24/7 Wall St.

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

How well run is your state? Assessing a state’s management quality is no simple task. The current economic climate and standard of living in any given state are not only the results of recent policy choices and developments, but may also be dependent on forces outside a state’s control and, often, decisions made decades ago.

For each of the past six years, 24/7 Wall St. has attempted to answer this question by surveying various characteristics of each state. To determine how well states are managed, we examine key financial ratios, as well as social and economic outcomes. This year, North Dakota is the best-run state in the country for the fourth consecutive year, while New Mexico replaced Illinois as the worst-run state.

There is no comprehensive measure of a state government administration and how well or poorly it runs the state. Selecting appropriate criteria to compare the 50 states is difficult because there is so much variation among them. Some states are rich in natural resources, for example, while others rely on high-skilled sectors, such as technology and business services. Some depend disproportionately on one industry, while economies in other states are more balanced. Further, some states are more rural, while others are highly urbanized and densely populated.

Click here to see how your state performs.

As a result, policy decisions that may work in one state might not work in another. For example, while taking on large amounts of debt to fund a state’s spending is often fiscally irresponsible, wealthier states arguably benefit from higher debt levels — they can use the extra funds to pay for public welfare services and are able to pay it back without much effort.
Most of the conditions used to determine how well or poorly run a state is do not tend to fluctuate a great deal from year to year. Measures such as income, poverty, and violent crime rates do not usually change meaningfully from year to year. Still, the rank of some states changed significantly this year. Maine, West Virginia, and Alaska each regressed by at least 10 spots. Alaska, this year’s 18th-best run state, was seventh-best last year. Meanwhile, four states improved by nearly 10 spots. Colorado improved from 17th-best to eighth-best.

This year, a number of the best-run states have again benefited from an abundance of natural resources, although this can often manifest as an overreliance. North Dakota, Wyoming, and Texas are among the top 10 best-run states, and in all three, the mining industry — which includes fossil fuel extraction — is a major contributor to state GDP. Due in large part to the mining sector, North Dakota, Texas and Wyoming led the nation in real GDP growth in 2014. Alaska has utilized its oil wealth to build massive state reserves and to pay its residents an annual dividend. However, the state’s position fell this year largely due to falling oil prices. Similarly, while North Dakota is the leader again this year, the mining industry has been subject to wild fluctuations.

While some states’ economic fortunes are closely tied to the rise and fall of individual industries, which are often outside their control, each state must make the best of its own situation. Governments, as stewards of their own economies, need to prepare for the worst, including the collapse of a vital industry. Good governance is about balancing tax collection and state expenditure in a way that provides essential services to residents without sacrificing a state’s long-term fiscal health. Many of the best-run states in the country set money aside each year for emergencies. For example, Alaska’s rainy day fund — reserves set aside to be allocated in the event of unforeseen budget shortfalls — are equal to 146.4% of its revenue, the highest such percentage of any state.

While each state is different, states at both ends of the list share certain characteristics. For example, people living in the worst-run states tend to have lower standards of living. Violent crime and poverty rates are typically higher in these states, and the share of the population with at least a high school diploma tends to be lower than the national rate.

The worst-run states also tend to have weak fiscal management, reflected by low pension funding, sparsely padded coffers, and poor credit ratings from Moody’s Investors Service and Standard & Poor’s (S&P). Illinois, the second worst-run state in America, received lower ratings than any other state from both agencies. By contrast, the majority of the 10 best-run states have perfect ratings from both agencies.

Unemployment rates are also relatively low in the nation’s best-run states. North Dakota, the top-ranked state, has an unemployment rate of 2.8%, the lowest of all states. Six of the 10 best-run states have among the 10 lowest unemployment rates. Meanwhile, unemployment is much more prevalent in the worst-run states. Louisiana and New Mexico, both among the lowest-ranked states, have the nation’s fifth- and second-highest unemployment rates, at 6.2% and 6.8%, respectively.

These are the best- and worst-run states in America.

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%.

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.

11. South Dakota
> Debt per capita:
$4,015 (16th highest)
> Credit rating (S&P/Moody’s): AAA/ N/A
> Unemployment rate: 3.2% (3rd lowest)
> Median household income: $50,979 (22nd lowest)
> Poverty rate: 14.2% (23rd lowest)

South Dakota has a relatively strong job market. Just 3.2% of the workforce is unemployed, the third lowest rate in the country. Benefits for those looking for work are relatively generous and effective, but they are not especially accessible. On average, unemployment insurance benefits cover more than 40% of the average weekly wage, one of the highest replacement rates. Also, just 15.4% of unemployment insurance claimants exhaust their benefits before finding a job, the lowest percentage in the nation. However, only 13% of unemployed individuals receive insurance benefits, the fourth lowest rate nationwide.

South Dakota also has a strong housing market. From 2010 through last year, home prices increased by 9.7%, the fifth fastest growth rate. The foreclosure rate, at one in every 831 housing units, is also the fifth lowest of any state.

12. Delaware
> Debt per capita:
$6,151 (8th highest)
> Credit rating (S&P/Moody’s): AAA/Aaa
> Unemployment rate: 5.1% (24th highest)
> Median household income: $59,716 (14th highest)
> Poverty rate: 12.5% (17th lowest)

Delaware moved up one position from last year’s ranking among the best-run states. This improvement was due in part to labor force growth. The state recorded a 4.0% labor growth from 2010 through 2014, the fifth fastest rate in the country over that time.

With the implementation of the Affordable Care Act, the share of Americans covered by health insurance has increased markedly over the past couple of years. In 2013, 14.5% of U.S. residents did not have insurance. That figure fell to 11.7% last year. Delaware already had one of the higher health insurance coverage rates in the country as only 9.1% of adults did not have health insurance in 2013. Still, coverage improved and just 7.8% did not have health insurance last year.

13. Hawaii
> Debt per capita:
$5,860 (9th highest)
> Credit rating (S&P/Moody’s): AA/Aa2
> Unemployment rate: 3.3% (4th lowest)
> Median household income: $69,592 (5th highest)
> Poverty rate: 11.4% (7th lowest)

Hawaii is the most expensive state to live in the country. Due largely to its remote geographical location — the middle of the Pacific Ocean — goods and services cost 16.2% more on average in Hawaii than they do elsewhere in the nation. Residents also have some of the nation’s highest incomes and most expensive homes. The typical Hawaiian home is valued at $528,000, the highest in the country, and the typical household earns $69,592 annually, the fifth highest median household income nationwide. In the absence of abundant natural resources, Hawaii has cultivated other industries. It relies more heavily on its entertainment industry, particularly tourism, than many other states. While 9.8% of American workers are employed in the arts, entertainment, recreation and accommodation sector, 16.6% of workers in Hawaii work in the industry, the second highest such concentration in the country, after only Nevada.

14. Vermont
> Debt per capita:
$5,315 (10th highest)
> Credit rating (S&P/Moody’s): AA+/Aaa
> Unemployment rate: 3.7% (8th lowest)
> Median household income: $54,166 (20th highest)
> Poverty rate: 12.2% (14th lowest)

Fewer than 100 violent crimes are committed for every 100,000 Vermonters each year, the lowest rate in the country. In addition to safe communities, Vermont’s government benefits from a strong tax base, and residents benefit from a relatively strong housing market. The state government collects $4,595 per capita in taxes each year, the third highest tax revenue nationwide. Vermont’s median home value of $214,600 is higher than the national median of $181,200, although it has declined over the past several years, unlike in most states. The foreclosure rate, at just one in every 1,138 housing units, is the lowest in the nation, after only North Dakota.


15. Oregon
> Debt per capita:
$3,425 (23rd highest)
> Credit rating (S&P/Moody’s): AA+/Aa1
> Unemployment rate: 6.0% (7th highest)
> Median household income: $51,075 (23rd lowest)
> Poverty rate: 16.6% (tied-14th highest)

Oregon’s unemployment rate of 6% is the seventh highest in the country. The state’s labor force also contracted by 2.1% from 2010 through 2014, even as the U.S. labor force grew by 6.7% during that time. While the state’s job market has seen better days, the state has many positive elements going for it as well.

People tend to move to a state when things are improving. In Oregon, migration over the five years through 2014 accounts for 2.2% of the current population, one of the larger shares in the country. The state government also managed its pension funds well: State pension funds are 96% funded, one of the highest percentages in the country. Oregon’s economy has also grew by 3.6% last year, the sixth-largest rate of growth of any state in the U.S.

16. Idaho
> Debt per capita:
$2,232 (13th lowest)
> Credit rating (S&P/Moody’s): AA+/Aa1
> Unemployment rate: 4.0% (11th lowest)
> Median household income: $47,861 (14th lowest)
> Poverty rate: 14.8% (25th highest)

According to an annual report on corruption from The Center for Public Integrity, Idaho earns the second highest marks in the country for its budgetary process. With responsible budgetary practices, Idaho has assets on hand to cover 85% of all state pensions. The average pension funded ratio among all states is 72%, by contrast. Idaho is able to effectively manage workers’ pensions despite having a much lower than average annual tax revenue per capita. While the national average per capita tax revenue is $2,657, Idaho collects on average only $2,190 annually per state resident.

17. Virginia
> Debt per capita:
$3,366 (25th lowest)
> Credit rating (S&P/Moody’s): AAA/Aaa
> Unemployment rate: 4.2% (15th lowest)
> Median household income: $64,902 (8th highest)
> Poverty rate: 11.8% (12th lowest)

Virginia ranked as the seventh best-run state in the country in 2010. It remained in the top 10 through 2012, but then steadily declined to this year’s mediocre rank of 17th. The drop is partially due to subpar economic growth. The state’s GDP growth remained stagnant in 2014, while nearly every other state in the country had at least some economic growth. Yet, Virginia receives top marks from credit rating agencies Moody’s and S&P, which may reflect strong leadership and good investment potential.

Incomes are quite high, likely due in part to the proximity of the Washington D.C. area, where some of the nation’s highest-paying jobs are based. The typical Virginia household earns $64,902 annually, significantly more than the median household income across the U.S. of $53,657. Virginia does not benefit from high tax revenue, however. While the average annual per capita tax revenue among all states is $2,657 — Virginia’s is $2,304.


18. Alaska
> Debt per capita:
$8,440 (4th highest)
> Credit rating (S&P/Moody’s): AAA/Aaa
> Unemployment rate: 6.4% (4th highest)
> Median household income: $71,583 (3rd highest)
> Poverty rate: 11.2% (5th lowest)

Previously positioned in the top 10, Alaska has slipped considerably in the rankings of the best-run states. Though the state maintains a perfect rating from both Moody’s and S&P, both credit rating agencies have a negative outlook for the state. Like only a few other states, more people left Alaska than arrived from April 2010 to July 2014. With a 6.4% unemployment rate, Alaska’s job market is also struggling. Only three states have higher unemployment rates than Alaska.

In 2013, the average annual per capita tax revenue across all states was $2,657. In the same year, Alaska collected about $6,967 per state resident, the second highest tax revenue in the country after North Dakota. However, with such weak population growth and higher than average unemployment, Alaska’s tax revenue may not remain so large.

19. Montana
> Debt per capita:
$3,476 (21st highest)
> Credit rating (S&P/Moody’s): AA/Aa1
> Unemployment rate: 4.1% (13th lowest)
> Median household income: $46,328 (10th lowest)
> Poverty rate: 15.4% (22nd highest)

Montana’s annual tax revenue is not particularly high — at $2,584 per capita, it is just below the nationwide average of $2,657 per capita. Similarly, the state’s median annual household income of $46,328 is lower than the national median income of $53,657. Highway maintenance and construction, as well as government administration, account for relatively large shares of the state’s spending, at 11.3% and 6.3% of total expenditure respectively. These allocations are also among the largest compared with other state budgets.

Montana residents are among the most likely Americans to have a high school diploma. Nearly 93% of adults in the state have at least a high school diploma, the second highest percentage in the country.

20. Maryland
> Debt per capita:
$4,362 (12th highest)
> Credit rating (S&P/Moody’s): AAA/Aaa
> Unemployment rate: 5.1% (24th highest)
> Median household income: $73,971 (the highest)
> Poverty rate: 10.1% (2nd lowest)

Maryland managed to record a 0.8% economic growth in 2014, despite the government sector dragging the state economy down by 0.11 percentage points. With a typical household earning $73,971 annually, incomes in the state are higher in Maryland than anywhere else in the country. High incomes mean a larger tax base, which in turn is a likely reason Maryland has a perfect credit rating from both Moody’s and S&P. Maryland’s poverty rate of 10.1% is also the second lowest poverty rate in the country after New Hampshire.

Maryland’s labor market and its unemployment insurance system, however, are not exceptional. The state’s unemployment rate of 5.1% is roughly in line with the national rate of 5.0%. Similarly, while 38.7% of Americans exhaust their unemployment benefits before finding a job, 38.8% of Maryland residents are unable to find a job before their unemployment benefits expire.

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.

26. Wisconsin
> Debt per capita:
$4,027 (15th highest)
> Credit rating (S&P/Moody’s): AA/Aa2
> Unemployment rate: 4.3% (16th lowest)
> Median household income: $52,622 (25th highest)
> Poverty rate: 13.2% (18th lowest)

After a four-month presidential bid by Wisconsin’s Governor Scott Walker, the state’s government and its finances have received national attention. Wisconsin, along with South Dakota, is one of just two states with a fully funded pension system. However, it is also one of seven states without a rainy day fund. In crafting the most recent budget, Walker introduced various cuts to education funding, including $250 million from the University of Wisconsin budget. While education is a key foundation of economic prosperity and the cuts are concerning, the consequence of the budget adjustments remains to be seen. Currently, the percentage of adults with a bachelor’s degree, at 28.4%, is lower than the national rate, while the percentage of adults with at least a high school diploma, at 92.5%, is the fifth highest nationwide.

27. Tennessee
> Debt per capita:
$945 (the lowest)
> Credit rating (S&P/Moody’s): AA+/Aaa
> Unemployment rate: 5.6% (14th highest)
> Median household income: $44,361 (6th lowest)
> Poverty rate: 18.3% (tied-7th highest)

Tennessee spends 39.4% of total annual expenditure on welfare, a larger percentage than in any state other than New York — and this spending may be somewhat necessary. Of all Tennessee residents, 18.3% live in poverty, higher than the 15.5% national poverty rate. Many impoverished residents likely rely on government assistance — 17.6% of Tennesseans receive food stamp benefits, the third highest share of any state population. Despite high welfare spending, benefits to those in need may not be as costly as in other states. According to the Cato Institute, a libertarian think tank, the typical benefits package in Tennessee is worth just $17,413, less than in any state other than Mississippi. In fact, high-spending states often have high debt levels, and Tennessee has very little debt relative to its population. State debt totals just $945 per capita, the lowest in the nation.

28. Ohio
> Debt per capita:
$2,858 (20th lowest)
> Credit rating (S&P/Moody’s): AA+/Aa1
> Unemployment rate: 4.4% (19th lowest)
> Median household income: $49,308 (16th lowest)
> Poverty rate: 15.8% (20th highest)

Home to roughly 11.6 million people, Ohio is one of the most populous states in the country. Despite an extensive tax base, the state has relatively low tax revenue per capita. Ohio only collects about $2,373 per resident per year compared to $2,657 nationwide. One reason for this is relatively low incomes throughout the state. While the typical American household earns $53,657 annually, the median annual household income in Ohio is only $49,308. In addition, people have been leaving the state to live elsewhere faster than people are moving in. This has reduced the tax base and dragged down property values. From 2010 through 2014, home values in the Buckeye State declined by 3.9%, one of the sharpest such decreases in the country.

One area in which the state excels is putting its unemployed residents back to work. Only 27.9% of unemployment insurance recipients find work before their benefits expire, one of the lowest exhaustion rates in the nation.

29. Florida
> Debt per capita:
$1,905 (9th lowest)
> Credit rating (S&P/Moody’s): AAA/Aa1
> Unemployment rate: 5.1% (24th highest)
> Median household income: $47,463 (12th lowest)
> Poverty rate: 16.5% (16th highest)

Florida is still coping with the lingering effects of the housing crisis. The state leads the nation in foreclosures, for example, with one in every 43.6 housing units in some phase of the foreclosure process. On the other hand, home prices have rebounded recently, rising 6.1% from 2013 through last year, the seventh highest increase in the nation. Also, while Florida’s unemployment rate of 5.1% is not particularly high, the state’s unemployment insurance system is inadequate for many jobless residents. More than 62% of unemployment insurance claimants exhaust their benefits before finding a job, the highest exhaustion rate in the nation. In addition, just 12% of unemployed individuals even receive benefits, tied with South Carolina for the lowest recipiency rate in the country.


30. New York
> Debt per capita:
$6,888 (6th highest)
> Credit rating (S&P/Moody’s): AA+/Aa1
> Unemployment rate: 4.8% (23rd lowest)
> Median household income: $58,878 (16th highest)
> Poverty rate: 15.9% (19th highest)

The Empire State is in the top 10 for tax revenue per capita, collecting the equivalent of $3,731 per person, which is more than $1,000 higher than the corresponding U.S. figure. With a healthy tax base, governments can often run a state better than without such a base and achieve better outcomes. For example, a higher state tax revenue tends to correlate with higher educational attainment levels and lower poverty. New York, however, is a distinct exception. The state’s poverty and high school attainment rates are both worse than the national ones.

31. Indiana
> Debt per capita:
$3,420 (24th highest)
> Credit rating (S&P/Moody’s): AAA/Aaa
> Unemployment rate: 4.4% (19th lowest)
> Median household income: $49,446 (18th lowest)
> Poverty rate: 15.2% (tied-23rd highest)

Despite top marks from credit rating agencies Moody’s and S&P, Indiana could improve by several other economic measures. The state has struggled to attract new residents. It added a net of roughly 8,400 people due to people moving to the state between 2010 and 2014, which accounts for just a fraction of a percent of the current population. In addition to being unable to attract people to the state, Indiana’s economy is relatively stagnant. The state’s economy expanded by less than 0.5% in 2014, significantly less than the national growth rate of 2.2%. The state also has relatively high levels of debt, equivalent to nearly 60% of its annual revenue.

Indiana allocates a much smaller share of resources to state government than is typical. Only 3.4% of the state’s workforce is employed in public administration, a smaller share than in all but three other states. Furthermore, Indiana spends only 1.7% of its annual budget on governmental administration, a smaller share than any other state.

32. West Virginia
> Debt per capita:
$3,975 (18th highest)
> Credit rating (S&P/Moody’s): AA/Aa1
> Unemployment rate: 6.9% (the highest)
> Median household income: $41,059 (2nd lowest)
> Poverty rate: 18.3% (tied-7th highest)

Like several other states in the Appalachian region, West Virginia has been one of the nation’s largest coal producers for many years. However, due in part to stricter environmental regulations and falling natural gas prices, U.S. coal production — and employment in the industry — has fallen precipitously in the region in recent years. The state’s natural gas production, on the other hand, is on the rise. With the development of the Marcellus Shale, West Virginia’s natural gas production has tripled since 2007. This could partially explain the state’s 2014 GDP growth of 5.1%, the third largest economic expansion in the nation.

Despite the economic growth, West Virginians struggle with some of the nation’s worst economic and social outcomes, including the second lowest median income, the highest unemployment rate, and the lowest college educational attainment. The typical household earns just $41,059 annually, 6.9% of the workforce is out of work, and just 19.2% of adults have a bachelor’s degree.


33. Nevada
> Debt per capita:
$1,271 (3rd lowest)
> Credit rating (S&P/Moody’s): AA/Aa2
> Unemployment rate: 6.6% (3rd highest)
> Median household income: $51,450 (24th lowest)
> Poverty rate: 15.2% (tied-23rd highest)

Nevada was one of the states hardest hit by the Great Recession. Although the unemployment rate has declined declining from 12.7% four years ago to 6.6% today — the largest improvement nationwide over that time — it still remains the third highest in the country. Similarly, despite the state’s foreclosure rate declining by 8.1 percentage points from 2010 to 2014 — also by far the largest improvement nationwide — 1.32% of Nevada homes today are in foreclosure, still the fourth highest rate in the country. Similarly, home values increased by 9.9% over that period, also the fourth largest growth of any state.

While there were improvements in the housing industry, gambling and mining revenues were lower than expected, and the state ended last fiscal year with a $162 million budget shortfall. To alleviate the deficit, Nevada depleted its rainy day fund. Now the state is one of just seven with no rainy day fund.

34. Michigan
> Debt per capita:
$3,065 (23rd lowest)
> Credit rating (S&P/Moody’s): AA-/Aa1
> Unemployment rate: 5.0% (25th lowest)
> Median household income: $49,847 (20th lowest)
> Poverty rate: 16.2% (18th highest)

Michigan is one of only a few states where from 2010 through 2014 more people left than arrived. Over that period, the state had a net migration loss of 72,674 residents, or 0.7% of its total population. Michigan was one of the hardest hit states by the recession, and it is currently in the process of a recovery. In the past four years, Michigan’s unemployment rate has declined from 9.8% to 5.0%, a 4.8 percentage point improvement — the fourth largest nationwide. Also, the state was able to pass a $54.5 billion budget in fiscal 2015, up considerably from $37.5 billion in the previous year. This will likely permit the state to spend more on highway repairs, among other much-needed public projects.

The government of Michigan is notable for its corruption and lack of transparency. According to a study by the Center for Public Integrity, Michigan is the most corrupt state in the nation, with weak disclosure rules for lobbyists and poor accountability in every branch of government. Michigan was judged well, however, for its state budget process.

35. Georgia
> Debt per capita:
$1,316 (4th lowest)
> Credit rating (S&P/Moody’s): AAA/Aaa
> Unemployment rate: 5.7% (12th highest)
> Median household income: $49,321 (17th lowest)
> Poverty rate: 18.3% (tied-7th highest)

Georgia has climbed from 44th place on this list to 35th this year, an improvement largely due to its declining unemployment rate. Today, 5.7% of Georgia’s workforce is unemployed, a significant recovery from last year’s 7.2% unemployment rate. However, Georgia still has one of the highest unemployment rates in the country and one of the least widely used unemployment insurance programs of any state. Just 13.0% of unemployed residents in Georgia receive benefits, one of the lowest recipiency rates, and much lower than the national rate of 27.0%. States with less than optimal unemployment insurance systems also often have relatively small tax bases. Georgia collects just $1,762 per capita from its residents annually, the least of any state.

36. Arizona
> Debt per capita:
$2,039 (11th lowest)
> Credit rating (S&P/Moody’s): AA/Aa2
> Unemployment rate: 6.1% (6th highest)
> Median household income: $50,068 (21st lowest)
> Poverty rate: 18.2% (10th highest)

Net migration from 2010 through 2014 accounts for 2.6% of Arizona’s population. While Arizona appears to be a popular destination for Americans seeking new homes, it seems unlikely that new residents are choosing the Sun Belt state for its public services. A $9.1 billion budget was recently approved for the coming fiscal year, less than in other states. The new budget cuts, among other things, education spending by about $352.5 million. The downsized budget is part of a two-decade trend of lower taxes and also fewer government services. Arizona collects just $2,001 in taxes per capita, much less than the $2,657 state average.

However, education spending may increase in the coming years from the current relatively small 34% share of total state expenditure. Arizona Governor Doug Ducey recently signed a package of bills that will provide $3.5 billion to the public school system — the settlement of a five-year lawsuit brought against the state by its public schools for underfunding education during the recession.

37. Missouri
> Debt per capita:
$3,184 (24th lowest)
> Credit rating (S&P/Moody’s): AAA/Aaa
> Unemployment rate: 5.0% (25th lowest)
> Median household income: $48,363 (15th lowest)
> Poverty rate: 15.5% (21st highest)

After its legislature introduced spending restrictions to help balance the state budget, Missouri received the highest possible credit rating from both Moody’s and S&P, as well as stable outlooks from both agencies. In Missouri’s balanced budget, low spending is accompanied by low taxes. The state government collects just $1,837 in taxes per capita annually, one of the lowest tax revenues nationwide. Missouri also spends just 2.0% of its total expenditure on government administration, the fifth lowest share nationwide. Low administrative spending contributed to low wages for state government employees, which are some of the lowest in the country. The low wages may also contribute to a higher voluntary turnover rate.

38. Connecticut
> Debt per capita:
$8,996 (3rd highest)
> Credit rating (S&P/Moody’s): AA/Aa3
> Unemployment rate: 5.1% (24th highest)
> Median household income: $70,048 (4th highest)
> Poverty rate: 10.8% (3rd lowest)

Connecticut has one of the most underfunded pension programs in the country — it has enough funds to cover just 48% of all pension obligations. To address the issue, Governor Dannel Malloy has introduced a plan that includes laying off 500 state employees and restructuring the state’s pension program to help meet short-term obligations. The state’s economy is also somewhat stagnant. Despite having some of the wealthiest residents in the country, Connecticut’s GDP growth rate of just 0.6% last year significantly lagged the 2.2% national expansion.

According to a White House report, Connecticut is tied with Rhode Island for the largest share — 41% — of state roads in poor condition. The state spends just 4.5% of its total expenditure on highways, the fifth least in the nation.

39. Maine
> Debt per capita:
$4,041 (14th highest)
> Credit rating (S&P/Moody’s): AA/Aa2
> Unemployment rate: 4.3% (16th lowest)
> Median household income: $49,462 (19th lowest)
> Poverty rate: 14.1% (22nd lowest)

Maine is one of only a handful of states where welfare spending exceeds education spending as a percentage of total expenditure. Each year, the state’s education expenditure equals 25.6% of total spending, the lowest percentage compared with other states. Annual welfare spending, on the other hand, is equal to 36.7% of total spending, the third largest share of any state. While the percentage of adults with a high school degree, at 91.7%, is relatively high, the percentage of people receiving food stamps, at 16.9%, is the sixth largest share nationwide.

Maine Governor Paul LePage, through aggressive tax reforms, has attempted to dramatically restructure the state’s spending apparatus. Numerous attempts to restrict welfare programs were ultimately rejected by concerns over their legality. In the most recent budget, Maine has cut public school funding among other public programs.


40. South Carolina
> Debt per capita:
$3,047 (22nd lowest)
> Credit rating (S&P/Moody’s): AA+/Aaa
> Unemployment rate: 5.6% (14th highest)
> Median household income: $45,238 (9th lowest)
> Poverty rate: 18.0% (11th highest)

South Carolina has some of the lowest tax revenues in the country. It collects just $1,805 per capita in taxes annually, the fifth least of any state government. This may be partially due to its relatively poor residents. The typical household in the state makes just $45,238 a year, one of the lowest median household incomes nationwide. Similarly, 18.0% of the state’s population lives below the poverty line, higher than the 15.5% national poverty rate. However, despite its Republican leadership decrying federal deficit spending, South Carolina’s weak tax base is subsidized heavily by federal funding. It is the most dependent state on federal funding, receiving around $8 from Washington D.C. for every $1 its residents pay in federal taxes. Major subsidies will allow South Carolina to have the largest budget in state history for the coming fiscal year.

41. Pennsylvania
> Debt per capita:
$3,677 (20th highest)
> Credit rating (S&P/Moody’s): AA-/Aa3
> Unemployment rate: 5.1% (24th highest)
> Median household income: $53,234 (22nd highest)
> Poverty rate: 13.6% (20th lowest)

Pennsylvania is currently in the middle of a budget stalemate, as Democratic Governor Tom Wolf is in political gridlock with the state’s Republican legislature to reach an agreement on an annual budget. State officials missed the budget deadline, and over the four months of the proceedings, the budgetless state spent more than $27 billion — a considerable proportion of annual funds typically available to the state. Such spending in the state is unsustainable. Pennsylvania was one of seven states last fiscal year reporting no rainy day funds whatsoever. For Moody’s, these budget difficulties display poor fiscal management. The rating agency downgraded Pennsylvania’s credit rating this year to Aa3, one of the lowest of any state.

42. Arkansas
> Debt per capita:
$1,331 (5th lowest)
> Credit rating (S&P/Moody’s): AA/Aa1
> Unemployment rate: 5.1% (24th highest)
> Median household income: $41,262 (3rd lowest)
> Poverty rate: 18.9% (6th highest)

By many measures, Arkansas is one of the most poorly run states in the country. Roughly 19% of state residents live below the poverty line, one of the highest poverty rates in the country. The typical household in Arkansas earns about $41,262 annually, much less than the $53,657 the typical American household earns. A weak tax base may have contributed to the state’s less-than-optimal credit rating from Moody’s and S&P.

Arkansas is one of only seven states that does not maintain a rainy day fund. However short- sighted that may be, the state spends more in other areas. Educational spending accounts for 42.8% of the state’s annual budget, a significantly larger share than the 35.6% average across the country. Additionally, Arkansas has minimal debt. The state’s total debt is equal to $1,331 per resident, much lower than the average per capita debt among states of $3,567.


43. Louisiana
> Debt per capita:
$3,998 (17th highest)
> Credit rating (S&P/Moody’s): AA/Aa2
> Unemployment rate: 6.2% (5th highest)
> Median household income: $44,555 (7th lowest)
> Poverty rate: 19.8% (3rd highest)

According to Moody’s, which applies a negative outlook to the state’s Aa2 rating, things are likely to get worse in Louisiana before they get better. Moody’s cited a dwindled rainy day fund and “muted job growth” as some justifications for its unfavorable forecast. In the last four years, the state’s unemployment rate has declined by just 1.3 percentage points, far worse the 3.8 percentage point national improvement. Today, 6.2% of Louisiana’s workforce is out of work, the fifth highest unemployment rate nationwide.

44. New Jersey
> Debt per capita:
$7,190 (5th highest)
> Credit rating (S&P/Moody’s): A/A2
> Unemployment rate: 5.4% (16th highest)
> Median household income: $71,919 (2nd highest)
> Poverty rate: 11.1% (4th lowest)

Only one state, Illinois, has a worse credit rating from Moody’s and S&P than New Jersey. Despite collecting the seventh highest total tax revenue in the country, only a handful of states have more debt than New Jersey. New Jersey is also one of only seven states that does not have a rainy day fund. Struggling to attract new residents, the state added less than 7,000 people due to migration between 2010 and 2014, which accounts for just a fraction of a percent of the current population.

Despite clear signs of poor fiscal management, New Jersey residents are relatively prosperous. Roughly one in 10 New Jersey households earns at least $200,000 annually, the largest such share in the country. Additionally, only 11.1% of New Jersey residents live below the poverty line, the fourth lowest poverty rate of any state. With high incomes and low poverty, the median household income in the state of $71,919 is the highest in the country after Maryland.

45. Kentucky
> Debt per capita:
$3,395 (25th highest)
> Credit rating (S&P/Moody’s): A+/Aa2
> Unemployment rate: 4.9% (24th lowest)
> Median household income: $42,958 (5th lowest)
> Poverty rate: 19.1% (5th highest)

Kentucky has one of the most underfunded pension systems in the nation. With its current level of pension funding, the state has the ability to meet just 44.0% of its obligations. In an attempt to make full payments to the state’s pension recipients, the Kentucky legislature passed a law in 2013 that does not require the Kentucky Employment Retirement Systems to make expensive cost-of-living adjustments if funding is not available. Last year, the state government finalized a $20.3 billion budget that will regulate the 2015-2016 fiscal period. Kentucky’s spending obligations currently outpace its revenues, but those revenues, according to the National Association of State Budget Officers, are expected to increase slightly. Kentucky’s increased spending obligations may require the state to dip into its insufficient rainy day fund, which amounts to just 0.8% of its annual expenditures. The state is projected to face a $500 million budget shortfall — the severity of which will largely depend on tax reform and gaming revenue in the coming years.

46. Alabama
> Debt per capita:
$1,867 (8th lowest)
> Credit rating (S&P/Moody’s): AA/Aa1
> Unemployment rate: 5.9% (9th highest)
> Median household income: $42,830 (4th lowest)
> Poverty rate: 19.3% (4th highest)

Alabama’s poor social and economic outcomes led to its rank as the fifth worst-run state. Alabama’s per capita tax revenue is only $1,911 — a smaller amount than in all but a handful of other states. The state’s weak tax revenue is due in part to low incomes among its residents. The typical Alabama household makes just $42,830 annually, significantly less than the national average of $53,657. Furthermore, nearly one-fifth of state residents live below the poverty line, a higher poverty rate than in all but three other states. Also, Alabama’s 5.9% unemployment rate is among the highest in the country. Benefits for the state’s unemployed workers are among the lowest in the nation. Across the country, the average unemployment insurance beneficiary receives about $321 a week. In Alabama, the average weekly unemployment insurance payout is only $214.

Economic growth in the state is sluggish. While the national economy expanded by 2.2% in 2014, Alabama’s economy grew by only 0.7% in the same time period.

47. Rhode Island
> Debt per capita:
$9,068 (2nd highest)
> Credit rating (S&P/Moody’s): AA/Aa2
> Unemployment rate: 5.3% (17th highest)
> Median household income: $54,891 (19th highest)
> Poverty rate: 14.3% (24th lowest)

After Massachusetts, its neighbor to the north, Rhode Island’s debt per capita is the second highest in the nation, contributing to its rank as the fourth worst-run state. While the average state debt per capita across all states is $3,567, Rhode Island’s debt is equal to $9,068 per state resident. With a dwindling tax base, conditions may get worse in the Ocean State before they get better. Rhode Island lost roughly 0.3% of its total population to people relocating from 2010 through 2014, making it one of 12 states with more people moving out than moving in. The population decline likely contributed to the even sharper drop in property values. Home prices in Rhode Island decreased by 7.3% over roughly the same time period, the fourth steepest drop in the country.

Budget allocation in Rhode Island may not be efficient. While the state spends much more on government than is typical, at 5.4% of its annual budget, the government sector actually detracted 0.2 percentage points from the state’s 2014 GDP growth, a larger drag than in all but six other states.


48. Mississippi
> Debt per capita:
$2,376 (15th lowest)
> Credit rating (S&P/Moody’s): AA/Aa2
> Unemployment rate: 5.9% (9th highest)
> Median household income: $39,680 (the lowest)
> Poverty rate: 21.5% (the highest)

It may not be surprising to find what may be the worst economy in the country ranked as the third worst-run state. The typical household in Mississippi earns just $39,680 a year, the lowest such amount in the country. Similarly, 21.5% of Mississippi residents live in poverty, the highest poverty rate nationwide. The job climate is also dismal. Mississippi’s unemployment rate of 5.9% is the ninth highest in the nation. From 2010 through 2014, the state’s workforce shrank by 5.4%, while the country’s workforce grew by 6.7%. In the same time period, as a result of people moving in and out of the state, Mississippi’s total population shrank by 0.6%, the fifth largest net migration decline of any state.

49. Illinois
> Debt per capita:
$4,942 (11th highest)
> Credit rating (S&P/Moody’s): A-/Baa1
> Unemployment rate: 5.4% (16th highest)
> Median household income: $57,444 (17th highest)
> Poverty rate: 14.4% (25th lowest)

Illinois collects more than $3,000 per capita in state and local taxes each year, one of the highest per capita tax revenues. Yet, the state’s fiscal management system does not appear to be operating optimally, which is the main reason it ranks as the second worst-run state. For example, Illinois has one of the smallest rainy day funds compared to other states, at 1% of its general annual budget — an indication the state may not be able to satisfy its short-term obligations. Illinois’ debt is equal to more than three-fourths of its annual revenue, also one of the highest shares in the nation. Similarly, the state’s pension fund is not financially healthy. The state only has assets on hand to meet 39% of its pension obligations, the lowest ratio of any state. Perhaps as a result of the state’s finances, Illinois has the worst credit rating and outlook from S&P and Moody’s of any state.

The housing market in Illinois is also struggling. One in every 73 housing units is in some state of the foreclosure process, nearly the highest foreclosure rate in the country. As is often the case in states with particularly high foreclosure rates, home prices in Illinois have dropped by more than 10% from 2010 through last year. This decline was the worst in the country during that time.

50. New Mexico
> Debt per capita:
$3,468 (22nd highest)
> Credit rating (S&P/Moody’s): AA+/Aaa
> Unemployment rate: 6.8% (2nd highest)
> Median household income: $44,803 (8th lowest)
> Poverty rate: 21.3% (2nd highest)

New Mexico is the worst-run state in the country with some of the worst social and economic outcomes. Only a handful of states struggle with similar levels of extreme poverty as New Mexico. More than one in every 10 households in the state earns less than $10,000 each year, the second highest proportion after Mississippi. The state also struggles with one of the nation’s highest violent crime rates. Close to 600 violent crimes are reported each year per 100,000 state residents, one of the highest rates nationwide.

Like a number of other states towards the bottom of this list, more people left New Mexico than arrived from April of 2010 through the middle of last year. Only Illinois reported a larger net population decline over that period.

To determine how well each state is run, 24/7 Wall St. constructed an index of numerous measures from a variety of sources. From the U.S. Census Bureau, we looked at net migration to a state from April 2010 to July 2014 as a percentage of the population in 2014. We reviewed each state’s finances for the 2013 fiscal year, including revenue, per capita tax collection, expenditure and debt levels, all from the Census. In addition, we considered pension funding ratios for each state from Washington D.C.-based think tank The Pew Research Center, as well as each state’s rainy day fund balance as a percentage of total general fund expenditures estimated for fiscal 2015 from The National Association of State Budget Officers (NASBO). For Georgia and Oklahoma, for which fiscal 2015 estimates were not available, we used the balance for fiscal 2014. NASBO defines rainy day funds as “budget stabilization funds set aside to respond to unforeseen circumstances.” Government general obligation ratings were provided by Standard & Poor’s and Moody’s Investors Service.

From the U.S. Census Bureau’s 2014 American Community Survey (ACS), we also considered a range of socioeconomic factors to assess social outcomes and residents’ well-being. We looked at poverty, educational attainment, the percentage of adults without health insurance, and median household income. Violent crime rates came from the Federal Bureau of Investigation’s (FBI) 2014 Uniform Crime Report. Annual foreclosure rates, measured as the number of housing units at some stage in the foreclosure process, were provided by housing market data tracker RealtyTrac and are for 2014.

To evaluate each state’s job market, we reviewed annual 2014 unemployment rates as well as jobless rates as of October from the Bureau of Labor Statistics (BLS). Characteristics of each state’s unemployment insurance (UI) benefits system, including average weekly benefit amounts in dollars and as a percentage of the average weekly wage (the replacement rate), the percentage of UI claimants exhausting their benefits before finding a job (the exhaustion rate), the average duration in weeks of insurance benefits, and the percentage of unemployed individuals receiving UI benefits (the recipiency rate) are from the Department of Labor’s Employment and Training Administration (DOLETA) and are as of 2014.

Lastly, to assess the strength of each state’s economy, we reviewed real GDP growth rates in 2014 from the Bureau of Economic Analysis (BEA). Also from the BEA, we considered industry contributions to a state’s economic growth in 2014, as well as 2013 regional price parity, a proxy for an area’s cost of living.