MENU

PENSIONS

Pensions

Unfunded pension liabilities are the dark cloud on the horizon of state budgets; a cloud totaling $4.1 trillion dollars for state-administered public pension plans, as SBS reported this year. Though they represent unavoidable fiscal debt, pension liabilities often slip under the radar when states tally up their spending, thanks to their status as "future payments" and accounting games. Aggressive pension reform is urgently needed in almost every state.

A recent group of studies by the GAO and Fed show how dire the situation really is.  Read about them here.

Courts are weighing in on what pension reform is feasible. Check out our monthly pension litigation update here.

  • Breaking News
  • Research
  • Solutions
  • Commentary
    • Alaska

      Senate passes new approach to pension obligation

      The Anchorage Daily News | by Becky Bohrer | April 21, 2014

      The Alaska Senate unanimously passed legislation setting out a new approach for addressing the state's pension obligation Saturday, less than three hours after the plan emerged from the Senate Finance Committee.

    • HEADLINES: Alaska

      House Approves $3 Billion Transfer To Pension System

      Alaska Public Radio | by Alexandra Gutierrez | April 18, 2014

      The bill uses $3 billion from the state's reserve funds to help pay off the $12 billion unfunded liability. It also directs the Legislature to put $500 million into the retirement system every year, until the obligation is paid off.

    • HEADLINES: North Carolina

      Nation's Seventh Largest State Pension Can't Afford Financial Audit

      Forbes | by Edward "Ted" Siedle | April 17, 2014

      It's hard to believe that there are no audited financial statements for the North Carolina state pension, the seventh largest public fund in the nation with $87 billion in assets.

    • HEADLINES: New Jersey

      Christie 'will force' legislators to address state pensions

      BenefitsPro | by Lisa Barron | April 17, 2014

      New Jersey Governor Chris Christie told a town hall meeting that the state's public pension system is unsustainable and that he plans to force legislators to tackle the issue during his last term.

    • HEADLINES: Rhode Island

      Raimondo: Losing pension case would be catastrophe

      Boston.com | April 15, 2014

      General Treasurer Gina Raimondo said Monday that it would be catastrophic for Rhode Island to lose the legal challenge over the state's pension overhaul but that she has a ‘‘high degree of confidence'' that won't happen.

    • POLICY BRIEF: Alaska, Arizona, Hawaii, Illinois, Louisiana, Michigan, New York

      Constitutional Public Pension Guarantees: Unfair, Unaffordable, and Bad Policy

      The Manhattan Institute | by Stephen D. Eide | August 22, 2013

       

      Seven states have specific clauses in their constitutions that protect public employee pensions: Alaska, Arizona, Hawaii, Illinois, Louisiana, Michigan, and New York. These seven states hold 20 percent of state governments' total pension debt, and many billions more in local pension debt. These states should amend their constitutions to remove language guaranteeing pension benefits for public workers.

    • RESEARCH

      The Funding of State and Local Pensions: 2012–2016

      The Center for State and Local Government Excellence | by Alicia H. Munnell, Jean-Pierre Aubry, Josh Hurwitz, and Madeline Medenica | June 27, 2013

      Despite a rising stock market, the rebound in tax revenues, and increased employee contributions, the funded status of state and local pensions in 2012 declined slightly.

    • RESEARCH

      Public Sector Pension Reform: Addressing Pressing Fiscal Realities from a Long-Term Perspective

      TIAA-CREF Institute | by Thomas L. Gais and Paul J. Yakoboski | June 17, 2013

      There are persistent fiscal and demographic challenges in most states. The public sector workforce is aging as the baby boom cohort moves towards and into traditional retirement ages. Budgetary pressures at the state and local level make it difficult to increase plan funding and maintain the size of the public sector workforce.

    • RESEARCH: Delaware

      Delaware’s Public Employees’ Retirement System: A Complete and Transparent Accounting

      The Mercatus Center | by Eileen Norcross | March 21, 2013

      To be fully funded, Delaware must increase its annual contribution to the pension system based on a market valuation of plan liabilities. This paper analyzes Delaware’s pension system on a fair-market or government- guaranteed basis, with reference to the average US Treasury rate on 10- and 20-year bonds in June 2012. A discussion of the discrepancy between current government accounting conventions and the fair-market value approach and the implications for plan management follows.

    • RESEARCH

      2013 Report on State Retirement Systems: Funding Levels and Asset Allocation

      Wilshire Consulting | by Julia Bonafede | February 27, 2013

      Wilshire Consulting estimates that the ratio of pension assets-to-liabilities, or funding ratio, for all 134 state pension plans was 73% in 2012, down from an estimated 77% in 2011. This deterioration in funding ratio was fueled by global stock market volatility in the twelve months ending June 30, 2012. Growth in fund assets could not keep up with growth in plan liabilities over fiscal 2012.

    • SOLUTIONS: Kentucky

      Future Shock Solutions

      The Bluegrass Institute | by Lowell Reese | April 8, 2013

      The goal is to enact systemic change and create a climate for long-term solvency for Kentucky's public pensions. This requires changing the very structure of the system while providing the minimum amount of one-time immediate funding to stave off bankruptcy in the state employees’ fund. Steps also must be taken to set in place policies that will enable the commonwealth to avoid such pension crises in the future.

    • SOLUTIONS

      Why government employee collective bargaining laws must be reformed now

      State Budget Solutions | by Bob Williams | December 5, 2012

      There are three important lessons from the Wisconsin collective bargaining battles over the past eighteen months:

      1. The power of the government-sector unions and their impact on elections is greatly overestimated. With the November 2012 victory for  Senate Republicans to regain control of the Wisconsin Senate,  government employee union  suffered their sixth  major defeat since March 2011.

      2. When given a choice, government employees will quit their union in large numbers.

      3. Government employees' salaries and benefits, particularly pensions, are financially unsustainable in most states and collective bargaining reform is needed.

    • SOLUTIONS

      How to Prevent Future Pension Crises

      by Cory Eucalitto | November 1, 2012

      The time for state and local governments to offer defined contribution retirement plans that protect both taxpayer dollars and public employee retirement security is now.

    • SOLUTIONS: California

      Reform Before Revenue: How to Fix California's Retiree Health-Care Problem

      The Manhattan Institute | by Stephen D. Eide | October 31, 2012

      This paper examines the ongoing fiscal crisis caused by health-care plans for retirees (known as "other post-employment benefits," or OPEB) in one of the hardest-hit states, California, and outlines necessary reforms that should come before tax increases or cuts to government services.

    • SOLUTIONS: California

      Rising Pension Costs Threaten Cities’ Ability to Provide Services

      Hoover Institution of Stanford University | by Chuck Reed | October 16, 2012

      In June 2012, nearly 70% of San Jose voters approved "Measure B" - a set of pension reforms that the City Council placed on the ballot after more than 8 months of negotiations with our employee unions.

    • OPINION: Illinois

      Defined-contribution plan could curtail pension liability

      by Bob Williams | March 21, 2014

      Chicago needs to find ways to control costs, both in terms of pensions and borrowing. The latter will only increase, as evidenced by the Moody's downgrade, if the city doesn't enact reform.

    • OPINION: Oklahoma

      On pensions, don't betray Oklahoma's public retirees

      by Bob Williams | February 10, 2014

      The devastating effects that a broken defined benefit pension system can have on employees, retirees and their communities is a wake up call. Oklahoma owes it to its hardworking public servants to pursue real pension reform before it is too late.

    • BLOG: Michigan

      Detroit’s Chapter 9 eligibility trial begins

      by Cory Eucalitto | October 23, 2013

      Before the City of Detroit may file for Chapter 9 bankruptcy, it must demonstrate that it is, in fact, insolvent and that it filed for bankruptcy in good faith.

    • BLOG: California, Washington

      State Supreme Court considers $1.3 billion pension case

      by Jason Mercier | October 21, 2013

      The State Supreme Court will hear a pension case brought by various unions raising the issue of whether lawmakers had the legal right to make changes to what they thought were conditional pension benefit increases.

    • OPINION: Pennsylvania

      Retirement Security is at Risk in Pennsylvania

      by Bob Williams | October 8, 2013

      As the special session of the Pennsylvania legislature gets underway, let's hope that lawmakers will not be misled by overly optimistic assumptions and will instead address Pennsylvania's pension problem with the implementation of a defined contribution plan. The state owes it to those who worked for years assuming their pensions would be there for them when they retired.

    • Alaska

      Senate passes new approach to pension obligation

      The Anchorage Daily News | by Becky Bohrer | April 21, 2014

      The Alaska Senate unanimously passed legislation setting out a new approach for addressing the state's pension obligation Saturday, less than three hours after the plan emerged from the Senate Finance Committee.

    • HEADLINES: Alaska

      House Approves $3 Billion Transfer To Pension System

      Alaska Public Radio | by Alexandra Gutierrez | April 18, 2014

      The bill uses $3 billion from the state's reserve funds to help pay off the $12 billion unfunded liability. It also directs the Legislature to put $500 million into the retirement system every year, until the obligation is paid off.

    • HEADLINES: North Carolina

      Nation's Seventh Largest State Pension Can't Afford Financial Audit

      Forbes | by Edward "Ted" Siedle | April 17, 2014

      It's hard to believe that there are no audited financial statements for the North Carolina state pension, the seventh largest public fund in the nation with $87 billion in assets.

    • HEADLINES: New Jersey

      Christie 'will force' legislators to address state pensions

      BenefitsPro | by Lisa Barron | April 17, 2014

      New Jersey Governor Chris Christie told a town hall meeting that the state's public pension system is unsustainable and that he plans to force legislators to tackle the issue during his last term.

    • HEADLINES: Rhode Island

      Raimondo: Losing pension case would be catastrophe

      Boston.com | April 15, 2014

      General Treasurer Gina Raimondo said Monday that it would be catastrophic for Rhode Island to lose the legal challenge over the state's pension overhaul but that she has a ‘‘high degree of confidence'' that won't happen.

    • HEADLINES

      Pace of pension reform ebbs after 49 states change laws

      Hazel Bradford | by Pensions & Investments | April 15, 2014

      While the sense of urgency has diminished, reform attempts have become a legislative staple, as public retirement systems continue to grapple with unfunded liabilities and political pressure to change.

    • HEADLINES: Florida

      House and Senate not in sync on state pension reform

      The Gainesville Sun | by Lloyd Dunkelberger | April 14, 2014

      House Speaker Will Weatherford said the changes, which will not directly impact current public employees, are needed to reduce the state's long-term costs for the retirement system.

    • HEADLINES: Alaska

      Governor's plan to address pension obligation gets municipal support

      The Anchorage Daily News | by Becky Bohrer | April 14, 2014

      Under the plan, about $1.9 billion would go to the public employees' system and the rest to the teachers' retirement system.

    • HEADLINES: Rhode Island

      RI pension case will go forward in court; mediation fails

      The Providence Journal | by Randal Edgar | April 11, 2014

      In a joint statement, Governor Chafee and state General Treasurer Gina Raimondo said that while they there was a strong effort to reach a mediated settlement, the rejection of that settlement "by a small group of union members" means the process "has failed and the mediation process has ended."

    • HEADLINES: California

      New pension plans differ greatly from 'classic' models

      Sacramento Bee - The State Worker | by Jon Ortiz | April 10, 2014

      California became a dual-class public employee state last year when a sweeping law lowered pension benefits for state and local government workers hired in 2013 and later.