Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Look up keyword
Like this
1Activity
0 of .
Results for:
No results containing your search query
P. 1
Pew Report Shines Light on West Virginia Public Pensions

Pew Report Shines Light on West Virginia Public Pensions

Ratings: (0)|Views: 115|Likes:
The latest report from the Pew Center on the State takes a look at public pension debt in all 50 states, but shows that West Virginia is not taking its long-term obligations as seriously as they let on.
The latest report from the Pew Center on the State takes a look at public pension debt in all 50 states, but shows that West Virginia is not taking its long-term obligations as seriously as they let on.

More info:

Published by: The West Virginia Examiner/WV Watchdog on Apr 26, 2011
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

07/10/2013

pdf

text

original

 
www.pewcenteronthestates.org april
2011
In the midst of the Great Recession andsevere investment declines, the gapbetween the promises states made foremployees’ retirement benefits and themoney they set aside to pay for themgrew to at least $1.26 trillion in fiscalyear 2009, resulting in a 26 percentincrease in one year.State pension plans represented slightlymore than half of this shortfall, with $2.28trillion stowed away to cover $2.94 trillionin long-term liabilities—leaving about a$660 billion gap, according to an analysisby the Pew Center on the States. Retireehealth care and other benefits accountedfor the remaining $604 billion, with assetstotaling $31 billion to pay for $635 billionin liabilities. Pension funding shortfallssurpassed funding gaps for retiree healthcare and other benefits for the first timesince states began reporting liabilities forthe latter in fiscal year 2006.
1
Precipitous revenue declines in fiscalyear 2009 severely depleted state coffersand constrained their ability to paytheir annual retirement bills. States’own actuaries recommended that theycontribute nearly $115 billion to build upenough assets to fully fund their promisesover the long term, but they contributedonly $73 billion—or 64 percent of thetotal annual bill. This 2009 paymentrepresents a three percentage point declinefrom the previous fiscal year’s contribution,when they set aside just under $72 billiontoward a $108 billion requirement.
The Widening Gap:
t g r’ im  s p dr h c c
the widening gap
 
Pew Center on the StateS
2
 And states’ ability to meet their annualpayments may not improve anytime soon;most government finance experts expectstate tax revenues to continue recoveringslowly in the years ahead.The $1.26 trillion figure is based onstates’ own actuarial assumptions. Moststates use an 8 percent discount rate—theinvestment target that states expect toearn, on average, in future years. Butthere is significant debate among policymakers and experts about what discountrate is most appropriate for states to usewhen valuing pension liabilities. This isan important issue because, dependingon how those liabilities are calculated,states’ total funding shortfall for their long-term pension obligations to public sectorretirees could be as much as $1.8 trillion(using assumptions similar to corporatepensions) or $2.4 trillion (using a discountrate based on a 30-year Treasury bond).How states value long-term liabilities goingforward will play an important role indefining the scale of their challenges andthe actions they will have to take tomeet them.
Pensions
In all, state pension systems were slightlyless than 78 percent funded—decliningsix percentage points from the 2008 levelof 84 percent. New York led the way witha funding level of 101 percent—the onlystate to enjoy a surplus—while Illinois and West Virginia were at the back of the pack,with just slightly more than half of theirliabilities accounted for. Overall, this is aworrisome trend, because most experts,including the Government AccountabilityOffice, advise states to have at least an 80percent funding level. Thirty-one stateswere below this threshold in fiscal year2009, a dramatic one-year increase fromfiscal year 2008, when 22 states were lessthan 80 percent funded.In fiscal year 2000, when pension systemswere well funded, states and participatinglocal governments had to pay $27billion to fund their promised benefitsadequately. In fiscal year 2009, the annualpension payment requirement grew to$68 billion—a nominal (non-inflation-adjusted) increase of 152 percent overnine years. States paid $56.3 billion—83percent—of this bill in fiscal year 2009.Many experts agree that making fullannual contributions is key to effectivelymanaging the long-term costs of stateretirement systems.
Far too many states arenot responsibly managingthe bill for theiremployees’ retirement.
 
the widening gaP: the great reCeSSion’S imPaCt on State PenSion and retiree health Care CoStS
3
Exhibit 1
Thirty-one stateswere below the 80percent fundedthreshold for awell-fundedpension system.
SOURCE: Pew Center on the States 2011.NOTE: Pew was able to obtain fiscal year 2009 data for all states except Hawaii and Ohio. For Hawaii, fiscal year 2008 datawere used; for Ohio, 2009 data were projected using preliminary valuations.
States’ Public Sector Pensions 78% Funded in FY09
States with less than 80%of pension liabilities funded
StatePct.fundedLatestliabilityLatestrequiredcontributionPct.paid StatePct.fundedLatestliabilityLatestrequiredcontributionPct.paid
 VAWAORCAUTNENDIANYTXMOFLNCGAPAHI
Alabama $41,634,554 74% $1,214,983 100%Alaska 15,347,768 61 268,127 110
Arizona
 44,078,394 78 1,141,602 101
Arkansas
 22,698,906 78 534,954 103California 490,585,000 81 12,422,673 82Colorado 54,536,549 69 1,310,315 66Connecticut 41,311,400 62 1,307,200 96Delaware 7,615,166 94 148,940 97Florida 141,485,280 84 2,928,569 108Georgia 79,898,410 87 1,316,048 100Hawaii 16,549,069 69 488,770 104
Idaho
 12,057,500 74 235,626 132Illinois 126,435,510 51 4,076,467 71Indiana 36,924,845 67 1,293,765 103Iowa 26,602,516 81 495,196 87Kansas 21,138,206 64 660,833 68Kentucky 35,686,737 58 964,979 58Louisiana 39,657,924 60 1,375,288 97
Maine
 14,410,000 73 331,700 100Maryland 53,054,565 65 1,338,342 84Massachusetts 61,140,335 68 1,968,259 66
Michigan
 72,911,900 79 1,381,577 100
Minnesota
60,835,351 77 1,128,407 78Mississippi 31,386,747 67 741,520 100
Missouri
 55,314,996 79 1,225,512 90
Montana
 $10,271,027 74% $196,002 92%Nebraska 9,427,370 88 180,411 100Nevada 33,148,347 72 1,344,489 90New Hampshire 8,475,062 58 262,984 75New Jersey 134,928,225 66 4,053,524 36
New Mexico
 29,003,362 76 683,886 93New York 146,733,000 101 2,456,223 100North Carolina 76,976,542 97 762,442 100North Dakota 4,475,800 81 83,339 80Ohio 171,194,371 66 2,565,450 94Oklahoma 34,815,244 57 1,346,040 77Oregon 56,810,600 86 630,800 100Pennsylvania 111,317,700 81 2,405,156 31Rhode Island 11,500,425 59 320,173 100South Carolina 42,050,701 69 966,538 100South Dakota 7,494,895 92 95,280 100Tennessee 35,198,741 90 836,911 100Texas 155,679,204 84 2,611,397 99Utah 24,299,183 86 665,235 100
Vermont
 4,012,955 73 68,615 93 Virginia 69,135,000 80 1,608,466 82Washington 57,754,700 99 1,829,700 73West Virginia 14,266,419 56 541,482 96Wisconsin 79,104,600 100 699,300 100Wyoming 7,401,614 89 169,712 63
TNILNVIDMTWYCOSDMNWIOHMINMKSSCKYMEINLAMSAZOKARWVAL
74%61%78% 78%81%69%62%59%94%66%65%68%58%73%73%101%81%80%97%69%87%84%67%60%84%57%64%79%77%79%100%56%66%58%67%51%76%90%69%86%89%88%72%74%99%86%81%92%81%74%
RINJMANH VTCTDEMD
States with at least 80% of pension liabilities funded in fiscal year 2008, but less than 80% in fiscal year 2009.
Figures are in thousands.

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->