Survey ranks Missouri's fiscal condition 11th in US

Missouri ranked 11th among the states in the latest study of their fiscal conditions by George Mason University's Mercatus Center.

That's a three-step improvement from Missouri's 14th place rankings in the study's two previous years.

The report named the five best states as Florida, North Dakota, South Dakota, Utah and Wyoming.

It listed the five worst states as Maryland, Kentucky, Massachusetts, Illinois and New Jersey.

But, as in the past, the authors caution: "This study ranks the performance of the states according to how well they do relative to other states. For this reason, it is important to focus less on ranking and more on each state's fiscal performance according to each individual metric."

The authors - Eileen Norcross and Olivia Gonzalez - work for the Mercatus Center at the Arlington, Virginia-based university. They also co-authored last year's report.

Norcross' research includes state and local finances, public sector pensions, fiscal federalism, and institutional analyses of state and local economies. She's the program director and senior research fellow for the center's State and Local Policy Project.

Gonzalez is a research associate for the project, with research focusing on state budgets, taxes and economic development.

As in the past, the study is based on the most recent audited financial statements contained in each state's comprehensive annual financial report, known as the CAFR.

"While a budget is a plan for how a state will spend money," the report explains, "the CAFR details fiscal condition and provides information on whether current spending decisions and policy choices are sustainable."

Each state's CAFR is finished from six-nine months after the end of their business year - in Missouri's case, that would come at some point after June 30 of each year.

While Missouri's 2015-16 fiscal year ended on June 30, 2016, other states' CAFRs for 2016 aren't available yet - so the study is based on the information from the end of the states' 2015 fiscal year.

But the authors then go further, analyzing the information in each CAFR to calculate four areas that the study calls "dimensions of solvency."

Each category is intended to answer a basic question:

Cash solvency - Does a state have enough cash on hand to cover its short-term bills?

Missouri was 13th in this category (12th last year).

Budget solvency - Can a state cover its fiscal year spending with current revenues, or does it have a budget shortfall?

Missouri was 20th in this category and 31st last year. The report noted Missouri was one of the states labeled as a "Big Mover" because its position changed at least five places from 2016.

Long-run solvency - Can a state meet its long-term spending commitments? Will there be enough money to cushion it from economic shocks or other long-term fiscal risks?

Missouri ranked 15th, the same as last year.

Service-level solvency - How much "fiscal slack" does a state have to increase spending if citizens demand more services?

Missouri placed seventh (sixth in 2016).

The statistics for the first four categories were "constructed using data from each state's CAFR, particularly the statement of net assets, the statement of activities, and changes in net position," the authors explained. "We assess total primary government activities, which include the state's spending on both government and business-type activities."

And there is a fifth "dimension" included in the report, identified as "Trust fund solvency - How large are each state's unfunded pension and health care liabilities?"

Missouri was 31st on that list - the same as 2016.

Data measuring each state's unfunded pension obligations came from individual actuarial reports for the state governments' state-administered pension plans, while the health care benefits, called OPEB or other post-employment benefits, were calculated using information in the comprehensive audited reports.