A public employee pension crisis for state governments has deepened to a record level even after nearly nine years of economic recovery for the nation, leaving many states vulnerable if the economy hits a downturn, according to an annual report from The Pew Charitable Trusts.
The deepening crisis is leaving many states vulnerable if the economy hits a downturn. The massive unfunded pension liabilities are becoming a real problem not just for public-sector retirees and workers concerned about their future but also for everyone else. As states try to prop up their pension funds, it means less money is available for core government services such as education, public safety and parks.
The report says public worker pension funds with heavy state government involvement owed retirees and current workers $4 trillion as of 2016.
While the study looks only at pension funds with major state-government involvement, systems run by cities, counties, school districts and other local entities have had similar problems.
Just four states—New York, South Dakota, Tennessee and Wisconsin—had at least 90% of their pension systems funded. David Draine, a senior officer at Pew, says those states and some others that have repaired pension shortfalls since the Great Recession will be in better shape the next time the economy slides.
Louisiana’s pension system for public employees is 60% funded, according to the report.
