Reason Foundation’s 28th Annual Highway Report evaluates state highway systems on cost versus quality using a method developed in the early 1990s by David T. Hartgen, Ph.D., emeritus professor at the University of North Carolina at Charlotte. This method has since been refined by Hartgen, M. Gregory Fields, Baruch Feigenbaum, and Truong Bui.

Since states have different budgets, system sizes, and traffic and geographic circumstances, their comparative performance depends on both system performance and the resources available. To determine relative performance across the country, state highway system budgets (per mile of responsibility) are compared with system performance, state by state. States with high rankings typically have better-than-average system conditions (good for road users) along with relatively low per-mile expenditures (also good for taxpayers).

The following table shows the overall highway performance of the state highway systems in the 28th Annual Highway Report, primarily using data that each state directly reported to the Federal Highway Administration.

Similar to last year, the top-performing states are a mix of large and small states as well as states that are more urban and more rural. (Tables 1, 2, 3, 4, and Figure 1). Five large-population (more than seven million people) states place in the top 10 of the overall rankings: North Carolina (2nd), Virginia (4th), Tennessee (5th), Georgia (6th), and Ohio (10th).

Numerous factors—terrain, climate, truck volumes, urbanization, system age, budget priorities, unit cost differences, state budget circumstances, and management/maintenance philosophies—all affect overall performance in the Annual Highway Report. The remainder of this report reviews the statistics underlying these overall rankings in more detail.

The overall rankings are not dramatically different from the previous version of the Annual Highway Report. However, three states’ overall ranking improved by double digits this year, while two states’ overall rankings declined by 10 or more spots:

• Idaho improved 19 positions from 34th to 15th in the overall rankings, as rural Interstate condition improved by 34 positions and urban Interstate condition improved by 22 positions. In addition, the rural fatality rate improved by 20 positions.
• Maine improved 11 positions from 32nd to 21st in the overall rankings, as rural Interstate condition improved by 24 positions. Capital disbursements also improved by 12 positions.
• New Jersey improved 10 positions from 44th to 34th in the overall rankings, as administrative and maintenance disbursements improved by 15 and 25 positions respectively. Rural Interstate condition improved by 12 positions.
• Massachusetts declined 20 positions from 20th to 40th in the overall rankings, as rural Interstate condition declined by 23 positions. The state also fared poorly in disbursements. Administrative disbursements worsened by 19 positions and maintenance disbursements declined by 26 positions.
• Arkansas declined 15 positions from 13th to 28th in the overall rankings, as rural fatalities declined by 25 positions and urban fatalities worsened by 39 positions. Capital disbursements also declined by 10 positions.

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Each state’s overall rating is determined by rankings in 13 categories, including highway expenditures per mile, Interstate and primary road pavement conditions, urbanized area congestion, bridge conditions, and fatality rates.

The study is based on spending and performance data state highway agencies submitted to the federal government, supplemented by data from the National Bridge Inventory, INRIX, and the American Community Survey. This study also reviews changes in highway performance over the past year. 

Although individual state highway sections (roads, bridges, pavements) deteriorate over time due to age, traffic, and weather, states perform maintenance to keep infrastructure in a state of good repair. They also reconstruct roadways when necessary. As a result, system performance can improve even as individual roads and bridges worsen. Table ES1 summarizes recent system trends for key indicators. The U.S. saw system improvements in some categories from 2020 to 2022, but declines in several other categories.

Between 2020 and 2022, three of the four disbursement measures (Capital and Bridge, Maintenance, and Administrative) for the U.S. state-owned highway system increased (states spent more money on their highway systems in 2022 than in 2020). The other disbursement measure (Other) decreased from the previous report. And when factoring inflation into account, spending has been roughly consistent over all categories during the past five years.

Further, six of the nine performance measures improved, including Rural Interstate Pavement Condition, Urban Interstate Pavement Condition, Rural Other Arterial Pavement Condition, Urban Other Arterial Pavement Condition, Rural Fatality Rate, and Structurally Deficient Bridges (a smaller percentage of bridges is structurally deficient).

Three of the nine performance measures worsened: Urbanized Area Congestion, Urban Fatality Rate, and Other Fatality Rate.

Overall, when adjusting for inflation, states are spending about the same amount of money for a slightly better quality roadway system.

Table ES2 summarizes system trends over the past 10 years.

Over a 10-year period disbursements increased, pavement quality worsened, congestion improved (on a statewide basis), the percentage of structurally deficient bridges decreased, and the fatality rate held steady. The worsening urban Interstate quality and rural arterial pavement quality are a change from the previous 10-year period. Figure ES1 displays this information in a graph.

Figure ES1: Trends in Highway System Performance

Figure ES2 shows each state’s ranking based on 2022 data. The top-performing states tend to be a mix of high-population and low-population states that lean both urban and rural.
Very rural, low-population states may have had a slight advantage before 2019. But since the report changed to using expected disbursements and ratios, that advantage no longer exists. For example, while North Dakota often leads the rankings, this year North Carolina ranked first followed by South Carolina, North Dakota, Virginia and Tennessee.

At the other end of the rankings are Alaska, California, Hawaii, Washington, and Louisiana. Two of the five worst performing states rank in the bottom 11 in population.

A number of states with large populations and/or large metro areas fared well: North Carolina (1st), Virginia (4th), Tennessee (5th), Georgia (6th), and Ohio (10th).

Some states had large increases or decreases in their ratings. The rankings for Idaho, Maine, and New Jersey improved by at least 10 spots.

However, the rankings for Massachusetts and Arkansas worsened by at least 10 spots.

Certain states spend significantly more than the national average. This spending may be justified if these states perform well in other categories. While some states’ disbursements have improved their deficiencies, other states are still performing badly:

• For Capital and Bridge Disbursements, five states have per-mile ratios higher than
  1.5: Washington, Idaho, Alaska, Utah, and Indiana.
• For Maintenance Disbursements, 11 states have per-mile ratios higher than 1.5: Washington, Indiana, Vermont, Oregon, Delaware, Colorado, California, Oklahoma, New York, Massachusetts, and Alaska.
• For Administrative Disbursements, six states have per-mile ratios higher than 2.0: Vermont, Nevada, Delaware, Washington, New Hampshire, and South Dakota.
• For Other Disbursements, three states have per-mile ratios higher than 2.0: Washington, Kansas, and Vermont.

System performance problems in each measured category seem to be concentrated in a handful of states:

• More than 25% of the rural Interstate mileage in poor condition is in just three states: Alaska, Colorado, and California.
• More than 30% of the urban Interstate mileage in poor condition is in just six states: Hawaii, Louisiana, New York, California, Delaware, and Colorado.
• Approximately 13% of the rural arterial mileage in poor condition is in just three states: Alaska, Rhode Island, and Vermont.
• Approximately 40% of the urban arterial primary mileage in poor condition is in just five states: California, Nebraska, Rhode Island, New York, and Massachusetts.
• Automobile commuters in seven states spend more than 60 hours annually stuck in peak-hour traffic congestion: New Jersey, Massachusetts, Delaware, New York, Illinois, Maryland, and California.
• Although a majority of states saw the percentage of structurally deficient bridges decline, nine states report more than 10% of their bridges as structurally deficient: West Virginia, Iowa, South Dakota, Rhode Island, Maine, Pennsylvania, Louisiana, Michigan, and North Dakota.
• Three states have rural fatality rates of 2.0 per 100 million vehicle-miles traveled or higher: Hawaii, Delaware, and Alaska.
• Urban fatality rates continue to worsen as 27 states have urban fatality rates of 1.0 per 100 million vehicle-miles traveled or higher: New Mexico, Alaska, Florida, Hawaii, Arkansas, Indiana, Montana, Tennessee, Mississippi, South Carolina, Colorado, Georgia, Arizona, Louisiana, Delaware, Oregon, Texas, California, Missouri, Nebraska, Oklahoma, Alabama, Maryland, Washington, Connecticut, Nevada, and Michigan.
• Other fatality rates continue to worsen as 25 states have other fatality rates of 1.5 per 100 million vehicle-miles traveled or higher: West Virginia, Oklahoma, South Carolina, Kentucky, Louisiana, California, Oregon, Texas, Tennessee, Arizona, South Dakota, North Carolina, Delaware, Nevada, Arkansas, Kansas, New Mexico, Washington, Colorado, Ohio, Mississippi, Georgia, Illinois, Florida, and Alabama.

System performance improved for some states but declined for others this year, with slightly less than half of the states (21 of 50) making progress between 2020 and 2022. However, a 10-year average of state overall performance data indicates that system performance problems are concentrated in a handful of states. These states are finding it difficult to improve. There is also increasing evidence that higher-level highway systems (Interstates, other freeways, and principal arterials) are in better shape than lower-level highway systems, particularly local roads.

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This dashboard compiles the key elements of governmental financial statements for fiscal years 2020, 2021, and 2022, covering all 50 states and the top 100 municipalities, counties and school districts.

A historical challenge in comparing the financial health of state and local governments has been that these entities do not prepare their financial statements in a machine-readable format. In some cases, certain reporting entities also fail to adhere to governmental accounting standards generally accepted in the United States.

Reason Foundation has responded to this gap by developing a proprietary automated approach to data extraction of key elements from the financial statements, the results of which are subsequently confirmed by manual human review.

We hope to provide valuable insights for policymakers, journalists, market participants, and other stakeholders by placing their state, municipality, county, or school district in contrast to their peers – and the broader context of the country.

At the end of fiscal 2022, five state governments had more than $200 billion in total liabilities: California, Illinois, New York, New Jersey and Texas.

Massachusetts had over $100 billion in total liabilities, Connecticut and Washington had over $90 billion, and Pennsylvania, Florida and Maryland each had over $60 billion in total liabilities at the end of fiscal 2022.

From the 2020 fiscal year through the 2022 fiscal year, 47 states saw increased revenues. Alaska, Michigan, and Wyoming were the three states that did not increase revenues.

During the same 2020-2022 period, total assets, such as growth in cash, investments, receivables, land, buildings, and infrastructure, increased for all 50 states.

The increase in assets helped 49 states, every state except North Dakota, reduce its state debt ratio, which is defined as the proportion of total liabilities to total assets from fiscal year (FY) 2020 to FY 2022.

At the end of the 2022 fiscal year, the 50 state governments held $1.03 trillion in employee-related debt, including $502 billion in net public pension liabilities and $524 billion in net other post-employment benefit liabilities, such as promised medical benefits for retirees.

For the tool’s full interactivity and options, please visit https://debttrends.transparencyproject.reason.org.

State debt: California, Illinois, New York, New Jersey and Texas each have over $200 billion in total liabilities

County debt: Los Angeles, Philadelphia, Denver, Miami-Dade and Cook counties among worst in nation

City debt: New York has more than four times the liabilities of Chicago, Los Angeles, Houston and other cities

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Actuaries, in essence, possess little capacity to enhance or exacerbate the state of public pension plans’ unfunded liabilities aside from offering recommendations for adjustments in assumptions. Any escalation in unfunded liabilities is not a reflection of the actuary’s actions or expertise but rather a result of the decisions made by the sponsoring government that hires these advisors. Nevertheless, the data from these actuarial firms is valuable in tracking their overall market share and the evolving challenges they face.

The 209 major public pension plans examined in Reason Foundation’s analysis—selected based on size and availability–make up 91% of total U.S. public pension assets. This group of plans contracted with 32 actuarial firms. Gabriel, Roeder, Smith & Company (GRS) remained in the top position, working with 55 plans, an increase of two public pension plans since 2016. In total, GRS oversees public pension plans with a combined actuarial accrued liability figure of nearly $1.5 trillion. 

GRS, as the leader in the field, covers one-quarter of the total actuarial accrued liabilities amount among public pension plans. The three most prominent plans under GRS’s oversight were the Teacher Retirement System of Texas, with $228 billion in accrued liabilities, the Wisconsin Retirement System, with $125 billion, and the Ohio Public Employees Retirement System, with $118 billion in liabilities. 

Just behind GRS, Cavanaugh Macdonald Consulting covers 34 public pension plans with slightly more than $901 billion in actuarial accrued liabilities.

The largest plans covered by Cavanaugh Macdonald Consulting were the Teachers Retirement System of Georgia, with $116 billion in liabilities, and the Virginia Retirement System, with $107 billion.

The next group of sizable actuaries includes Milliman, Segal, and the California Public Employees Retirement Fund (CalPERS), which cover actuarial liabilities amounting to $791 billion, $650 billion, and $588 billion, respectively. 

CalPERS held the fifth position based on its in-house oversight of $588 billion in liabilities.

From 2016 to 2021, all of the top five actuarial firms observed an increase in the total actuarial accrued liabilities of the public pension plans they managed, which is unsurprising considering the growth of pension liabilities nationwide. As the firm overseeing the most liabilities, GRS predictably saw the most substantial leap in absolute actuarial accrued liabilities (AAL) value. In terms of percentage changes in AAL amount, both Cavanaugh Macdonald and CalPERS experienced a 35% increase, GRS a 28% increase, Segal 27%, and Milliman 16%. 

In terms of the number of plans overseen, most firms have expanded their portfolios of covered pension systems, with Segal taking the lead by adding eight new plans since 2016. Following behind were Cheiron with four additions and Foster & Foster with two new pension plans. Since Reason’s last study, Cavanaugh Macdonald Consulting dropped from 38 to 34 covered plans. GRS covered three fewer plans than they had in 2016. 

Significantly, Buck’s contracted plans saw a marked decrease, plummeting from 21 plans in 2016 to eight by 2021. Out of these 13 plans that swapped actuarial vendors, five plans went to Cavanaugh Macdonald Consulting, another five to Segal, with the remaining three contracted with Hooker & Holcombe, Definiti, and Cheiron.

The top five actuarial firms jointly accounted for approximately 73% of all studied public pension liabilities in 2021. This distribution was as follows: GRS at 24%, Cavanaugh Macdonald Consulting at 15%, Milliman at 13%, Segal at 11%, and CalPERS at 10%. The other 27 firms shared the remaining 27% of accrued liabilities.

Actuarial firms are not responsible for the unfunded liabilities of the public pension plans who hire them. It is interesting, however, to see how these pension debts are distributed between the major advisors to gauge what unique challenges they may face. When speaking to unfunded liabilities, GRS again holds the top position, while Segal secures the second spot. Cavanaugh Macdonald takes third, and CalPERS claims the fourth spot. Notably, Milliman, which is among the top three in total liabilities, is tasked with overseeing only the sixth most unfunded liabilities.

In 2021, 44 overfunded pension plans were distributed among various firms. The net overfunded plans were primarily concentrated within three actuarial offices: the New York State and Local Retirement Systems’ Actuary, the New York State Teachers Office of the Actuary, and the State Actuary of Washington. 

While unfunded public pension obligations continue to grow, these actuarial firms are responsible for conveying to the sponsoring governments—and their assigned pension boards—the need for more funding through higher annual contributions. Actuaries are also tasked with advising pension sponsors on the investment return rate assumptions that will be used to project obligation costs, significantly impacting the accounting of liabilities owed to employees and retirees by their government employers. Ultimately, actuaries are merely advisors, with the challenge of growing costs and risks falling to the sponsoring governments and their assigned boards.

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Reason’s 27^th Annual Highway Report rates state highway systems on cost versus quality using a method developed in the early 1990s by David T. Hartgen, Ph.D., who was emeritus professor at the University of North Carolina at Charlotte. This method has since been refined by Hartgen, M. Gregory Fields, Ph.D., Baruch Feigenbaum, and Truong Bui. Since states have different budgets, system sizes, and traffic and geographic circumstances, their comparative performance depends on both system performance and the resources available. To determine relative performance across the country, state highway system budgets (per mile of responsibility) are compared with system performance, state by state. States with high ratings typically have better-than-average system conditions (good for road users) along with relatively low per-mile expenditures (good for taxpayers).

The following table shows the overall highway performance of the state highway systems using 2020 and 2021 data. This year’s leading states are Virginia, North Carolina, Tennessee, Georgia, and Connecticut. At the other end of the rankings are Alaska, New York, Hawaii, California, and Washington.

Similar to last year, the top-performing states are a mix of large and small states as well as states that are more urban and more rural (Tables 1, 2, 3, 4, and Figure 1). Five high-population states rank in the top 10 of the overall rankings: Virginia (1^st), North Carolina (2^nd), Tennessee (3^rd), Georgia (4^th), and Florida (8^th). Numerous factors—terrain, climate, truck volumes, urbanization, system age, budget priorities, unit cost differences, state budget circumstances, and management/maintenance philosophies— all affect overall performance. Some categories in the report cannot be compared to previous years due to methodological changes that also impacted the overall rankings of some states. These methodological changes are fully explained in Part 2 and the appendix of this report. The remainder of this report reviews the statistics underlying these overall ratings in more detail.

27th Annual Highway Report: Each State’s Highway Performance Ranking By Category

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