Study: Alabama has 7th lowest debt of any state, still financially unhealthy

Alabama has one of the “worst run” state governments in the country, according 24/7 Wall St., a financial news and opinion website. But there are also some positive economic indicators that the state can build on going forward.

The Yellowhammer State ranked 41st in a recent study titled “The Best and Worst Run States in America,” but a former Bentley Administration official said the title isn’t entirely accurate.

Clinton Carter, who served as Alabama’s Deputy State Finance Director before becoming VP for Business and Financial Affairs at the University of North Alabama, said the list could be more accurately described as a measure of each state’s financial health, rather than how well or poorly they are being “run.”

“(T)he title of the study seems misleading as it’s not very indicative of how ‘well-run’ the State may be, rather how financially healthy.” Carter said on his Facebook page. “We have super low debt and a low unemployment rate, but the lack of further educational attainment, which leads to high poverty and low median income levels, continues to hold us back.”

24/7 Wall St. did note that Alabama has the 7th lowest debt per capita of any state. Each Alabamian’s share of the state debt is $1,804. The study also found that Alabama’s average 2013 unemployment rate of 6.5 percent was the 18th lowest in the country.

But as Carter mentioned, the state’s $42,849 median income — 4th lowest in the U.S. — and 18.7 percent poverty rate — 7th highest — are dragging the state down when it comes to overall financial health.

However, the major credit rating agencies continue to have confidence in Alabama’s ability to fulfill its obligations.

Standard and Poor’s gives the state its second highest rating, AA, which they define as having a “very strong capacity to meet financial commitments.” Moody’s also gives Alabama its second highest credit rating, Aa1.

Here are the details from 24/7 Wall St. —

41. Alabama
> Debt per capita: $1,804 (7th lowest)
> Credit Rating (S&P/Moody’s): AA/Aa1
> 2013 unemployment rate: 6.5% (18th lowest)
> Median household income: $42,849 (4th lowest)
> Poverty rate: 18.7% (7th highest)

Like many other states at the bottom of the list, Alabama residents are quite poor. More than 10% of households in Alabama earned less than $10,000 last year, and nearly 19% of state residents lived in poverty, both among the highest rates in the country. Poor educational attainment rates likely contribute to the state’s low incomes. Just 23.5% of adults had at least a bachelor’s degree as of last year, one of the lowest rates nationwide. Despite the potentially discouraging economic outcomes, Americans are still moving to Alabama faster than they are leaving. More than 17,000 people elected to move to the state between mid-2010 and mid-2013 from either other states or foreign countries.