The median funding ratio of U.S. state pension plans fell again in fiscal year 2016 to 68% from 75% the previous fiscal year, according to a report from Standard & Poor's.
The drop in the median funding ratio was due to weak market returns through the end of June 2016, as well as reductions in many plans' assumed rates of returns and the adoption of new mortality projections.
The five top-ranked states were Wisconsin, with a funding ratio of 98.2%, followed by South Dakota at 96.9%, New York at 93.6%, Tennessee at 88% and North Carolina at 87.2%.
The lowest-ranked state was New Jersey, with a funding ratio of 30.9%. The rest of the bottom five were Kentucky, 31.2%; Illinois, at 35.6%; Connecticut, 41.4%; and Hawaii, 51.3%.
Only one state, Michigan, saw its funding ratio increase during its plans' fiscal year 2016, in part because the state's fiscal year ended Sept. 30 instead of the common June 30 fiscal year-end. Market returns in the quarter ended Sept. 30, 2016, were the primary driver behind the improvement in Michigan's funding ratio.
Minnesota saw the largest decline in funding ratio, by more than 30%, to 52.1%. The report cited the drop in one main pension fund's discount rate to 4.17% as the primary reason for the decline.
Standard & Poor's compiled the data using state plans' comprehensive annual financial reports.