Kansas

How Does Kansas Compare to Other States?

Kansas ranks 24th among US states for its fiscal health, based on its fiscal solvency in five separate categories.

Overall, Kansas performed slightly above the national average for fiscal solvency in most areas in FY 2013. The state could cover its short- and long-term bills and didn’t have excessive debt. However, employee pension plans were underfunded, which could eventually undermine its financial position.

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

1. Kansas ranks 29th 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. Kansas’ cash ratio indicates the state had 1.3 times the cash available to pay for short-term liabilities. The quick and current ratios include less liquid forms of cash, such as receivables. Together the three ratios show that Kansas had enough cash available to pay for liabilities due within the year.

2. Kansas ranks 28th 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? Kansas had slightly more revenues than expenses to cover spending for the fiscal year. The state ran a surplus of $193 per capita, which was slightly below the national average of $473.

3. Kansas ranks 20th 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? 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. Kansas did better than the national average, with net assets making up 14 percent of the total. The long-term liability ratio measures the state’s proportion of long-term liabilities relative to total assets. The lower the ratio, the better the state’s fiscal health. Kansas’ long-term liabilities represented 23 percent of total assets, lower than the national average of 40 percent. The long-term liability per capita captures how much the state owes in the current fiscal year in liabilities (e.g., payments towards debts, pension plans, and loans). Kansas did better than the national average, with $1,423 in liabilities per capita.

4. Kansas ranks 14th 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? Kansas’ total taxes were 6 percent of total state personal income (a measure of the tax base). Revenues and spending each represented 11 percent of state personal income, which was lower than the national average.

5. Kansas ranks 24th 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? Unfunded pension liabilities were 25 percent of Kansas’ 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.) The state had very low levels of debt compared to state income and an insignificant level of unfunded health care benefits relative to the state’s income.

State debt

State debt is calculated from each state’s Comprehensive Annual Financial Report. Kansas does not issue General Obligation debt, though the legislature authorizes the issuance of revenue bonds and other forms of debt.  Total primary government debt represented about 3.2 percent of the total income of state residents in FY 2013.

Pension liability

Pension liability is calculated from each state’s pension actuarial reports. Kansas’ unfunded pension liabilities (liabilities without assets backing them) were significant. The state reported an unfunded liability of $10 billion in its pension plans, which put the system at about 52 percent funded. On a market valuation basis (when the liabilities are valued based on guaranteed, rather than assumed, investment returns), Kansas’ pension liability increased to $32 billion, putting the system in a critical condition of only 29 percent funded.

OPEB liability

OPEB liability is calculated from each state’s Comprehensive Annual Financial Report. Like many states, Kansas’ other postemployment benefits (OPEB) operated on a pay-as-you-go basis with an unfunded liability of $0.53 billion. However, the liability is relatively small, representing less than 1 percent of total personal income.