Special Report

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

Samuel Stebbins

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41. New Jersey
> 2018 unemployment: 4.1% (20th highest)
> Pension funded ratio: 35.8% (2nd lowest)
> 1 yr. GDP growth: 2.2% (19th lowest)
> Poverty rate: 9.5% (5th lowest)
> Moody’s credit rating and outlook: A3/Stable

Few state governments are saddled with as much debt as New Jersey. The state has an outstanding balance of nearly $66 billion — equal to $7,411 per resident, one of the highest debt per capita figures of any state. The state also has a woefully underfunded pension system, with funding for only 35.8% of its total pension obligations. The state government’s financial woes do not stop there. New Jersey is one of only four states with no savings set aside to fund government operations in the event of a revenue shortfall.

People living in the state are also less likely to be able to find a job than most Americans. New Jersey’s annual unemployment rate of 4.1% is higher than the comparable 3.9% national rate.

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42. Rhode Island
> 2018 unemployment: 4.1% (20th highest)
> Pension funded ratio: 53.7% (6th lowest)
> 1 yr. GDP growth: 1.2% (8th lowest)
> Poverty rate: 12.9% (24th highest)
> Moody’s credit rating and outlook: Aa2/Stable

Rhode Island is the lowest ranking state in the Northeast on this list. The state’s economy grew by just 1.2% in 2018, less than half the comparable 2.9% national GDP growth the same year. A more rapid economic growth could improve the state’s job market. Currently, Rhode Island’s annual unemployment rate of 4.1% is higher than in most states and the 3.9% national rate.

Rhode Island may be facing a pension crisis. The state has funding for just 53.7% of its pension obligations, less than all but five other states.

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43. Kentucky
> 2018 unemployment: 4.3% (12th highest)
> Pension funded ratio: 33.9% (the lowest)
> 1 yr. GDP growth: 1.4% (10th lowest)
> Poverty rate: 16.9% (6th highest)
> Moody’s credit rating and outlook: Aa3/Stable

Kentucky has the most underfunded pension system in the United States. The state has enough money to fund only 33.9% of its total pension obligations. It is also not well equipped to to fund government operations in the event of a revenue shortfall, with the equivalent of only 0.8% of its annual expenditures saved in a rainy day fund. The average rainy day fund savings across all states is equal to 8.3% of annual expenditures. Economic growth has also been sluggish in Kentucky lately. The state’s economy grew by just 1.4% in 2018, less than half the comparable 2.9% national GDP growth rate.

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44. Oklahoma
> 2018 unemployment: 3.4% (16th lowest)
> Pension funded ratio: 77.9% (18th highest)
> 1 yr. GDP growth: 2.6% (20th highest)
> Poverty rate: 15.6% (8th highest)
> Moody’s credit rating and outlook: Aa2/Positive

Oklahoma is one of only 14 states that chose not to expand Medicaid coverage under the Affordable Care Act. Given the relatively high poverty rate in the state, a large share of residents could have likely benefited from the Medicaid expansion. Some 15.6% of Oklahoma residents live below the poverty line, a larger share than the 13.1% national poverty rate. Currently, 14.2% of people living in Oklahoma are uninsured, the second highest uninsured rate after only Texas and well above the 8.9% national uninsured rate.

Crime tends to be more concentrated in more impoverished areas, and Oklahoma is a relatively dangerous state. There were 466 violent crimes for every 100,000 people in the state in 2018, one of the higher violent crime rates among states and far higher than the 369 per 100,000 national violent crime rate.

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45. Illinois
> 2018 unemployment: 4.3% (12th highest)
> Pension funded ratio: 38.4% (3rd lowest)
> 1 yr. GDP growth: 2.1% (16th lowest)
> Poverty rate: 12.1% (22nd lowest)
> Moody’s credit rating and outlook: Baa3/Stable

Illinois is the only Midwestern state to rank among the bottom 10 states on this list. It is facing a worse pension crisis than nearly every other state, with enough money to fund only 38.4% of its total pension obligations. The state may also struggle to fund basic state operations in the event of a budget shortfall as it is one of only four states with no money put away in a rainy day fund.

Illinois is also a relatively dangerous states, with 404 violent crimes for every 100,000 people in 2018, well above the 369 per 100,000 national violent crime rate. Crime tends to be more common in areas with weaker economies, and in Illinois, the unemployment rate is 4.3%, 12th highest among states and well above the 3.9% national rate.

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