LANSING, MI — Michigan’s state government reported $39.21 billion in debt at the end of the 2023 fiscal year, ranking 16th highest in the nation, according to a new Reason Foundation analysis.
California led all states with nearly $500 billion in debt, while South Dakota ranked lowest at $2.46 billion. On a per-capita basis, Michigan’s debt stood at about $3,891 per resident, below the national average of roughly $8,000.
The study also examined liabilities across local governments, municipalities, and school districts, finding Michigan’s total public debt at $141 billion, or $13,984 per citizen—23rd highest per capita nationwide. Long-term debt included bonded obligations (39%), unfunded pension liabilities (47%), and retiree healthcare costs (9%).
“Local governments are responsible for about 60% of all state and local debt nationwide,” said Mariana Trujillo, one of the report’s authors, emphasizing the need for greater financial transparency.
Michigan’s school districts hold the largest share of long-term liabilities at $59.6 billion, with 59% tied to pensions. “Retirement costs dominate local balance sheets,” said co-author Jordan Campbell, adding that falling public school enrollment worsens the burden on fewer students and teachers.
The Reason Foundation report noted that Michigan’s pension-related debt continues to strain budgets despite receiving a “C” grade for its financial condition earlier this year. Analysts warned that declining federal support and legacy costs could push the state deeper into fiscal stress.
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