The Trillion Dollar Gap: Michigan

Michigan needs to improve how it manages the long-term bills coming due for both its pensions and retiree health care and other benefits. Starting in 2002, the state has consistently failed to meet annual actuarially required contributions, dipping below 70 percent in 2004. However, the state contributed 111 percent of the annual required contribution in 2008, and has set aside 84 percent of the assets needed to fund its total pension bill as of fiscal year 2008.

In 1997, Michigan moved to a defined contribution plan, which today enrolls half of the state's employees; however, teachers remain in a defined benefit plan. Meanwhile, Michigan has a $40.7 billion bill coming due for retiree health care and other benefits.

While the state is one of 29 with any assets set aside to cover these benefits, only 1.9 percent of the long-term cost is funded.