Unfunded Liabilities in State Pension Plans Significantly Threaten Taxpayers in Nearly Every State
FOR IMMEDIATE RELEASE
Contact: Daniel Reynolds
Unfunded Liabilities in State Pension Plans
Significantly Threaten Taxpayers in Nearly Every State
Public servants like teachers, firefighters and police officers include those at risk
ARLINGTON, VA – (March 20, 2019) The American Legislative Exchange Council (ALEC) releases today, Unaccountable and Unaffordable 2018 – its newest publication in an annual series illustrating the growing pension crisis facing public employees and taxpayers. To understand the scope of the crisis, state pensions across the country are funded at an average of 35% of what they should be. This translates into an average of $18,300 in unfunded pension liabilities for every man, woman and child across the United States. The new report measures nearly 300 state-administered pension plans and in total, they have unfunded liabilities of nearly $6 trillion.
“Despite strong market gains in recent years, states continue to struggle with massive unfunded pension obligations, “says ALEC Chief Economist and Vice President, Jonathan Williams. “Absent fundamental pension reform, these unfunded liabilities threaten core government employees like teachers, firefighters and police officers. The liabilities could also lead to massive tax increases in many states. Fortunately, states like Michigan, Oklahoma and Utah have all enacted comprehensive pension reforms in recent years that will protect workers, retirees and taxpayers alike.”
This publication uses unfunded pension liabilities per capita to illustrate is the magnitude of the liabilities. Even the best funded states like Tennessee, Indiana and Nebraska – which take the top three on this publication’s rank of unfunded liabilities per capita – have per capita liabilities of $8,466, $8,690 and $9,043, respectively. The worst three states, Alaska, Connecticut and California have unfunded liabilities per capita of $46,774, $32,805 and $29,137, respectively.
“Unaccountable and Unaffordable 2018 clearly illustrates the looming economic crisis hidden within state budgets,” said Lisa B. Nelson, Chief Executive Officer of ALEC. “States must find a way to set their priorities straight and commit to fixing public pension plans. An easy first step is to empower new employees and move towards the fully funded 401k model that has been rewarding for the vast majority of private sector workers.”
The American Legislative Exchange Council is the largest nonpartisan, voluntary membership organization of state legislators in the United States. The Council is governed by state legislators who comprise the Board of Directors and is advised by the Private Enterprise Advisory Council, a group of private, foundation and think tank members. For more information about the American Legislative Exchange Council, please visit: www.alec.org.