Thread: U.S. local government pension costs exceeds $530 billion

U.S. local government pension costs exceeds $530 billion

NEW YORK
Wed Dec 23, 2009 5:43pm EST

NEW YORK (Reuters) - U.S. state and local governments face more than $530 billion in unfunded public pension liabilities and most do not have funds set aside to pay for them, a government report showed on Wednesday.

U.S.

As of June, state governments were on the hook for around $405 billion and 39 of the country's largest local governments must come up with around $130 billion for their other post employment benefits, the U.S. Government Accountability Office said.

The report said unfunded state liabilities ranged from as low as $71 million in Arizona to $62 billion in California.

Local government liabilities ranged from $15 million for a county in Arizona to over $59 billion for New York City, the GAO said.

The economic meltdown hit all U.S. municipalities hard and many have had difficulty keeping up with their pension, or OPEB, obligations.

"State and local governments faced increasing fiscal pressures in 2008, in part because of recession-induced revenue shortfalls," the report said. But "unfunded OPEB liabilities on their own are large enough to represent a fiscal pressure for state and local governments," the GAO said.

It said that by 2050, the projected operating budget imbalance for state and local governments is 4.7 percent of gross domestic product. This is largely due to increases in health-related spending.

The congressional watchdog said that only around 35 percent of the 89 governments it reviewed reported having set aside at least some assets to cover their liabilities.

This means that "most state and local governments included in our review are paying for their OPEB liabilities for active and retired workers in a given year from their current revenues."

The most common actions that municipalities took to address the shortfall were changes to their contributions to the benefits, such as reductions to the amount of health insurance premiums paid for by the government.

Other actions included changes to the type of retiree health benefit plan and a tightening of the eligibility requirements to qualify for retiree health benefits.

http://www.reuters.com/article/idUSTRE5BM4FC20091223

San Diego's Pension Crisis

Shortfall in pension fund at $2.7 billion

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The gap between promised pension benefits for San Diego city employees and available money to pay them has ballooned to $2.7 billion, according to an actuary hired by the city to monitor the pension system . . .