No state is squeaky clean. Green states are the least corrupt, red states flunk badly.
Remember though, the metrics from this study only talk about how covertly the state is run, not how badly it is doing.
For instance, California has the worst debt, bond rating, taxes, failing schools, lost property values, and illegals problems. But California does it's business in the open - so though the state is failing badly on performance, at least you can see them going down in flames in front of you.
Why is Michigan getting an F? Well, executive and judicial accountability are zip, union pensions are out of control, the legislature does nasty stuff behind closed doors, and financial disclosures are non existent.
If you find yourself living in a state that lacks honest and ethical governance don't panic. If your taxes are low, and your life-style is adequate, who cares what the goofs in the government are doing, as long as they are not dipping into your pockets while they plot and pander.