Monday, April 2, 2012

Best and Worst Run States in America

A must read article that discusses the best and worst run state in America. To generate these rankings, they analyzed the level of: debt, unemployment rate, quality of government services, standard of living, crime, educational outcomes, etc.To view the ranking and detailed analysis of your state, click on the following link. Not surprisingly, California and Illinois were at the bottom of the list.

Because economic and social questions involve a multitude of interrelated factors, in which cause, effect and correlation are not always clear, its challenging to determine the more relevant causes of a state's general welfare.But, in general (with some exceptions): the states that fared the best were: low population, northern states with relatively homogeneous (white) populations and fiscally conservative governments. Worth noting is that 8 out of the 10 states were red. Conversely, the states that fared the poorest were (for the most part): southern, ethnically diverse, fiscally imprudent and had experienced the brunt of the rupture of the real estate bubble. I believe that 6 out of the 10 states were solidly blue.

I am inclined to believe that a good portion of a state's general welfare is the product of its people. But, again, it's challenging to determine where people, policy and uncontrollable factors start and end. For example, to what extent are Vermont's impressive (and West Virginia's poor) educational outcomes a result of the predominant culture and values of its people and to what extent have the people been shaped by good (and bad) policies? Comparing these two homogeneous states is already a complex and contentious matter, while exploring the role (if any) that demographic change played in California's notable decline treads upon dangerous taboos that few are willing to discuss.


Best and Worst Run States in America


How well run are America’s 50 states? The answer depends a lot on where you live.

For the second year, 24/7 Wall St. has reviewed data on financial health, standard of living and government services by state to determine how well each state is managed. Based on this data, 24/7 Wall St. ranked the 50 states from the best to worst run. The best-run state is Wyoming. The worst-run state is California.

Comparing the 50 states can be a challenge because they are so different. Some states have abundant natural resources while others rely on service or innovation. State populations also can be more rural or more urban. Some had booming industries that are waning or that have disappeared altogether. Border states with large immigrant communities have populations that are growing rapidly. Many states in the Northeast are not growing at all. All of these factors affect the finances and the living conditions in a state.

Despite these differences, states can do a great deal to control their fate. Well-run states have a great deal in common with well-run corporations. Books are kept balanced. Investment is prudent. Debt is sustainable. Innovation is prized. Workers are well-chosen and well-trained. Executives, including elected and appointed officials, are retained based on merit and not politics.

To determine how well -- or how poorly -- a state is run, 24/7 Wall St. weighed each state’s financial health based on factors including credit score and debt. We also evaluated how a state uses its resources to provide its residents with high living standards, reviewing dimensions such as health insurance, employment rate, low crime and a good education. We considered hundreds of data sets and chose what we considered to be the 10 most important measurements of financial and government management.

This year, as a new component of our analysis, 24/7 Wall St. obtained additional budget data for each state. Examining the state’s revenue and expenditures, and what each government opted to spend money on, allowed us to determine if a state overspent limited resources, failed to devote funds to an urgent need of its citizens or spent a great deal of money but with poor results. While we did not use expenditures or revenue in our ranking, these numbers reflect how a state is managed. Together with other budget data, living standards and government services, it provided a complete picture of the management of each state. A fuller accounting of our methodology can be found at the end of the article.

The 24/7 Wall St. Best and Worst Run States is meant to be an analysis that will focus the debate about state management and financial operations. The analysis should also serve to empower and inform citizens who want who want to better understand the impact government decisions have on each state.

Best Run States: 

1. Wyoming
State debt per capita: $2,452 (18th lowest)
Pct. without health insurance: 14.9% (21st highest)
Pct. below poverty line: 10.3% (7th lowest)
Unemployment: 5.8% (6th lowest)

Wyoming comes in first place in 24/7 Wall St.’s Best Run States for the second year in a row. The state has high marks in many categories including high school graduation rate. A whopping 92.3% of state residents age 25 or older have at least a high school diploma — the highest rate in the country. The state also has the fourth lowest rate of violent crimes and the sixth lowest unemployment rate. Wyoming has the smallest population of any state in the country.

2. Nebraska
State debt per capita: $1,407 (4th lowest)
Pct. without health insurance: 11.5% (14th lowest)
Pct. below poverty line: 11.9% (tied for 14th lowest)
Unemployment: 4.2% (2nd lowest)

The state of Nebraska had the 21st lowest revenue per capita in the country in 2009 yet managed to spend more per capita that year than all but seven states. The state has the fourth lowest debt per capita, and it is one of 13 states with a perfect AAA credit rating. Besides being financially sound, Nebraska also has an unemployment rate of 4.2%, the second lowest rate in the country. The state also has relatively low poverty, high graduation rates and the seventh lowest rate of foreclosures last month.

3. North Dakota
State debt per capita: $2,721 (20th lowest)
Pct. without health insurance: 9.8% (9th lowest)
Pct. below poverty line: 12.3% (17th lowest)
Unemployment:  3.5% (the lowest)

One of the best measures of North Dakota’s success is its unemployment rate of 3.5% — the lowest in the country and one that has n0t been above 5% in over 20 years. While the state has relied on a stable agriculture sector to keep unemployment low, the booming oil industry has created a $1 billion surplus in the past three years. From 2009 to 2011 Montana was the only other state to report a surplus, according to the Center on Budget and Policy Priorities.

4. Minnesota
State debt per capita: $1,790 (8th lowest)
Pct. without health insurance: 9.1% (4th lowest)
Pct. below poverty line: 11.0% (10th lowest)
Unemployment: 6.9% (14th lowest)

Minnesota moved up in the ranking from fifth to fourth due to its improvement in several categories, including violent crime rate and health insurance coverage. In 2010, just 9.1% of state residents were without health insurance coverage — the fourth best rate in the country. The state also continues to excel in the areas it did last year. Some 91.5% of the state’s adult population has graduated high school — the second highest percentage in the country. The state also has the eighth lowest debt per capita.

5. Iowa
State debt per capita: $2,117 (13th lowest)
Pct. without health insurance: 9.3% (6th lowest)
Pct. below poverty line: 11.9% (tied for 14th lowest)
Unemployment: 6% (8th lowest)

Iowa’s greatest assets are its rates of educated and insured residents. Some 90.6% of residents 25 years and older have at least a high school diploma and only 9.3% of residents do not have health insurance. These are among the best rates in the country. Iowa also has an exceptionally lowunemployment rate and the highest credit rating available, demonstrating its healthy economy.

6. Utah
State debt per capita: $2,274 (15th lowest)
Pct. without health insurance: 15.3% (20th highest)
Pct. below poverty line: 11.5% (12th lowest)
Unemployment: 7.4% (17th lowest)

Utah kept the same rank it had in our last survey. The state has the fifth-lowest violent crime rate in the country, as well as the seventh-highest graduation rate in the country. However, Utah had one of the higher foreclosure rates in the country in October, and 15.3% of the population — an above-average rate — is without health insurance.

7. Vermont
State debt per capita: $5,514 (9th highest)
Pct. without health insurance: 8% (3rd lowest)
Pct. below poverty line: 11.7% (13th lowest)
Unemployment: 5.8% (5th lowest)

Vermont does extremely well in a number of areas considered for this list. Residents are highly educated. It has the second lowest rate of violent crime in the country. It has the third lowest percentage of uninsured residents. However, the state has saddled its citizens with debt. Vermont’s debt per capita is more than $5,500, which is the ninth highest in the country.

8. Virginia
State debt per capita: $3,100 (22nd lowest)
Pct. without health insurance: 13.1% (20th lowest)
Pct. below poverty line: 10.7% (8th lowest)
Unemployment: 6.5% (10th lowest)

Virginia is the highest-ranked state in the southern U.S., largely because it does not suffer from many of the problems that plague the rest of the South. The state has a median income of $60,674, the eighth-highest in the country, as well as a poverty rate of 10.7%, which is the eighth lowest. The state also has the sixth-lowest violent crime rate in the country, with just 213 incidents taking place in 2010 for every 100,000 people.

9. Kansas
State debt per capita: $2,086 (10th lowest)
Pct. without health insurance: 13.9% (24th lowest)
Pct. below poverty line: 12.8% (tied for 21st lowest)
Unemployment: 6.7% (12th lowest)

Kansas has the 10th-lowest state debt per capita in the country. However, the state’s ranking may change as its debt grows. According to The Hutchinson News, borrowing by school districts has increased over 800% since 1990. Kansas has a relatively low unemployment rate of 6.7% compared to the national rate of 9.1%.

10. South Dakota
State debt per capita: $4,485 (12th highest)
Pct. without health insurance: 12.4% (18th lowest)
Pct. below poverty line: 13.8% (25th highest)
Unemployment: 4.6% (3rd lowest)

South Dakota rounds out our list of the 10 best-run states in the country. While the state is slightly below average in median income and poverty, otherwise things are going quite well in the state. South Dakota has the third-lowest unemployment rate in the country. It is also one of the few states to truly avoid the worst parts of the housing crisis. Just one in 4,352 homes was foreclosed in October — the fourth lowest rate in the country.

Worst Run States:
50. California
State debt per capita: $3,660 (21st highest)
Pct. without health insurance: 18.5% (8th highest)
Pct. below poverty line: 14.5% (tied for 21st highest)
Unemployment: 11.9% (2nd highest)

California has moved down one slot on from last year to earn the title of the worst-run state in the country. In the fiscal year 2009, the state spent $430 billion, roughly 14% of all the money spent by states in that year. Compared to its revenue, the state spent too much — California had the 10th lowest revenue per person, and spent the 15th most per person. California is the only state in the country to be rated A-, the lowest rating ever given to a state by S&P. Despite the huge amount the state spends each year, conditions remain poor. California has the second-lowest percentage of adults with a high school diploma in the country, the second-highest foreclosure rate and is tied for the second highest unemployment rate in the U.S.

49. Illinois
State debt per capita: $4,424 (13th highest)
Pct. without health insurance: 13.8% (23rd lowest)
Pct. below poverty line: 13.1% (25th lowest)
Unemployment: 10% (10th highest)

Illinois has fallen from 43rd last year to the overall second-worst run state in the country. The state performs poorly in most categories, but is worst when it comes to its credit rating. Illinois has a credit rating of A+, the second worst given to any state, behind only California. The state has been on credit watch since 2008 because of budget shortfalls and legal challenges against then-governor Rod Blagojevich.

48. Michigan
State debt per capita: $2,963 (21st lowest)
Pct. without health insurance: 12.4% (18th lowest)
Pct. below poverty line: 15.7% (15th highest)
Unemployment: 11.1% (3rd highest)

Michigan has arguably suffered more than any state in post-industrial America. The state is one of just four with a credit rating of AA-, although its debt per capita is actually below average. The state ranks among the worst in the country for violent crime, unemployment, foreclosures and home price decline.

47. Arizona
State debt per capita: $1,882 (9th lowest)
Pct. without health insurance: 16.9% (16th highest)
Pct. below poverty line: 16.3% (tied for 13th highest)
Unemployment: 9.1% (18th highest)

Arizona’s housing market was one of the worst hit in the country during the housing crisis. Home values have dropped 28.6% since 2006, the fourth worst rate in the country. In October 2011, one in every 259 housing units were foreclosed upon, which was the third worst rate that month in the U.S. Arizona also has one of the lowest credit scores in the country after its downgrade to AA- in 2009.

46. Nevada
State debt per capita: $1,690 (6th lowest)
Pct. without health insurance: 22.6% (2nd highest)
Pct. below poverty line: 13.0% (24th lowest)
Unemployment: 13.4% (the highest)

Nevada has dropped five places in our rankings. This drop is due primarily to its credit downgrade this year from AA+ to AA. Surprisingly, the state has one of the lowest debts per capita in the country, at just $1,690 per person. However, it has other financial woes that make it a long-term risk. Nevada properties declined 44.5% in value between 2006 and 2010, the worst decline in the country. In October alone, one in every 180 homes was foreclosed upon, easily the worst rate in the country. The state also has the second lowest percentage of residents covered by health insuranceand the highest unemployment rate in the country.

45. South Carolina
State debt per capita: $3,379 (24th highest)
Pct. without health insurance: 17.5% (13th highest)
Pct. below poverty line: 17.1% (8th highest)
Unemployment: 11% (4th highest)

Fiscally speaking, South Carolina is relatively sound. It takes in the 27th most in revenue per capita and spends the 24th most in total expenditures per capita. Its state debt per capita is slightly below average. However, the state has the eighth highest poverty rate and the fourth highestunemployment rate. It also has the fifth highest rate of violent crime, with 597.7 crime committed per 100,000 people. This is actually an improvement from last year when the state’s violent crime rate was 731 per 100,000 -- the worst in the country.

44. Kentucky
State debt per capita: $3,107 (23rd lowest)
Pct. without health insurance: 15.3% (20th highest)
Pct. below poverty line: 18.2% (4th highest)
Unemployment: 9.7% (13th highest)

Last year, 24/7 Wall St. named Kentucky the worst-run state in the country. The state saw slight improvements in the percentage of its population with high school diplomas and poverty rate. Violent crime dropped significantly -- now the 10th-lowest rate in the country, compared to the 17th-lowest last year. Despite these improvements, Kentucky remains one of the poorest states in the country, ranking among the five worst for median income and poverty rate. It is also one of just four states to be awarded an unfavorable AA- credit rating, the third worst score awarded to any state.

43. Rhode Island
State debt per capita: $8,716 (3rd highest)
Pct. without health insurance: 12.2% (16th lowest)
Pct. below poverty line: 12.8% (tied for 21st lowest)
Unemployment: 10.5% (7th highest)

Rhode Island has many positive attributes, including low violent crime rate and a relatively lowpoverty rate. However, the state’s spending is exceptionally high, and it has accumulated $8,716 in debt per capita. Nearly 20% of expenditures are for public education, yet compared with other states it has the 10th lowest percentage of adults who have graduated from high school.

42. Louisiana
State debt per capita: $3,914 (17th highest)
Pct. without health insurance: 17.8% (10th highest)
Pct. below poverty line: 17.8% (5th highest)
Unemployment: 6.9% (13th lowest)

Louisiana remains in our bottom 10 again this year, although it has improved since last year, primarily because of decreases in unemployment and violent crime rate. In all, however, the state ranks poorly in most of the metrics we considered. Louisiana has the fifth-highest poverty rate in the country, the 10th-highest percentage of residents without health insurance coverage and the fifth lowest percentage of adults with a high school diploma.

41. New Mexico
State debt per capita: $4,004 (16th highest)
Pct. without health insurance: 19.6% (6th highest)
Pct. below poverty line: 18.7% (12th highest)
Unemployment: 6.6% (11th lowest)

New Mexico has a relatively low unemployment rate of 6.6% compared with the national average of 9.1%. This is down from 8.6% one year ago. Other statistics are not as promising. At 18.7%, the state has the second highest poverty rate in the country. Worst still, almost 20% of New Mexicans do not have health insurance. The state also has the highest rate of violent crime in the country.

Methodology

24/7 Wall St. considered data from a number of sources, including Standard & Poor’s, the Bureau of Labor and Statistics, the U.S. Census Bureau, the Tax Foundation, Realty Trac, The Federal Bureau of Investigation and the National Conference of State Legislators. The Bureau of Labor Statistics provided unemployment data, Credit rating agency Standard & Poor’s provided credit ratings for all 50 states.  The Tax Foundation provided state debt per capita for the fiscal year 2009. The FBI’s Uniform Crime Report provided violent crime rates by state. Realty Trac provided foreclosure rates. A significant amount of the data we used came from the U.S. Census Bureau’s American Community Survey. Data from ACS included percentage below the poverty line, high school completion for those 25 and older, median household income, percentage of the population without health insurance and the change in occupied home values from 2006 to 2010. These are the values we used in our survey.  Once we reviewed the sources and compiled the final metrics, we ranked each state based on its performance in all the categories.

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