Study: Illinois in the worst fiscal condition in the nation

Yet another study has placed Illinois in the worst fiscal condition in the nation.  Research conducted by Dr. Sara Arnett of the Mercatus Center at George Mason University placed Illinois 50th in the report, State Fiscal Condition: Ranking the 50 States. The report pointed to poor decisions, both financial and economic as the leading indicator of poor performance.

"Illinois underfunded its public pensions, resulting in an estimated state retirement system combined unfunded liability of $96.8 billion as of 2012 (Illinois Commission on Government Forecasting and Accountability 2013). To cover the costs of its pension obligations, Illinois has also sold bonds to cover its annual contributions—60 percent of Illinois’s total outstanding debt is in pension bonds (State Budget Crisis Task Force 2012). In essence, Illinois is using long-term debt instruments to meet current year pension obligations."

According to Arnett, "the reason some states ended up with the lowest-ranked fiscal condition is beyond the scope of this analysis; however, exploring the circumstances resulting in poor fiscal conditions in California, Illinois, and New Jersey provides some context. Since a ranking requires, by definition, a top performer and a bottom performer, it is possible for a bottom performer to be only slightly less strong than a top performer. With fiscal condition, this is not the case. As tables 10 and 11 show, the bottom five performers had much weaker performance across nearly all the indicators, especially those related to cash, budget, and long-run solvency."

Read the study in its entirety.