Minnesota Earns AAA Bond Ratings

Fitch Ratings, Standard and Poor’s agree Minnesota is in prime fiscal health

With sound fiscal management and a structurally-balanced budget outlook, national rating agencies assign top bond ratings for the State of Minnesota

Fitch’s AAA rating notes “Minnesota has shown significant financial resilience”

S&P’s AAA rating “reflects our view of the state’s improved financial position and recently passed pension reform”

ST. PAUL, MN – In separate announcements today, two national bond rating agencies – Fitch Ratings and Standard and Poor’s (S&P) – gave the State of Minnesota their highest “AAA” bond ratings, affirming that Minnesota is in prime fiscal health. Today’s bond rating announcements follow nearly eight years of sound fiscal management from the Dayton Administration – including difficult budget cuts, the elimination of budget shifts and gimmicks that undermined our fiscal health, the long-term stabilization of the State’s revenues, structural budget balances into the future, public employee pension reforms, and historic savings in Minnesota’s Budget Reserves.

“Our state government has made a complete financial turnaround in the past seven-and-a-half years,” said Governor Mark Dayton. “The credit for Minnesota’s success belongs to the people of our state. I thank Minnesotans for their many contributions to the strength of our economy and the stabilization of our State’s budget. And I thank MMB Commissioner Myron Frans and his tremendous staff for their steadfast commitment to improving Minnesota’s financial management.”

“Minnesota’s financial health is better than ever, and these AAA ratings are proof of the progress we have made,” said Commissioner Myron Frans. “One of the key reasons for our AAA ratings by S&P and Fitch is because of the Pension Reform Bill that unanimously passed by the Minnesota Legislature this year. This bill not only benefits 511,000 Minnesotans, it immediately eliminated $3.4 billion of the state’s unfunded pension liabilities, and put the plans on a path to fully fund pensions within 30 years the moment Governor Dayton signed it. Management of our state pensions had long been a concern for the rating agencies, so it was a highlight of my time as Commissioner to tell them we had taken a significant step to achieve pension reform with bipartisan support.”

Standard and Poor’s upgraded its rating to AAA, with a stable outlook. In its determination, S&P notes: “The stable outlook on Minnesota reflects our view of the state’s improved financial position and recently passed pension reform. The state has shown a commitment to actively managing its long-term liabilities to better align its statutory funding of the pension with actuarially determined contributions and through benefit reductions.”

S&P also called out the state’s sound financial management and leadership, saying: “The state has historically had very strong budget management. Minnesota has strong policies and procedures. It was able to manage through the political impasse between the governor and the legislature over tax reform adopted in the fiscal 2018-2019 biennium… We have assigned a score of ‘1.5’ to the state’s overall financial management, on a scale where ‘1.0’ is the strongest score and ‘4.0’ the weakest.”

To read the full report from Standard and Poor’s, CLICK HERE.

Fitch Ratings upgraded Minnesota’s bond rating to AAA in 2016, after having downgraded Minnesota’s rating to AA+ in 2011. This year, Fitch reaffirmed its rating of AAA, with a stable outlook. In its determination, Fitch notes: “Minnesota has shown significant financial resilience through downturns and a strong commitment to bolstering its financial position as conditions improve. Minnesota’s economy is well-balanced, with positive wealth indicators and innate demographic strengths. [The state is] exceptionally well positioned to manage throughout the economic cycle while maintaining a high level of financial flexibility.”

To read the full report from Fitch, CLICK HERE.

A third national bond rating agency, Moody’s Investors Service, reaffirmed today its Aa1 rating for Minnesota. In its determination, Moody’s notes: “Minnesota’s Aa1 general obligation rating reflects the state’s diverse and growing economy, supporting healthy revenue growth in recent years. The rating also reflects improved financial management practices that have resulted in replenishment of budget reserves and a structurally balanced budget… The state’s manageable debt and pension burden, along with recently enacted pension reform, affords the state additional financial flexibility.”

To read the full report from Moody’s, CLICK HERE.

About Minnesota’s Economic and Fiscal Turnarounds

In January 2011, Minnesota was still facing the economic consequences of the Great Recession, and the state budget was a mess. Over 202,000 Minnesotans were out of work, the State of Minnesota was facing a $6.2 billion deficit and owed school districts $1.9 billion, and there was nothing in the State’s Budget Reserves. Since then, Minnesota’s economy and fiscal health has greatly improved. The chart below lays out some key comparisons of Minnesota’s budget and economy between January 2011 and now.



January 2011


July 2018

Better Economy

Unemployment was at 6.9 percent

202,000 people were out of work


At 3.1 percent, unemployment in Minnesota is at its lowest rate in 18 years (as of the latest jobs report)

Unemployment has been at or below 4 percent for 47 straight months

Minnesota employers have added over 302,600 new jobs since January 2011

With 2.96 million jobs, Minnesota now has more jobs than ever before


Better Budget


Minnesota faced a $6.2 billion budget deficit

Minnesota owed our school districts $1.9 billion

Minnesota had nothing in the budget reserve account to protect the state’s finances from economic downturns


Nine out of the last ten budget forecasts have projected budget surpluses in Minnesota

Minnesota currently has a projected $419 million budget surplus for the FY2020-21 biennium

Minnesota has nearly $2 billion in cash and budget reserves to help protect the state’s finances from future economic downturns and prevent harmful budget cuts to essential state services