Oklahoma

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How Does Oklahoma Compare to Other States?

Oklahoma ranks 9th among US states for its fiscal health, based on its fiscal solvency in five separate categories.

Oklahoma’s fiscal performance was strong in FY 2013. The state had sufficient cash to cover short-term expenses. Revenues exceeded fiscal year expenses by 5 percent, generating a small surplus. On a long-run basis, Oklahoma performed very well, with long-term liabilities accounting for 12 percent of assets. The state also had excess assets representing 35 percent of total assets in FY 2013. Unfunded OPEB liability was insignificant at$5 million. Oklahoma’s pension funds were among the best funded in the 50 states. However, when calculating Oklahoma’s pension obligations on a guaranteed basis, the total unfunded liability was $40 billion, much larger than the state had estimated.

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

1. Oklahoma ranks 15th 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. Oklahoma’s cash position was strong in FY 2013. The state had available two to three times the cash needed to cover short-term expenses, about average with the nation.

 

Cash ratio

                    Quick ratio

                   Current ratio

Oklahoma

2.53

3.06

3.32

National average

2.23

3.02

3.37 

2. Oklahoma ranks 21st 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? Oklahoma’s operating ratio showed that the state’s revenues exceeded expenses by 5 percent, and a small surplus of $249 was realized in FY 2013. 

 

Operating ratio

Surplus (deficit) per capita

Oklahoma

1.05

$249

National average

1.07

$473

3. Oklahoma ranks 6th 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? Oklahoma’s long-term position was strong. After paying for its debts, excess assets represented 35 percent of all 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.) Long-term liabilities were low, at 12 percent of total assets. On a per capita basis, Oklahoma’s long-term liability was $704, far lower than the national average. 

 

Net asset ratio

Long-term liability ratio

Long-term liability per capita

Oklahoma

0.35

0.12

$704

National average

0.03

0.40

$2,768

4. Oklahoma ranks 15th 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? Oklahoma’s total tax revenue relative to personal income was 5 percent. When including other forms of revenue this increased to 12 percent of total state personal income, slightly below the national average. Expenses were 11 percent of state personal income in FY 2013.

 

Tax to income ratio

Revenues to income ratio

Expenses to income ratio

Oklahoma

0.05

0.12

0.11

National average

0.06

0.14

0.13

5. Oklahoma ranks 2nd 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, Oklahoma’s total unfunded pensions represented 25 percent of state 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.) Oklahoma’s OPEB and debt were small relative to state personal income. 

 

Pension to income ratio

OPEB to income ratio

Debt to income ratio

Oklahoma

0.25

0.00

0.02

National average

0.29

0.04

0.04

State debt 

State debt is calculated from each state’s Comprehensive Annual Financial Report. Oklahoma carried $2.6 billion in total primary government debt, or $689 per capita, 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

Oklahoma

$0.14 billion

$2.63 billion

$161.19 billion

1.6%

$689

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. Oklahoma’s unfunded pension liability was $40 billion when calculated on a guaranteed-to-be paid basis, about four times the amount recognized by state estimates.

Unfunded pension liability

Funded ratio

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

Market value of funded liability ratio

Oklahoma

$11.38 billion

67%

$40.92 billion

36%

National average

$19.85 billion

70%

$78.79 billion

40%

OPEB liability 

OPEB liability is calculated from each state’s Comprehensive Annual Financial Report. Even though unfunded, Oklahoma’s OPEB liabilities were very small at $5 million in FY 2013.

 

Total unfunded OPEB liability

Funded ratio

Oklahoma

$0.005 billion

0%

National average

$10.84 billion

11%