States have set aside about $2 trillion to cover the cost of pensions and health insurance promised teachers, police officers and other public-sector workers, but retiree benefits are still underfunded by about $731 billion, a new study released on December 18, 2007, shows.
Of that shortfall, nearly half ($370 billion) is needed for future retirees’ health care and other non-pension benefits, such as dental and life insurance, the Pew Center on the States said in “Promises with a Price,” a 50-state analysis of state retiree benefits.
Pew Center on the States is funded by The Pew Charitable Trusts, the same organization that funds Stateline.org. Read the full report and fact sheets for each state.
States have always been required to publicly report their long-term pension liabilities, but starting in 2008, states also have to estimate the price tag of health care and other non-pension benefits. States will have to identify these costs in their fiscal 2008 financial reports under a new rule from the Governmental Accounting Standards Board.
Only Arizona, North Dakota, Ohio, Oregon, Utah and Wisconsin were on track at the end of 2006 to fully fund retiree benefits other than pensions for the next 30 years, Pew said.
None of the big states – California, Texas, New York, Florida and Illinois — had put aside enough money for retiree health care and other non-pension benefits as of 2006. New York faces long-term liabilities of $50 billion, followed by California ($48 billion) and Connecticut and New Jersey ($22 billion each), according to the Pew study.
States that don’t sock away enough money risk getting a lower credit rating from Wall Street, making it much more expensive to borrow money.
Read the full article Price Tag For Retiree Benefits: $2.73 Trillion on Stateline.org's Web site.