Indiana ranks 16th among US states for its fiscal health, based on its fiscal solvency in five separate categories.

How Does Indiana Compare to Other States?

Indiana ranks 16th among US states for its fiscal health, based on its fiscal solvency in five separate categories.

Indiana exhibited a strong fiscal performance in FY 2013. On a cash basis, the state had sufficient cash available to cover short-term liabilities; however, these ratios were below the national average. Indiana also ran a small surplus during FY 2013. On a long-run basis, the state had excess assets after all long-term liabilities were met and a low level of liabilities relative to state assets. In addition, Indiana carried low levels of debt and OPEB relative to state personal income. On a guaranteed-to-be-paid basis, Indiana’s unfunded pension obligations were $41 billion, several times larger than the state’s estimates, though this represents 16 percent of state income, far lower than most states.

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

1. Indiana ranks 26th 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. Indiana’s cash solvency ratios indicate the state had between 1.5 and 2.6 times the amount of cash available to meet short-term liabilities. Indiana was below the national average of two to three times the amount of cash relative to short-term liabilities. 


Cash ratio

         Quick ratio

       Current ratio





National average




2. Indiana ranks 31st 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? An operating ratio of 1.03 indicates Indiana’s revenues exceeded its expense by about 3 percent. The state showed a fiscal year surplus of $152 per capita.


Operating ratio

Surplus (deficit) per capita




National average



3. Indiana ranks 3rd 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? Indiana had a healthy net asset ratio, indicating that after all long-term liabilities were met, the state had excess assets of 21 percent relative to total assets. (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.) Another strong sign was Indiana’s low long-term liability ratio. Indiana’s long-term liabilities represented 11 percent of total assets, putting it in a much better fiscal position than the national average. Long-term liabilities per capita were also far lower than the national average at $413 per capita.


Net asset ratio

Long-term liability ratio

Long-term liability per capita





National average




4. Indiana ranks 21st 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? Indiana’s total taxes as a percent of state income were on a par with the national average at 6 percent. Revenues and expenses as a percent of personal income were slightly below the national average at 12 percent each. Total revenues to income were double taxes to income, indicating the state relied on nontax sources to meet its expenses in FY 2013.


Tax to income ratio

Revenues to income ratio

Expenses to income ratio





National average




5. Indiana ranks 6th 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? Unlike most states, Indiana’s total unfunded pension liabilities as a percent of state personal income were relatively low at 16 percent, when calculated on a guaranteed-to-be-paid basis. (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 and debt ratios as a percent of state personal income were zero, indicating these did not represent a significant claim on state income.


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. Indiana does not issue general obligation debt. In FY 2013 Indiana held $1.16 billion in total bonded debt, representing less than one percent of state income, or $177 per capita, far lower than 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



$1.16 billion

$253.78 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. According to Indiana’s estimates, its unfunded pension liability was $15 billion in FY 2013. However when calculated based on the certainty of payment, unfunded liabilities rose to $41 billion, a far larger long-term claim on state resources.

Unfunded pension liability

Funded ratio

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

Market value of funded liability ratio


$15.04 billion


$41.23 billion


National average

$19.85 billion


$78.79 billion


OPEB liability 

OPEB liability is calculated from each state’s Comprehensive Annual Financial Report. Indiana does far better than the national average in OPEB solvency. Indiana’s plan was 34 percent funded, triple the national average. However, it still means that 66 percent of the plan’s liabilities had no assets backing them. The total unfunded liability was relatively low at $0.32 billion, which is less than 1 percent of the state’s personal income.

Total unfunded OPEB liability

Funded ratio


$0.32 billion


National average

$10.84 billion