7/31/2019 0813 Econ Snapshot

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The bottom line

David Draine, senior researcher,

Pew Center on the States

Shad Rowe, former chairman of the

Texas Pension Review Board

Pamela Yip, personal finance writer,

The Dallas Morning News

States continue to feel the impact of

the Great Recession and have lost

more ground in their efforts to cover

the long-term costs of their

employees pensions and retiree

health care. Whilethe economy and

state revenues are

improving, states

are still struggling

to manage the bill

coming due.

Texas lawmakers approved

pension benefit cuts in 2009 and

2011, including raising the

retirement age from 60 to 65. That

changed the formula for calculating

benefits and increased employeecontributions.

Lawmakers also

increased

employee

contributions to

their retiree

health care.

You begin with an assumption of what

youre going to return. Some people are

[using] 8.5 percent, 9 percent, in a

world where the 10-year bond is

yielding 1.5 percent. No one is doing

that in any market. Itsreally an absurd

proposition on its

face.

The growing funding gap

Texas Pensions, percentage funded

LOCAL ECONOMIC SNAPSHOT | PUBLIC PENSIONS

By PAMELA YIPPersonal Finance Writerpyip@dallasnews.com

States continue to lose ground in their efforts to cover the long-term costs of their employees pensions and retireehealth benefits. In fiscal year 2010, the gap between states assets and their obligations for public sector retirement

benefits was $1.38 billion, up almost 9 percent from fiscal year 2009, according to the Pew Center on the States,which identifies solutions to critical issues facing states.

Texas was a strong performer at

managing its long-term liabilities for

public pensions, despite failing to pay

its full annual pension contribution

four times from 2005 to 2010.

The state has fallen far short on

funding for its retiree health care

obligations, according to Pew.

In 2010, Texas paid 82 percent of its

required pension contributions and

26 percent of its required retiree

health care contribution.

NY

AR

LA

MS AL GA

FL

SC

NC

VA

TN

MO

OK

KS

NMAZ

COUT

NV

CA

OR

WA

ID

MT

WY

ND

SD

NEIA

MN

MI

AK

HI

ME

RI

MA

CTNJ

DE

MD

VTNH

KY

OHIN

PA

WV

45% to 59% 60% to 69% 70% to 79% 80% to 89% 90% or more

Texas

83%

Illinois

45%

Wisconsin

100%

Retiree health benefits, percentage funded

NY

AR

LA

MS AL GA

FL

SC

NC

VA

TN

MO

OK

KS

NM

COUT

NV

CA

OR

WA

ID

MT

WY

ND

SD

NEIA

MN

MI

HI

ME

RI

MA

CTNJ

DE

MD

VTNH

KY

OHINIL

WI

PA

WV

0% 0.1% to 49% 50% or more

Texas

1.5%

Arizona

69%

Alaska

50%

NOTES: Based on fiscal year 2010 data; 2010 data for all states except for Ohio, South Dakota, Virginia and

Wisconsin, which are for 2009; Nebraska does not calculate a liability for retiree health benefits

Pensions (2010)

Pensions

$163.4 billion

Recommended contribution

Paid

Assets$135.6billion

$3.4 billion

$2.8 billion

Gap$27.8billion

Retiree health care (2010)

$56 billion

Assets$560

million

Gap$55.4billion

Retiree health care

Recommended contribution

Paid

$4.5 billion

$1.2 billion