.8% (10th lowest)
> Median household income: $61,303 (12th highest)
> Poverty rate: 12.0% (13th lowest)

Moving up from last year’s ranking as the 17th best-run state, Colorado is one of the most competently managed states in the country today. Colorado stands out primarily in educational investment and educational outcomes. More than 38% of adults in the state have earned a bachelor’s degree, the highest share in the country after Massachusetts. Additionally, 14.3% of Colorado adults have a professional or graduate degree, a larger share than the 11.4% of adults nationwide. It is perhaps no coincidence that Colorado allocates a much larger than average percentage of its annual budget to education. While across the country states spend an average of 35.6% of their total budget on education, education spending accounts for 40.9% of Colorado’s total annual expenditure.

Higher educational attainment in Colorado accompanies lower unemployment and lower poverty rates. While the national unemployment rate is 5.0%, only 3.8% of Colorado’s workforce is unemployed. The poverty rate in Colorado is 12.0%, while 15.5% of people live below the poverty line nationwide.

9. Washington
> Debt per capita:
$4,316 (13th highest)
> Credit rating (S&P/Moody’s): AA+/Aa1
> Unemployment rate: 5.2% (18th highest)
> Median household income: $61,366 (11th highest)
> Poverty rate: 13.2% (18th lowest)

Unlike most other states at the higher end of the ranking, Washington’s labor force shrank slightly from 2010 through last year. By contrast, the U.S. workforce grew by 6.7%. Still, the state’s economy is relatively healthy. Washington’s 2013 GDP of $379.0 billion grew to $390.5 billion last year, a 3.0% growth rate — the eighth fastest economic expansion of all states. Relative to its population, the state is also one of the nation’s largest exporters. Goods originating in Washington total $12,837 per capita each year, higher than every state except Louisiana. As is usually the case, the state’s relatively strong economy is tied to the financial well-being of its residents. The typical Washington household earns $61,366 annually, the 11th highest income of all states.

With the higher incomes, Washington residents are able to afford more expensive homes. The state’s median home value of $266,200 is the eighth highest in the nation. While home values in the state fell by 2.1% from 2010 through last year, they increased by 6.1% from 2013, one of the fastest short-term rebounds.

10. Massachusetts
> Debt per capita:
$11,291 (the highest)
> Credit rating (S&P/Moody’s): AA+/Aa1
> Unemployment rate: 4.6% (22nd lowest)
> Median household income: $69,160 (6th highest)
> Poverty rate: 11.6% (10th lowest)

Massachusetts residents are the most likely Americans to have gone to college. Of the adults in the state, 41.2% have a bachelor’s degree and 18.0% have a graduate degree, each the highest such rate in the nation. The high level of education helps residents earn high incomes and partially explains the significant presence of technology and scientific occupations, particularly in the Boston area. At $69,160, the state’s median annual household income is the sixth highest in the country. Also, the professional and scientific industry contributed 0.52 percentage points to GDP growth last year, tied with Utah as the second largest such contribution in the country.

Unlike other healthy state economies, however, Massachusetts has one of the highest debt levels. The state’s debt equals 137.4% of annual revenue, by far the largest debt ratio of any state. While high debt is not necessarily a sign of economic weakness, it could partially explain S&P’s negative outlook for the state.