0813 econ snapshot
TRANSCRIPT
-
7/31/2019 0813 Econ Snapshot
1/1
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 [email protected]
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