HEADLINES : Alabama, Kansas, New York, South Carolina, Virginia, Wyoming, Louisiana
Highlights of State Pension Reform in 2012
Seven states have enacted sweeping structural pension reforms in 2012-Alabama, Kansas, Louisiana, New York, South Carolina, Virginia and Wyoming-affecting various sets of state and local government employees. This year's legislation affected almost all state and local government in employees in Alabama, Kansas, New York, South Carolina, Virginia and Wyoming, and focused on state government employees in Louisiana. In addition, major reforms were considered or are under consideration in California, Michigan, New Hampshire, Ohio, and Rhode Island, some of which could be enacted later in 2012.
Six of the seven states that enacted major legislation in 2012 had already undertaken pension reform in the past three years. The addition of South Carolina to the list has increased the number of states that have enacted major reforms from 2009 through the present to 44. California and Michigan are among the 43. The other six states either had acted before 2009, like Alaska, or, like Idaho and Tennessee, have been less damaged than most in the crisis of public pension funding that has swept the country. [i]
This multi-year wave of reform is intended to address the long-term funding issues of public pension plans. The severity of investment losses in the past two recessions, slow growth in the economy and the slow recovery of state revenues mean that average plan funding levels continue to disappoint. Figures from the Pew Center on the States indicate an average funding level for state plans in 2010 to be at 75.2 percent of actuarial liabilities. Another recent study sponsored by the National Conference of Public Employee Retirement Systems includes many municipal and county plans in its base, and reports a 2012 funding ratio of 74.9 percent. [ii]
This report provides an overview of changes enacted in the seven states listed in the first paragraph above. More detail on their legislation and on other states' enactments in 2012 is available in the NCSL report Pensions and Retirement Plan Enactment in 2012 State Legislature. [iii]