Fiscal Health Score

How It Works

The Fiscal Health Score evaluates six weighted factors: budget balance and reserves (25%, driven by fund balance as a percentage of expenditures, structural balance, and rainy-day fund adequacy per GFOA best practice benchmarks), debt burden relative to peers (20%, measured by net direct debt per capita, debt service as a percentage of general fund expenditures, and aggregate debt as a share of personal income), pension funding ratio (20%, using Public Plans Database funded ratios and ADC funding discipline, weighted across all pension plans covering city employees), spending efficiency (15%, comparing per-capita spending by Census functional code to peer medians adjusted for BLS regional price parity and overlaid with outcome data where available), revenue diversity (10%, using a Herfindahl-Hirschman Index adapted for municipal revenue categories from Census Annual Survey of State and Local Government Finances data), and 3-year fiscal trend direction (10%, measuring trajectory of key metrics). Cities are scored against their population peer group, large (250K+), midsize (100K-250K), and small (50K-100K), to ensure fair comparisons, because city spending and revenue patterns vary systematically with size. Scores of 90-100 receive an A grade, 80-89 B, 70-79 C, 60-69 D, and below 60 F, modeled on academic grading to aid public comprehension. The score is designed to give taxpayers, journalists, credit analysts, and bond investors a quick read on whether a city's finances are sustainable. It uses publicly available data from Census ASG, Census ASPEP, Lincoln Institute Fiscally Standardized Cities (FiSC), Public Plans Database, Federal Audit Clearinghouse, and USASpending.gov. The Score is directional rather than absolute: cities with deteriorating 3-year trends (such as pre-bankruptcy Detroit 2010-2013, pre-rescue Dallas Police & Fire 2014-2017) are flagged for attention even when current-year metrics appear acceptable.

Related Terms

• Funded Ratio, The percentage of a pension plan's projected liabilities that are covered by current assets. A plan with $80 in assets for every $100 in liabilities has an 80% funded ratio.
• Debt Per Capita, A city's total outstanding debt divided by its population, a key metric for comparing debt burdens across cities of different sizes.
• Revenue Diversity, The degree to which a city's revenue comes from multiple sources (property tax, sales tax, fees, grants) rather than being concentrated in a single stream.
• Spending Efficiency, A measure of how effectively a city converts spending into services, comparing per-capita costs to service quality outcomes and peer benchmarks.