The Trillion Dollar Gap: Montana
Underfunded State Retirement Systems and the Roads to Reform
Montana is managing its long-term pension liability well, but it needs to improve how it handles the bill coming due for its retiree health care and other benefits. After seeing its pension funding level drop 25 percentage points between 2001 and 2005, Montana has been recovering its financial footing by paying more than the actuarially required contribution to its pension funds.
In 2008, the Treasure State had funded nearly 84 percent of its total pension bill, above the 80 percent benchmark that the U.S. Government Accountability Office says is preferred by experts. The year before, the legislature increased the employer contribution rate for the teachers' retirement system from 7.47 percent to 9.85 percent by 2010.
Meanwhile, Montana has a bill coming due of $632 million for retiree health care and other benefits, but as of 2007 it had failed to set aside any money to cover these costs.