Special Report

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

Sacramento, California
Source: Thinkstock

16. California
> Debt per capita: $4,006 (17th highest)
> 2015 Unemployment rate: 6.2% (7th highest)
> Credit rating: Aa3/AA-
> Poverty: 15.3% (19th highest)

California is one of the largest and best performing economies in the country. The state’s GDP of $56,365 per capita is roughly $7,000 greater than the national average. Largely due to innovation in the state’s technology industry, California’s economy grew more than that of any other U.S. state last year. Growing 4.1% in 2015, California’s economy surpassed France and Brazil to become the sixth largest in the world.

Despite the strong economy, California has one of the worst school systems in the nation. Just 82.2% of California adults have graduated from high school, the lowest educational attainment rate in the country. California also spends relatively little on education. The state dedicates 28.0% of its total expenditures to education spending, which amounts to roughly $1,400 less on education per student than the average across all states.

George Washington Statue, Boston, Massachusetts
Source: Thinkstock

17. Massachusetts
> Debt per capita: $10,926 (the highest)
> 2015 Unemployment rate: 5.0% (tied-23rd lowest)
> Credit rating: Aa1/AA+
> Poverty: 11.5% (tied-13th lowest)

With a wealthy tax base and substantial tax revenue, Massachusetts regularly reports some of the best health and education outcomes of all states. The state spends $15,087 on education per student, about $4,000 more than the national average. An estimated 90.2% of adults have at least a high school diploma, well above the national rate, and 41.5% have at least a bachelor’s degree, the highest of all states. Additionally, just 2.8% of Massachusetts residents do not have health insurance, the lowest uninsured rate in the country.

Heavy spending, however, has saddled the state with debt. State debt is equal to $10,926 per resident, more than three times the average across all states. At the end of last year, Massachusetts was on track to hit its $21.7 billion debt ceiling in the 2017 fiscal year. Citing possible financial instability resulting from the state’s heavy borrowing, S&P recently downgraded its outlook on Massachusetts from stable to negative.

Helena, Montana
Source: Thinkstock

18. Montana
> Debt per capita: $3,294 (25th highest)
> 2015 Unemployment rate: 4.1% (11th lowest)
> Credit rating: Aa1/AA
> Poverty: 14.6% (24th highest)

While Montana still ranks in the upper half of our list, its ranking has fallen compared to years past. Just three years ago, the state ranked 11th best. This year it ranks 18th. One of the factors contributing to the state’s downward trajectory is the state’s rainy day fund, which is now depleted. While the state’s reserves totalled 17.5% of its fiscal 2014 budget, eighth best in the country that year, the state has no reserves for its 2017 fiscal year.

One positive factor is the state’s favorable job environment. The state labor force increased by 4.3% from 2011 through 2015, the fifth largest increase over that time period. Also, the state’s annual unemployment rate of 4.1% is better than a majority of states.

Richmond, Virginia, USA Skyline
Source: Thinkstock

19. Virginia
> Debt per capita: $3,309 (23rd highest)
> 2015 Unemployment rate: 4.4% (tied-16th lowest)
> Credit rating: Aaa/AAA
> Poverty: 11.2% (11th lowest)

Virginia ranks relatively well in a number of socioeconomic measures. Of the state’s adults, 37% have at least a bachelor’s degree, nearly the highest such share of any state. High educational attainment typically correlates with lower crime and unemployment rates and with higher incomes — Virginia is no exception. The state’s violent crime rate is third lowest of all states, and its 2015 annual unemployment rate of 4.4% is nearly a full percentage point below the corresponding national figure. Additionally, Virginia’s 11.2% poverty rate is well below the 14.7% nationwide poverty rate.

However, the state faces certain budget problems. Only about three-quarters of the state pension is funded, and government debt comprises more than half of Virginia’s total revenue. While many states perform better in these measures, Virginia’s reputation of responsible long-term financial planning, among other things, has earned it the highest possible credit rating from Moody’s and S&P.

Madison, Wisconsin
Source: Thinkstock

20. Wisconsin
> Debt per capita: $3,876 (18th highest)
> 2015 Unemployment rate: 4.6% (19th lowest)
> Credit rating: Aa2/AA
> Poverty: 12.1% (15th lowest)

A declining population, particularly when residents are moving out of state, often can be traced to a lack of job opportunities or a low quality of life. Between 2010 and 2015, 14,210 more people moved out of the state than moved in, equivalent to a net population loss of 0.2% over that time. Wisconsin is one of just 14 states with a net negative migration over the last five years. Home values in the state remained effectively stagnant over that time, even as the U.S. median home value increased by 12%. This is likely a product of outbound migration from the state.

One major positive for the state is its apparent fiscal responsibility. Wisconsin is one of just three states with enough assets allocated to fully meet its future pension obligations.

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