State Retiree Benefits Fact Sheet – Alabama

  • December 18, 2007
Alabama's pension systems appear to be in good shape and the state does an excellent job of keeping up with its annual required contributions. Alabama's big challenge is its extensive non-pension benefits—about $5.3 billion for state employees and another $14.6 billion for teachers. (In many states, the latter is not calculated on a state-level basis, but will appear as a liability for individual school districts.) Alabama has moved aggressively, calculating its liability earlier than many states and setting up irrevocable trusts in which to make payments toward its long-term costs. Moving toward full funding of this bill and consistently putting the money in its trusts would be smart fiscal policy. The long-term cost for state employees would shrink from $5.3 billion to $3.8 billion, and from $14.6 billion to $10.2 billion for teachers, because the interest the state is likely to earn when it invests more money over the long term can be applied to paying down the bill.