Ohio

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How Does Ohio Compare to Other States?

Ohio ranks 7th among US states for its fiscal health, based on its fiscal solvency in five separate categories.

Ohio’s fiscal ranking in FY 2013 placed it in the top ten even though its performance was a mixed bag. The state had very high levels of cash to cover short-term bills; by one measure, available cash was seven times greater than short-term liabilities. Ohio had enough revenue to cover expenses and showed a small surplus. However, on a long-run basis there are a few causes for alarm. Long-term liabilities accounted for 56 percent of total assets, and at more than $247 billion, the state’s unfunded pension liability was far larger than its estimates. Ohio’s OPEB was well funded relative to most states, at 40 percent. The unfunded OPEB liability was almost $13 billion. Taken together, the solvency of Ohio’s trust funds ranked third from the bottom among the 50 states.

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

1. Ohio ranks 4th 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. Ohio’s cash position was very strong in FY 2013. The state had five to seven times the amount of cash needed to cover short-term spending, placing it far above the national average.

 

Cash ratio

           Quick ratio

         Current ratio

Ohio

5.14

7.12

7.36

National average

2.23

3.02

3.37

2. Ohio ranks 32nd 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? Ohio was able to meet its expenses in FY 2013 with revenues exceeding expenditures by 3 percent. The state realized a small surplus of $162 per capita.

 

Operating ratio

Surplus (deficit) per capita

Ohio

1.03

$162

National average

1.07

$473

3. Ohio ranks 37th 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? After paying for its debts, Ohio had a small amount of assets left over with a net asset ratio of 6 percent. (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.) Ohio’s long-term liabilities accounted for 56 percent of total assets and $3,728 per capita, both higher than the national average.

 

Net asset ratio

Long-term liability ratio

Long-term liability per capita

Ohio

0.06

0.56

$3,728

National average

0.03

0.40

$2,768

4. Ohio ranks 19th 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? Ohio’s total taxes as a percent of state personal income were slightly below the national average at 5 percent. Ohio also relied on nontax sources to cover total expenses, which accounted for 12 percent of state personal income.

 

Tax to income ratio

Revenues to income ratio

Expenses to income ratio

Ohio

0.05

0.13

0.12

National average

0.06

0.14

0.13 

5. Ohio ranks 48th 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? Ohio’s unfunded pension obligations represented more than half of the total state personal income. As a percentage of income, the shortfall was almost double the national average. (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 obligations were 3 percent of personal income, and total state bonded debt represented 4 percent of personal income in FY 2013. 

 

Pension to income ratio

OPEB to income ratio

Debt to income ratio

Ohio

0.52

0.03

0.04

National average

0.29

0.04

0.04

State debt 

State debt is calculated from each state’s Comprehensive Annual Financial Report. Ohio’s total bonded debt amounted to more than $17 billion in FY 2013, or 3.6 percent of personal income.

General obligation bonds

Total primary government debt

State personal income

Ratio of debt to state personal income

Total primary debt per capita

Ohio

$8.67 billion

$17.29 billion

$474.97 billion

3.6%

$1,498

National average

$6.08 billion

$12.60 billion

$282.05 billion

4.0%

$1,824 

Pension liability 

Pension liability is calculated from each state’s pension actuarial reports. Calculated on a guaranteed-to-be-paid basis, Ohio’s unfunded pension liabilities increased significantly from about $59 billion to more than $247 billion. 

Unfunded pension liability

Funded ratio

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

Market value of funded liability ratio

Ohio

$59.37 billion

72%

$247.65 billion

38%

National average

$19.85 billion

70%

$78.79 billion

40%

OPEB liability 

OPEB liability is calculated from each state’s Comprehensive Annual Financial Report. Ohio’s OPEB benefits were partially funded at 40 percent. The unfunded OPEB liability was almost $13 billion, slightly higher than the national average.

 

Total unfunded OPEB liability

Funded ratio

Ohio

$12.94 billion

40%

National average

$10.84 billion

11%