You're going to hear a lot about a study released this morning by the Pew Center on the States that says state retirement systems have promised current and retired workers $3.35 trillion in pension, health care and other post-employment benefits as of fiscal 2008, but have $2.35 trillion on hand to pay for them. The study shows the impact to public pension funds of the epic meltdown in the financial markets, but it doesn't include much of the subsequent Wall Street rebound that occurred after mid-2009.
Of the $454 billion in retiree pensions and benefits on California's fiscal 2008 books, $59 billion was unfunded liability, according to Pew. That means the fund had assets to cover 87 percent of its obligations.
In conjunction with the national trend report, the center published fact sheets about each state's long-term pension, retiree health and other obligations and graded each on its fund management. Pew gave California a "needs to improve" grade. Click here for the Golden State's profile. This link opens the menu fact sheets for all 50 states.
Here's the broader picture, according to Pew:
In aggregate, states' systems were 84 percent funded--a relatively positive outcome, because most experts advise at least an 80 percent funding level. Still, the unfunded portion--almost $452 billion--is substantial, and states' overall performance was down slightly from an 85 percent combined funding level, against a $2.3 trillion total liability, in fiscal year 2006. These pension bills come due over time, with the current liability representing benefits that will be paid out to both current and future retirees. Liabilities will continue to grow and, as more workers approach retirement, the consequences of delayed funding will become more pronounced.
The conclusion: Some states may have to cut benefits, raise taxes or whack services to keep their pension promises if action isn't taken.
Click here to download "The trillion dollar gap:Underfunded state retirement systems and the road to reform."