Industry News

On October 26, 2020, Fitch Ratings released its report, 2020 State Liability Report. The annual survey report covers U.S. states’ direct debt and pension liabilities, which finds that long-term liabilities declined for the fourth consecutive year in 2019.

According to Fitch Ratings, “State long-term liability burdens continued to decline in fiscal 2019, the last full year of the long economic expansion that followed the Great Recession. The median ratio of states’ direct debt and Fitch Ratings-adjusted net pension liabilities to personal income measured 5% in fiscal 2019, down from 5.7% one year earlier and 6% in fiscal 2016. The ratio declined for 42 states in fiscal 2019 and increased for eight.”

One common factor among high pension burden states is that the state directly carries some or all of the unfunded pension liability associated with certain public workers outside of state government, which is referred to as a special funding situation. In addition, in the majority of these states, the net pension liability of local school teachers is carried by the state.

Importantly, the report indicates that the data have yet to be affected by the economic disruptions caused by the coronavirus pandemic.

The report is available here.