(The Center Square) – A report by Fitch Ratings ranked Florida fourth best nationally for its defined benefit pension system’s liabilities.
The credit ratings agency’s analysis measuring long-term liabilities said Florida’s pension system in fiscal 2023 had the nation’s third-lowest adjusted net pension liability to personal income ratio at 0.6% and the 12th lowest debt to personal income at 0.8%.
Florida, according to the report, has $12.18 billion in direct debt, nearly $6.4 billion in reported net pension liability and nearly $9.3 billion in adjusted net pension liability.
The Sunshine State has a AAA credit rating from Fitch, the highest the firm issues. Since Gov. Ron DeSantis took office, the state has paid more than 36% of its debt and has $17 billion in budgetary reserves.
That compares favorably with some of the lower-ranking states in the report, such as Connecticut, which has $25.7 billion in debt and $49.2 billion in adjusted net pension liability.
The New England state had the worst liability in the report at 23% of personal income, followed by Illinois, Hawaii, New Jersey and Kentucky.
Tennessee had the lowest long-term liability at 1% of personal income, followed by Nebraska, South Dakota and Arizona.
Nationally, Fitch said the ratio of pension assets to liabilities fell to 66% in fiscal 2023 from 73.5% in fiscal 2022. The report says the reduction was driven by a nearly 5% drop in the net positions of the pension funds from assets set aside for pensions, following a 24% gain in fiscal 2022.
One positive note was that analysts noticed that more states continued to improve their pension contribution policies, with 40 making their required contributions, up from 37 in fiscal 2022 and 25 in fiscal 2016. Ten states contributed a combined $12 billion beyond these contributions, which analysts said will reduce the future budgetary burden of contributions.
