NCSL 2025 State of the States

March 14, 2025

FYI Week of March 14, 2025

At the recent NCTR/NASRA Federal Legislative and Regulatory Workshop, held in Washington, DC, on March 3, Barrie Tabin, Legislative Director at the Washington office of the National Conference of State Legislatures (NCSL), presented a very well-received report on the “State of the States” for 2025. In addition to a breakdown of the party control of state governments, her summary included a discussion of the fiscal outlook for the states in 2025 as well as an overview of trending issues. Ms. Tabin also included a brief discussion of federal activity impacting states and their retirement plans.

[NCSL was created by state legislators and legislative staff in 1975 and represents the legislatures in the states, territories and commonwealths of the U.S. Its self-proclaimed mission is “to advance the effectiveness, independence and integrity of legislatures and to foster interstate cooperation and facilitate the exchange of information among legislatures.” NCSL also represents legislatures in dealing with the federal government, especially in support of state sovereignty and state flexibility and protection from unfunded federal mandates and unwarranted federal preemption.]

In addition to her role as Legislative Director, Ms. Tabin leads NCSL’s technology and financial services team. Prior to joining NCSL, she was a Government Affairs Director with AARP, where she directed the organization’s state-level advocacy priorities across all 50 states in the areas of taxation, consumer affairs, financial services, health, housing, transportation finance, and public sector retirement. She also spent time working with state and local leaders at both the Government Finance Officers Association (GFOA) and the National League of Cities (NLC), where she managed a range of local, state, and federal legislative, legal, and regulatory issues.

Ms. Tabin began her presentation with a summary of the post-election partisan control of the states’ legislatures. She displayed a map that indicated that the legislatures of 28 states plus Guam were controlled by Republicans – which represented no change from 2024. The big change was in the number of states which now how have divided control; prior to the election,only one state (Pennsylvania) had divided control – the lowest it has ever been – but now Minnesota and Michigan have joined this list along with Pennsylvania.

Tabin then showed a map with what she referred to as “trifectas,” where the legislatures and the governorship are under the same control. She said this was also close to a record high, with 23 states under GOP control (no change) and Democratic trifectas falling by two for a total of fifteen.

Finally, Tabin showed where each party has a veto-proof majority, at least on paper. Republicans continue to have this in 19 states, which reflects no change from the last election, while Democrats are down one, for a total of eight. However, as she noted, just because there is a trifecta or veto-proof majority, this does not mean all members of that party are on the same page — so there is still the ability to “negotiate” bills’ advancement.

Tabin next provided an overview of the 2025 legislative sessions, beginning with a summary of state fiscal outlooks. “State budget challenges are brewing after years of historic growth,” she warned, noting that tax revenue has dropped, federal COVID dollars have stopped, and general fund spending is on the decline. As a result, she reported that Maine, Colorado, and Washington are anticipating budget shortfalls, and long-term budget projections in California, New York, Pennsylvania, and Florida predict future deficits.

Turning to the legislative issues developing in state legislatures, Tabin provided a brief look at what she saw as 2025 “public pension policy trends,” such as:

Changes to pension plan design and plan features, including reemployment after retirement, where Tabin said more than 150 bills related to this subject in at least 13 states were introduced in 2024, with approximately 40 enacted in six states (California, Louisiana, Maryland, Mississippi, Rhode Island, and Tennessee). To date, she said approximately 60 bills have been introduced in 2025 in nine states (Connecticut, Illinois, Kentucky, Mississippi, North Carolina, New Jersey, Rhode Island, Texas, and West Virginia) to make changes to existing provisions of law in this area, including caps on annual hours, earning limitations, time required between retirement and reemployment, and eligibility.
Changes to funding and investment provisions, including unfunded liabilities, such as adjusting amortization periods; one-time and permanent appropriations; employee/employer contributions; and alternate funding streams.
Modifications to investment options, dealing with alternative asset classes and increasing risk; higher management fees; and digital asset investments.
Cost of Living Adjustments (COLAs). Eighty-three COLA bills were introduced across 19 states (2023- 2024), but they were mostly unsuccessful, Tabin reported. She said that already “a handful” of states have introduced COLA legislation (including 13th checks) in 2025, with more likely to follow, such as Indiana, New Hampshire, New Jersey, and Nebraska.
Environmental, Social and Governance (ESG) factors. Tabin said states passed 32 bills related to ESG investing in 2024, with anti-ESG legislation continuing to proliferate in Republican controlled states, with bills restricting the use of ESG factors being the most common. She said the most common type of pro-ESG legislation are bills that promote ESG factors in investment and/or proxy voting decisions and bills promoting or requiring divestment from certain industries. Tabin provided a summary of several legislative proposals as examples. (In a related area, Tabin noted that in 2024, more than 20 states enacted “fuel choice” bills that prevent local governments from restricting access to fuels such as natural gas. “Some states have taken an in-between approach, requiring new efficiency and emissions measures without bans or preemptions,” she observed. She also pointed out later in her presentation that emission reduction strategies have evolved in recent years, with energy storage, carbon capture, geothermal energy, and nuclear power emerging in 2024 as options that could continue to grow in 2025.)

Tabin then turned to what she called a “hot topic” in state legislatures, which is cryptocurrency. For example, as she pointed out, at least 35 states and D.C. introduced legislation related to cryptocurrency in 2024 and enacted legislation focused on such areas as crypto mining, crypto/blockchain study commissions, central digital banks, licensing, and unclaimed property. She also noted that 23 states have already introduced legislation in 2025 to allow state investments in crypto, and that four had failed.

Another “hot topic” is artificial intelligence (AI). For example, in 2024, NCSL tracked over 450 bills in 23 different AI-related categories and found three legislative trends “rising to the top.” These are consumer protection, deepfakes, and government use of AI.

For example, legislation has been adopted in Colorado focused on consumer protections. Also, at least half the states addressed deepfakes through new laws targeting the technology’s use in elections and sexually explicit materials. Finally, most states considered or enacted bills related to government use of AI tools.

[The Government Accountability Office (GAO) defines “deepfakes” as a video, photo, or audio recording that seems real but has been manipulated with AI. “The underlying technology can replace faces, manipulate facial expressions, synthesize faces, and synthesize speech,” GAO explains, and thus deepfakes “can depict someone appearing to say or do something that they in fact never said or did.”]

Already, 46 states have introduced over 600 pieces of AI legislation in 2025 on topics ranging from the use of AI in housing, health care, employment, criminal justice, and education, to name just a few areas, Tabin said.

In addition to return-to-work legislation, Tabin expanded a little more on the topic of public education, noting that in 2024, 561 bills were introduced in 44 states focused on expanding private educational choice, public-school open enrollment, and optimizing school finance models to support choice. Twenty-one private school choice bills were enacted in 2024, including in Alabama, Florida, Georgia, Louisiana, Oklahoma, Tennessee, and Utah. She said that in 2025, private school choice bills are again being introduced, many focused on tax credits to help facilitate private school choice. In 2025, private school choice bills are again being introduced, many focused-on tax credits to help facilitate private school choice.

Finally, the NCSL Legislative Director also spoke to legislative trends in addressing teacher workforce challenges, including teacher compensation, expanded pathways to becoming part of the education workforce, and removing barriers to entry to the education profession, including student teacher compensation and altering licensure exam requirements.

In closing, Tabin touched on housing trends in the nation’s legislatures, including the regulation of investor-owned properties, tenant opportunity to purchase, protection for single-family renters, occupancy and vacancy taxes, and regulating short-term rental properties. She did not, however, see a direct link between these trends and recent criticism of private equity investments’ role in exacerbating the housing crisis.

But she did note interest in the impact of such investments in healthcare, where she said policymakers “are exploring various options to increase health care market oversight and examine the impacts of consolidation in their states.” For example, she said at least 35 states require hospitals, health systems, physician groups, and/or private equity firms to notify authorized state entities (e.g., the state attorney general or the state health agency) of certain proposed mergers, facility closures, or contractual affiliations.

In addition to notification, Tabin said states are also introducing and enacting legislation related to transaction review and approval, anti-competitive contract terms, certificates of need (laws requiring approval of major capital expenditures, and projects for certain health care facilities), and certificates of public advantage, permitting states to approve health care mergers in exchange for increased oversight after a merger occurs.

So what, if anything, is NCSL doing about any of the above? Tabin says that NCSL’s federal advocacy focus is on:

Funding of grants to the states;
Fiscal Issues – with a particular interest in expiring tax credits including the childcare tax credit, the Earned Income Tax Credit, and preserving the status of tax-exempt bonds;
Crypto, and the federal regulation of stablecoin (digital currencies pegged to other external assets like the U.S. dollar), with a clearer regulatory authority framework for the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) and no or limited federal preemption, with a continued role for states in crypto regulation;
Artificial Intelligence, with a focus on more public education, more money for research, more control of deepfakes, and no (or limited) federal preemption;
Education, with fair terms for borrowers and taxpayers on student loan reform through a bipartisan reauthorization of the Higher Education Act, the exploration of flexibilities in the Elementary & Secondary Education Act programs to encourage state innovation, and improved customer service to student borrowers;
Medicaid cuts, which will have significant implications for states, Tabin pointed out, forcing them to absorb higher costs, reduce services and eligibility and remove people from Medicaid programs; and
Energy, and the administration’s desire to fast-track energy development projects, coupled with the need for increased grid resiliency, reliability, and modernization driven by increased power needs from all sources, including large-scale data centers.

Tabin’s PowerPoint presentation was accompanied by a number of valuable links to NCSL resources of interest and importance to public pension systems. These include:

NCSL has been, and continues to be, an important partner to NCTR on issues of importance and concern to teachers and their retirement systems. Thank you, Barrie!