To measure state fiscal health we created an index of two measures. We drew data from the Pew Center on the States’ 2014 report, The Fiscal Health of State Pension Plans: Funding Gap Continues to Grow. That report details states’ unfunded pension liabilities, a measure of how much states have saved, or are on a path to save, relative to the amount they are expected to owe in pensions to public-sector employees.
From the same Pew Center analysis, we also gleaned data on the most recent contributions states have made to their pension funds. Are states behind in “catching up” on payments to make up for their previous shortfalls, or is the gap widening? These two numbers, expressed as decimals, were averaged together, ranked, and curved so that there were 10 states with A’s, 10 with B’s, 10 with C’s, 10 with D’s, and 10 with F’s. Since the Pew Center did not grade the District of Columbia, it did not receive a grade for this metric.