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ALEC in The Center Square: States owe nearly a trillion dollars in liabilities on top of unfunded pensions

ALEC's OPEB report details unfunded state debt and how it is affecting states across the country.

By: Casey Harper
July 7, 2022

Unfunded state debt for things like retired public employees health care coverage continues to balloon to an unsustainable level, according to a new report.

The American Legislative Exchange Council released its report Thursday on “Other Post-Employment Benefit (OPEB) Liabilities,” which total about $959 billion.

The Center Square recently reported on the huge debt levels for state pensions, which have grown to more than $8 trillion in unfunded liabilities. Thursday’s ALEC report details the other state employment obligations that are not included in pensions that public employees can receive after they retire. This can include things like life insurance, health insurance and more.

“Without real policy reforms, defined benefit OPEB plans will place a severe burden on taxpayers and other state spending priorities,” ALEC Chief Economist and Executive Vice President of Policy Jonathan Williams said. “By offering a range of defined contribution options for new employees, states can keep the promises made to both public employees and taxpayers.”

The OPEB debt obligation is about $3,000 for every U.S. resident, according to ALEC, leaving taxpayers footing the bill.”

“Well governed states such as Nebraska and South Dakota have switched to defined contribution plans to reduce the burdens on taxpayers to zero,” ALEC Center for State Fiscal Reform Research Manager Tom Savidge said. “Utah’s common-sense reforms in recent years have led to a drop in their unfunded OPEB liabilities for the past 5 years. Today that liability is down to just $35 per person in Utah.”

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