The bankruptcies of cities like Detroit and Stockton, California, have shined fairly bright lights on the fiscal unsustainability of benefits offered to public employees. And we've seen at least lip service and some stabs at reform, lackluster as they may be. So you'd think maybe we'd see just a little bit of improvement in the state of public employee pensions now that the alarm bells have been going off for a few years now.
Today State Budget Solutions, a non-profit policy organization that focuses on, among other things, the state of public pensions, has released its annual report. They've calculated that for 2014, unfunded state pension liabilities across the country have actually increased from $4.1 trillion to $4.7 trillion. They've unsurprisingly titled their report for this year "Promises Made, Promises Broken":
Overall, the combined plans' funded status has dipped three percentage points to 36%. Split among all Americans, the unfunded liability is over $15,000 per person.
This spells trouble for the millions of Baby Boomers who are quickly approaching retirement age and expect to collect the pensions promised to them by government officials. Furthermore, state taxpayers who are not government employees will also feel the pinch, which could result in reduced government services, as larger and larger portions of the states' budgets must be allocated to cover the public pension shortfall. This report gives ample support for reform efforts that would protect pensions and vital public services.
State Budget Solutions offers several different charts to help understand which states are doing the worst in funding pensions, because it can get a little complicated. California has the biggest flat liability, but it's partly because the state is so large and has so many employees. Despite the state's fiscal crisis, California doesn't even crack the top ten in terms of how poorly they've actually funded their pensions. Illinois, unsurprisingly, ranks on either first or second on all three lists. Its unfunded pension liabilities are more than $330 million, it has funded only 22 percent of its liabilities, and each resident of the state is on the hook for more than $25,000 for these liabilities.
Read more about their report here.