California ranks 44th among US states for its fiscal health, based on its fiscal solvency in five separate categories.

How Does California Compare to Other States?

California ranks 44th among US states for its fiscal health, based on its fiscal solvency in five separate categories.

California’s cash position was very poor for FY 2013. When including all forms of cash, the state had 1.29 times the amount of cash available to cover short-term expenses, which was almost three times less than the national average. On a fiscal year basis, California had sufficient revenues to cover expenses and ran a slight surplus. But the long-term picture showed several warning signs. Long-term liabilities accounted for nearly 80 percent of the state’s total assets. The largest area of fiscal risk was in California’s state-run pension systems, which had a staggering $636 billion shortfall when calculated on a risk-free or guaranteed-to-be-paid basis. 

See “Ranking the States by Fiscal Condition” for a complete explanation of the methodology used to calculate California’s fiscal health rankings.

1. California ranks 46th in terms of cash solvency.

Cash solvency measures whether a state has enough cash to cover its short-term bills, which include accounts payable, vouchers, warrants, and short-term debt. California’s cash position was poor. The state could only cover 59 percent of its short-term expenses with the most liquid forms of cash. When less liquid forms of cash were included (such as receivables) the state had 1.29 times cash relative to short-term bills, nearly three times less than the national average. 


Cash ratio

Quick ratio

Current ratio





National average




2. California ranks 23rd in terms of budget solvency.

Budget solvency measures whether a state can cover its fiscal year spending out of current revenues. Did it run a shortfall during the year? California was able to meet its fiscal year spending with revenues about equal to expenses. California had a slight surplus of $260 per capita.


Operating ratio

Surplus (deficit) per capita




National average



3. California ranks 46th in terms of long-run solvency.

Long-run solvency measures whether a state has a hedge against large long-term liabilities. Are there enough assets available to cushion the state from potential shocks or long-term fiscal risks? California had a negative net asset ratio, indicating that it did not have enough assets to cover long-term liabilities. (Net assets are those left over after the government has paid its debts. They are a subset of total assets, which also include capital and government buildings. The net asset ratio measures the total of restricted and unrestricted assets, or net assets, as a portion of total assets.) California’s long-term liabilities represented 79 percent of the state’s assets, nearly double the national average; they amounted to $4,320 per capita. 


Net asset ratio

Long-term liability ratio

Long-term liability per capita





National average




4. California ranks 27th in terms of service-level solvency.

Service-level solvency measures how high taxes, revenues, and spending are when compared to state personal income. Do states have enough “fiscal slack”? If spending commitments demand more revenues, are states in a good position to increase taxes without harming the economy? Is spending high or low relative to the tax base? California’s total taxes made up 6 percent of state income, about average for the nation. Revenues were 13 percent of total personal income, slightly more than the ratio of total expenses to personal income. 


Tax to income ratio

Revenues to income ratio

Expenses to income ratio





National average




5. California ranks 40th in terms of trust fund solvency.

Trust fund solvency measures how much debt a state has. How large are unfunded pension liabilities, other postemployment benefits (OPEB) liabilities, and state debt compared to the state personal income? When calculated on a guaranteed-to-be-paid basis, California’s unfunded pension liabilities accounted for 34 percent of the state’s total personal income. (Pension benefits are recalculated based on a discount rate of 3.38 percent to account for the government’s guarantee to pay employees earned benefits.) OPEB liabilities represented 4 percent of personal income and total debt accounted for 7 percent of personal income, higher than the national average. 


Pension to income ratio

OPEB to income ratio

Debt to income ratio





National average




State debt 

State debt is calculated from each state’s Comprehensive Annual Financial Report. California carried $123 billion in total bonded indebtedness, which represented 6.6 percent of state personal income or $3,245 per capita, above the national average.


General obligation bonds

Total primary government debt

State personal income

Ratio of debt to state personal income

Total primary debt per capita


$84.23 billion

$123.46 billion

$1,856.61 billion



National average

$6.08 billion

$12.60 billion

$282.05 billion



Pension liability 

Pension liability is calculated from each state’s pension actuarial reports. California’s pension liabilities for its major plans were significant on a guaranteed-to-be-paid basis, totaling $636 billion.


Unfunded pension liability

Funded ratio

Market value of unfunded liability (risk-adjusted discount rate)

Market value of funded liability ratio


$142.70 billion


$636.22 billion


National average

$19.85 billion


$78.79 billion


OPEB liability 

OPEB liability is calculated from each state’s Comprehensive Annual Financial Report. California’s OPEB was only funded at 1 percent, leaving the total unfunded OPEB liability at nearly $66 billion, which was relatively large (4%) when compared to the state’s personal income. 


Total unfunded OPEB liability

Funded ratio


$65.97 billion


National average

$10.84 billion