States Sink in Benefits Hole

Publication: The Wall Street Journal

Author: Amy Merrick


02/18/2010 - State governments face a trillion-dollar gap between the pension, health-care and other retirement benefits promised to public employees and the money set aside to pay for them, according to a new report from the Pew Center on the States.

States promised current and retired workers a total of $3.35 trillion in benefits through June 30, 2008, said the report from the nonprofit research group, a division of Pew Charitable Trusts. But state governments had contributed only $2.35 trillion to their benefit plans to pay current and future bills, the report said.

The Pew report said its estimate of the funding gap would likely prove conservative, because it didn't account for the massive investment losses pension funds suffered during the second half of 2008. Although there was a slight rebound last year, it wasn't nearly enough to cover the previous losses, Pew said.

Read the full article States Sink in Benefits Hole on The Wall Street Journal's Web site.

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