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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.

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    • HEADLINES: California, Idaho, Illinois, Indiana, Louisiana, Michigan, Minnesota, North Carolina

      Williams Report - August 25, 2014

      State Budget Solutions | by Bob Williams | August 25, 2014

      Join us on Twitter today by following @StateBudgets and tweeting with the hashtag #SBSBob.

    • HEADLINES: California, Connecticut, Iowa, Kansas, Louisiana, Maryland, New Jersey, New York, North Carolina , Vermont, Virginia, Washington, Wisconsin

      Williams Report - August 19, 2014

      State Budget Solutions | by Bob Williams | August 19, 2014

      Join us on Twitter today by following @StateBudgets and tweeting with the hashtag #SBSBob.

    • HEADLINES: Wisconsin

      Wisconsin Supreme Court upholds Act 10

      State Budget Solutions | by Hannah Oh | August 4, 2014

      After three years of protests and heated debate, the legal battle over Act 10 has finally ended.

    • HEADLINES: Connecticut, Iowa, New Jersey, North Carolina , Washington, Wisconsin, Kansas, Texas

      Williams Report - August 4, 2014

      State Budget Solutions | by Bob Williams | August 4, 2014

      Join us on Twitter today by following @StateBudgets and tweeting with the hashtag #SBSBob.

       

       

    • HEADLINES: Illinois, Indiana, Kentucky, Michigan, Nebraska, New Jersey, North Carolina , South Dakota, Texas, Vermont, New York, Pennsylvania, Oregon

      Williams Report - July 29, 2014

      by Bob Williams | July 29, 2014

      Join us on Twitter today by following @StateBudgets and tweeting with the hashtag #SBSBob.

    • HEADLINES

      Williams Report - July 21, 2014

      State Budget Solutions | by Bob Williams | July 21, 2014

      The Williams Report is BACK after a one week hiatus. Be honest, you missed it! Join us on Twitter today by following @StateBudgets and tweeting with the hashtag #SBSBob. 

    • HEADLINES: Michigan

      Detroit's Startup Revolution: How the Motor City is Driving Entrepreneurship

      by Hannah Oh | July 9, 2014

      Detroit, America’s underdog city, is quickly rising as it becomes one of the top destinations for savvy entrepreneurs and business-minded individuals around the country.

    • HEADLINES: Illinois, Maryland, Minnesota, New Hampshire , North Carolina

      Williams Report - July 7, 2014

      State Budget Solutions | by Bob Williams | July 7, 2014

      We hope you had a great Independence Day weekend! Join us on Twitter today by following @StateBudgets and tweeting with the hashtag #SBSBob.

    • HEADLINES: Illinois, Indiana, Maine , Massachusetts , Michigan, New Jersey, North Carolina , Oklahoma

      Special Edition Williams Report July 2, 2014

      State Budget Solutions | by Bob Williams | July 2, 2014

      Welcome to a special edition of the Williams Report! There has been a lot of news this week: an important U.S.Supreme Court decision on unions and the end of the fiscal year in many states have been in the headlines. Join us on Twitter today by following @StateBudgets and tweeting with the hashtag #SBSBob.

    • HEADLINES: Alaska, Delaware, Louisiana, Missouri, New Jersey, North Carolina , Pennsylvania, Virginia, Washington

      Williams Report - June 30, 2014

      June 30, 2014

      Join us on Twitter today by following @StateBudgets and tweeting with the hashtag #SBSBob.


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    • 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.

    • RESEARCH

      Forecasting the Recovery from the Great Recession: Is This Time Different?

      The National Bureau of Economic Research | by Kathryn Dominguez & Matthew Shapiro | February 4, 2013

      Was the slow recovery of the U.S. economy from the trough of the Great Recession anticipated? 

    • RESEARCH

      On Financing Retirement with an Aging Population

      The National Bureau of Economic Research | by Ellen McGrattan & Edward Prescott | February 4, 2013

      Alternative views on the problem the United States is facing: financing retirement consumption as its population ages.

    • RESEARCH

      Pension Markets in Focus: Pension fund assets hit record USD 20.1 trillion in 2011 but investment performance weakens

      The Organisation for Economic Co-operation and Development | by André Laboul | September 27, 2012

      Recent years have witnessed intense pension reform efforts in countries around the globe, often involving an increased use of funded pension programmes managed by the private sector. These funded arrangements are likely to play an increasingly important role in delivering retirement income in many countries and privately managed pension assets will play an increasing role in financial markets, notably as a source of long-term savings.

      Published annually since 2005 by the The Organisation for Economic Co-operation and Development  (OECD) Directorate for Financial and Enterprise Affairs, Pension Markets in Focus provides accurate, comprehensive, comparable and up-to-date statistics to help policy makers, regulators and market participants measure, compare and evaluate programme developments and country experiences globally.

       

       

    • RESEARCH

      The Revenue Demands of Public Employee Pension Promises

      by Robert Novy-Marx and Joshua Rauh | September 16, 2012

      Calculation of the increases in contributions required to achieve full funding of state and local pension
      systems in the U.S. over 30 years. Without policy changes, contributions must increase by a factor of 2.5, reaching 14.1% of the total own-revenue generated by state and local governments.
      This represents a tax increase of $1,385 per household per year.

    • RESEARCH: New York

      Iceberg Ahead

      Empire Center for New York State Policy | by E.J. McMahon | September 5, 2012

      New York taxpayers spend billions of dollars a year on health insurance coverage for retired state and local government employees, many of whom are too young to be eligible for Medicare. But the mounting "pay-as-you-go" bill for retiree healthcare is just the tip of a much larger iceberg. Thanks to a new government accounting standard, the true cost of this long-term entitlement is finally emerging from the depths of state and local finances.


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    • SOLUTIONS

      The State Public Pension Crisis: A 50-State Report Card

      The Heartland Institute | by Eli Lehrer and Steve Stanek | February 9, 2011

      This report objectively measures and ranks states according to the operation and relative disposition of the pension plans in the 50 states and suggests ways that statefacing problems with their pension systems might go about solving these problems.

    • SOLUTIONS: Colorado, Kansas

      State Pension Funds Fall Off a Cliff

      by Barry Paulson, Arthur Hall | January 28, 2011

      This study examines different measures of historical and current funding shortfalls in state pension plans. Two case studies are examined in greater depth to explore some fatal flaws that have caused funding crises in these plans: Public Employee Retirement Association of Colorado (PERA) and the Kansas Public Employee Retirement System (KPERS).

    • SOLUTIONS: Florida

      Protecting Florida's Cities Through Pension Reform

      The James Madison Institute | by Randall G. Holcombe | January 1, 2011
    • SOLUTIONS: Missouri

      Missouri's Public Pension Plans Need to Be Reformed to Maintain Solvency

      The Show-Me Institute | by John Payne | December 23, 2010

      The primary benefit to society of a greater reliance on defined contribution plans is that individuals would be more directly responsible for their own retirement funds, as opposed to relying on taxpayers for support. Public employees are as capable as the rest of the working public to provide for their retirements.

    • SOLUTIONS: North Dakota

      State debt in North Carolina

      The John Locke Foundation | by Joseph Coletti | December 2, 2010

      North Carolina should limit non-voter-approved debt. Any further borrowing by the state should be subject to voter approval. It should also reform state employee pensions by moving to more portable and flexible benefits, such as a 401(k). State government should set aside reserves to cover future health care costs for retired state employees. Health Savings Accounts would be one solution and will remain an option at least until 2018, when the state will need to meet federal health insurance regulations.

    • SOLUTIONS: South Carolina

      10 Reforms for the S.C. Retirement System

      South Carolina Policy Council | by Simon Wong and Dr. Jameson Taylor | November 18, 2010

      Paper proposing 10 reforms that would facilitate funding the South Carolina Retirement System at 100 percent, keeping it solvent beyond 2024. The first nine ideas would streamline the existing system and provide for greater transparency. Adopting these reforms would not require a major overhaul of the existing plan. Reform # 10 looks to long-term changes that must be made to sustain the state’s retirement system.

    • SOLUTIONS: Washington

      Time to Come Clean in Washington State

      by Bob Williams | November 15, 2010

      Washington State Treasurer Jim McIntire has learned some lessons from the fast and loose Wall Street accounting that plunged the country into recession - he's learned to obfuscate and mislead. When current and prospective bond holders look to Treasurer McIntire to understand the condition of the state's pension fund, they'd best beware.

      Treasurer McIntire appears to be going beyond simple carelessness or cleverness. Treasurer McIntire is leading bond holders to believe the State Actuary's grim Risk Assessment fully reflects the condition of the pension fund. In fact, the situation is much worse. And Treasurer McIntire knows it.

    • SOLUTIONS: Michigan

      Michigan’s Public-Employee Retirement Benefits: Benchmarking and Managing Benefits and Costs

      Mackinac Center for Public Policy | by Rick Dreyfuss | October 25, 2010

      This paper reviews Michigan Public School Employees’ Retirement System and Michigan State Employees’ Retirement System pension and retiree medical benefits and confirms many of the published concerns related to the level of benefits provided and the associated fiscal challenges facing Michigan taxpayers in both the short and long term.

    • SOLUTIONS: Utah

      Utah: A Case Study for Pension Reform

      Defined contributions are a potential solution to states' unsustainable pension liabilities.

    • SOLUTIONS: Maryland, Nevada, Oregon, Vermont, Washington, Alaska, Michigan

      State Budget Solutions with Bob Williams

      May 7, 2010

      Video of Bob Williams addressing the underfunded state pension fund problem facing so many states.  He states that the public cannot afford the benefits and suggests defined contribution programs as a solution.


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