S&P Global Ratings revised the outlook on Mississippi's general obligation bonds to stable from negative and affirmed the state's AA rating, citing continued structurally balanced budgets.
The outlook revision reflects the state's "ongoing commitment to structural budget balance and maintenance of healthy reserves" that S&P expects will continue for the next two years. "It also reflects pension plan changes that should help improve funding progress in the medium to long term," the agency said.
The state had a surplus equal to 8% of revenue in fiscal 2025, on an unaudited basis, S&P said. Through February, fiscal 2026 general revenue fund collections are 2.4% above state estimates.
The state's working cash stabilization reserve account had a $667 million balance at the end of 2025, equal to 8.7% of fiscal 2025 general fund expenditures. When adding other funds that could be used to address revenue shortfalls, the state had a total of $2.8 billion in reserve.
The state's Public Employee Retirement System was below 60% funded as of June 30, 2024, and the state's portion of net pension liability was $4.3 billion. While the PERS board has increased the required contribution rate, it is still well below the recommended actuarially determined contribution rate.
However, a bill passed in March 2025 establishes for new employees a hybrid defined-contribution plan with smaller pension payments that, over the long term, should slow growth of pension liabilities and improve funded ratios. In addition, the state plans to contribute $500 million from its capital expense fund to cover some of the unfunded accrued liabilities.
"This is more great news for Mississippi and it proves our hard work is paying off," Gov. Tate Reeves told The Bond Buyer. "Since I've been governor, we've finalized a record-breaking $70 billion in new capital investment in our state — that's going to generate millions in new tax revenue for Mississippi. Economic growth and population growth trends are strong and actually growing stronger."
In addition to strengthening PERS, the state is "in the best fiscal and financial shape in history," Reeves said, noting a declining debt burden. Therefore, he added, "it really should come as no surprise that the outlook improved."
S&P pointed to the state's conservative fiscal management, including use of timely budget adjustments to maintain fiscal balance in periods of revenue decline, its healthy rainy-day and supplemental liquidity balances, and manageable debt burden.
For negatives, S&P pointed to the state's weak wealth and income levels and history of population declines 2015 to 2022, although the state has seen small increases since 2023. It also pointed to the state's low pension funded ratios that are offset by minimal other postemployment benefit liabilities.
The state had $5.33 billion in net direct debt as of June 30, 2023, equal to 2.6% of state revenues.
The state
Mississippi's GOs are rated Aa2 with a stable outlook by Moody's Ratings and AA with a stable outlook by Fitch Ratings.
