Iowa needs to improve how it is managing its long-term liabilities for both pensions and retiree health care
and other benefits. In 1999, Iowa's pension system was 97 percent funded—well above the 80 percent benchmark that the U.S. Government Accountability Office says is preferred by experts. But since 2004, the state has consistently failed to make its actuarially required contributions. The pension system is now 89 percent funded, with an unfunded liability of $2.7 billion. Starting in July 2007, Iowa began upping both its employee and employer contribution rates for the Public Employees' Retirement System. Meanwhile, while Iowa has very limited long-term liabilities for retiree health care and other benefits—with a bill coming due of $404.3 million—the state has failed to put away any funds to cover these costs.