Industry News
S&P Global Ratings Reports U.S. States’ Debt Eases While Pension and OPEB Funding Improved in 2024
On October 22, 2025, S&P Global Ratings published its report, Debt Eases, Pension and OPEB Funding Up in 2024: U.S. States Gain Ground, Complex Challenges Remain. In the report, S&P Global Ratings indicated that state debt burdens decreased in fiscal 2024, while pension and Other Postemployment Benefits (OPEB) plans experienced funding improvements due to strong asset performance.
Other key findings include:
- In 2024, the metrics for State debt experienced declines overall likely due to federal infrastructure grant funds and the use of high liquidity balances to fund pay-as-you-go capital or pre-pay higher-cost debt.
- In fiscal 2024, pension funding levels for many state plans improved and are expected to trend upward in fiscal 2025. Across most plans, asset performance is expected to benefit from multiple years of investment returns above states’ average investment return expectations of 7%.
- In 2024, the OPEB funded levels in states remained relatively stable compared with previous years. However, when compared with pensions, OPEB liabilities continue to experience broader variation in funding progress with many states only funding these obligations on a pay-as-you-go basis.
- Proactive plan governance and liability management may be helpful to support credit rating stability in a developing operating environment, including moderate near-term economic growth, federal policy and funding changes, increasing health care inflation, and variable long-term demographic changes.
According to the report, “Although debt, pension, and OPEB liabilities are affordable and manageable in the context of state economic and budget capacity over the next two years, we believe states that continue to adhere to established governance and liability management policies are likely to safeguard against significant long-term liability growth. In contrast, a reemergence of pension contribution deferrals, underfunding OPEB, or persistent deferral of capital spending may reflect a weaker governance and management environment that can manifest in higher future fixed costs and constrained budgets that weaken credit quality.”
The report is available here.