Thursday, February 18, 2010

Trillion Dollars in Unfunded Liabilities

Wisconsin is no exception.

States may be forced to reduce benefits, raise taxes or slash government services to address a $1 trillion funding shortfall in public sector retirement benefits, according to a new study that warns of even more debilitating costs if immediate action isn’t taken.

The Pew Center on the States released a survey Thursday of state-administered pension plans, retiree health care and other post-employment benefits in all 50 states that blamed a decade’s worth of policy decisions for leaving them shortchanged.

The result for some states will be “high annual costs that come with significant unfunded liabilities, lower bond ratings, less money available for services, higher taxes and the specter of worsening problems in the future,” the study said.

(3) Comments
Posted by Owen at 1137 hrs
Economy + Politics + Politics - General

  1. I know that Wisconsin has been playing a lot of accounting games with any number of other accounts, but the article implied that the state (unlike, say, Milwaukee County) was doing reasonably well. Pew’s actual release is more clear:  “In 2000, just over half the states had fully funded pension systems. By 2006, that number had shrunk to six states. By 2008, only four—Florida, New York, Washington and Wisconsin—could make that claim.”

    Nice to see a little news about state government finances that isn’t more bad news.

    Posted by .(JavaScript must be enabled to view this email address) on February 18, 2010 at 1150 hrs


  2. Good point.  As I read the story I was including county and municipality liabilities.  Much of that is unaccounted for in the story.

    Posted by Owen on February 18, 2010 at 1154 hrs


  3. The whole Pew report: The Trillion Dollar Gap is informative. It only covers retirement commitments and funding for states but it covers it in reasonable depth without being too hard for non-accountants to follow (Wisconsin also gets high grades on non-pension obligations, but only because there’s a curve that every college student who forgot to study would envy).

    It could be that they didn’t bother with local governments because those can go into bankruptcy under Chapter 9 if the local officials make too much of a mess of things, though I suspect that the huge number of local governments was just too daunting to try to include.

    Posted by .(JavaScript must be enabled to view this email address) on February 18, 2010 at 1218 hrs


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