News release: “A new report by Moody’s Investors Service presents combined net tax-supported debt and pension liability figures for the U.S. states, providing a clearer view of how each factors into the evaluation of states’ total current liabilities. “Pensions have always had an important place in our analysis of states, but we looked separately at tax-supported bonds and pension funds in our published financial ratios,” says Moody’s analyst Ted Hampton. “Presenting combined debt and pension figures offers a more integrated — and timely — view of states’ total obligations.” Given the level of fiscal stress being felt by most states and the prospects for sluggish economic growth and slow revenue recovery, pension funding pressures will continue to have a negative impact on state credit quality and state ratings. Moody’s also recognizes that, as currently reported, pension liabilities may be understated. Of the 50 states, those with the highest debt and pension funding needs include Connecticut, Hawaii, Massachusetts, and Illinois, the report finds. “In general, states’ rankings for debt and pension combined parallel their rankings for debt alone,” says Hampton. Hawaii, Massachusetts, and Connecticut — the three states with the largest ratios of bonded debt to personal income — are also among states with the largest combined debt and pension obligations relative to their economies and revenues. “Not all states with large debt burdens also suffer from weak pension funding, however,” Moody’s Hampton adds. “New York, Delaware, and California — states with comparatively large debt burdens — are not among the states with the highest combined long-term liabilities.” Some states, notably Maryland and South Carolina, have strong credit ratings despite relatively high debt and pension burdens, underscoring that these liabilities are only one of many factors that contribute to state ratings.”