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

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21. California
> Debt per capita:
$3,922 (19th highest)
> Credit rating (S&P/Moody’s): AA-/Aa3
> Unemployment rate: 5.8% (10th highest)
> Median household income: $61,933 (9th highest)
> Poverty rate: 16.4% (17th highest)

Ranked as the most poorly run state just three years ago, California has dramatically improved in recent years. Home to nearly 39 million people, California is the most populous state in the country. Due to the size of its tax base, California has the highest tax revenue in the country. Even after adjusting for population, California’s annual per capita tax revenue of $3,432 is 11th highest in the country. However, with a relatively high unemployment rate of 5.8%, the state’s economy may not be equipped to handle its large population. Making matters worse, nearly half of all unemployment insurance claimants exhaust their benefits before finding a job, the second highest rate in the nation.

Still, the Golden State continues to attract new residents. From April 2010 to July 2014, Migration added a net of 459,574 to California’s population, an amount equivalent to 1.2% of the current population. Over roughly the same time period, home values across the state increased by 11.3%, the third highest increase in the country.

22. Kansas
> Debt per capita:
$2,350 (14th lowest)
> Credit rating (S&P/Moody’s): AA/Aa2
> Unemployment rate: 4.1% (13th lowest)
> Median household income: $52,504 (25th lowest)
> Poverty rate: 13.6% (20th lowest)

Citing income tax cuts, S&P downgraded Kansas’s credit rating from AA+ to its current rating of AA in August 2014. With a negative outlook, the state’s credit rating will likely worsen before it improves. Despite tax cuts, per capita tax revenue in Kansas is roughly in line with the average across states of $2,656. However, the state’s disbursement of tax revenue seems problematic.

Kansas is only one of seven states to not have a rainy day fund. Kansas’s pension system is also relatively underfunded. The state only has funds on hand to cover 60% of all state pensions. By contrast, the average pension-funding ratio nationwide is 72%.


23. New Hampshire
> Debt per capita:
$6,605 (7th highest)
> Credit rating (S&P/Moody’s): AA/Aa1
> Unemployment rate: 3.3% (4th lowest)
> Median household income: $66,532 (7th highest)
> Poverty rate: 9.2% (the lowest)

With New Hampshire’s relatively healthy job market and high college attainment rate, many residents are able to take advantage of employment opportunities and avoid financial stress. Just 3.3% of the state’s workers are unemployed, one of the lowest proportions nationwide. For those who are looking for work, New Hampshire’s unemployment insurance system seems to be functioning better than many others. Just 20.2% of unemployment insurance recipients exhaust their benefits before finding a job, nearly the lowest exhaustion rate in the country. Also, 35% of adults have at least a college degree, one of the highest rates nationwide. New Hampshire’s poverty rate of 9.2% is the lowest in the country. Residents also benefit from relatively safe communities. The violent crime rate of 196 incidents per 100,000 people is fourth lowest in the U.S.

Still, New Hampshire fares only slightly better than most states in this ranking. This is due in part to the state’s housing market. Home values declined by 2.7% from 2010 through last year.

24. North Carolina
> Debt per capita:
$1,916 (10th lowest)
> Credit rating (S&P/Moody’s): AAA/Aaa
> Unemployment rate: 5.7% (12th highest)
> Median household income: $46,556 (11th lowest)
> Poverty rate: 17.2% (tied-12th highest)

Since the election of Governor Pat McCrory in November 2012, North Carolina’s government has undergone significant changes in leadership. Republicans now occupy a majority in the executive and legislative branches for the first time since the end of the Civil War, bringing with them major shifts in policy. For example, to accelerate repayment of debt incurred during the recession, state officials have introduced dramatic budget cuts, including the elimination of federal unemployment benefits — the first state to do so. Now, unemployment benefits amount to just 27.2% of average weekly wages across the state, the 10th lowest rate nationwide. Also, 46.7% of unemployment insurance recipients exhaust their benefits before finding a job, the third largest percentage in the country. Today, 5.7% of North Carolina’s workforce is out of work, one of the higher unemployment rates nationwide. Despite what appears to be a poorly operated unemployment insurance system, North Carolina is not the worst-run state by any means. For instance, the state’s fiscal management is relatively strong, as it is capable of funding 96% of all pension obligations.

25. Oklahoma
> Debt per capita:
$2,453 (17th lowest)
> Credit rating (S&P/Moody’s): AA+/Aa2
> Unemployment rate: 4.3% (16th lowest)
> Median household income: $47,529 (13th lowest)
> Poverty rate: 16.6% (tied-14th highest)

Oklahoma manages its finances relatively well. The state’s rainy day fund amounts to 8.2% of annual general fund expenditures, the 10th largest rainy day fund in the nation. Also, to foster economic growth, policy makers in the state have supported legislation that favors employers. A bill passed earlier this year, for example, allows employers to challenge unemployment claims from terminated employees before they are even filed.

But the employer-friendly legislature may hinder the effectiveness of the state’s unemployment insurance system. Today, unemployment benefits cover just 25.7% of the average weekly wage across the state, the fifth smallest rate nationwide. Also, 43.7% of recipients in the state exhaust their benefits before finding a job, one of the highest rates in the country.