The Trillion-Dollar Public Benefits Gap Widens
State governments are looking at a cumulative shortfall of at least $1.26 trillion needed to pay for pension and retirement health care services, The Pew Center on the States reported in a study published last week.
The Pew Center on the States:
In the midst of the Great Recession and severe investment declines, the gap between the promises states made for employees’ retirement benefits and the money they set aside to pay for them grew to at least $1.26 trillion in fiscal year 2009, resulting in a 26 percent increase in one year.
State pension plans represented slightly more than half of this shortfall, with $2.28 trillion stowed away to cover $2.94 trillion in long-term liabilities—leaving about a $660 billion gap, according to an analysis by the Pew Center on the States. Retiree health care and other benefits accounted for the remaining $604 billion, with assets totaling $31 billion to pay for $635 billion in liabilities. Pension funding shortfalls surpassed funding gaps for retiree health care and other benefits for the first time since states began reporting liabilities for the latter in fiscal year 2006.
… And states’ ability to meet their annual payments may not improve anytime soon; most government finance experts expect state tax revenues to continue recovering slowly in the years ahead.