June 19, 2012
Pew: RI Still has "Serious Concerns" About Unfunded Pensions & Health Care
The Pew Center on the States is out with an "update" (PDF) on public employee retiree pension and health care benefit debt owed by the states (h/t ProJo).
They provide three ratings for the two categories: Solid Performer, Needs Improvement and Serious Concerns. Despite giving Rhode Island (report here) positive marks for addressing it's pension problem with "an unprecedented package of reforms," the fact remains we are so far behind the 8-ball that they still rate our pension liability as a having "Serious Concerns." As for Health Care, they note Rhode Island has a $775 million liability and had not funded any of it by 2010. Again, they rated it as having "Serious Concerns." In 2010, Rhode Island did pay 100% of the "recommended" contribution to fund retiree pensions, but only 69% of "recommended" contribution to fund retiree health benefits.
Nationally, Rhode Island joined ten other states who had serious concerns in both categories (Arkansas, California, Connecticut, Hawaii, Illinois, Louisiana, Mississippi, Montana, New Hampshire, New Jersey & New Mexico). Several states were "Solid Performers" in one while they didn't do as well in the other category. Only one state was deemed a "Solid Performer" in both categories: Wisconsin. I wonder what they did?
Interesting timing b/c back here in RI, a study commission just yesterday released its (non-binding) recommendations:
"municipalities have 20 years to get their plans out of “critical status” and 30 years to get to the point where cash on hand equals the cost of the promises made to retirees."
That strikes me as an awful long time. Does anyone know what the implications are - especially to taxpayers - of dragging it out so long?
digital.olivesoftware.com/OLIVE/ODE/PROJO/LandingPage/LandingPage.aspx?href=VFBKLzIwMTIvMDYvMTk.&pageno=NA..&entity=QXIwMDQwMA..&view=ZW50aXR5
Let's see: middling benefits (even PolitiFact) acknowledged this) +one of the highest contributions in the country, 8.75% and 9.50% = one of the highest unfounded liability? Does this make sense?
Do you think Gina Raimondo's "Truth in Numbers" did an adequate job of addressing this?
Posted by: Candace McCall at June 19, 2012 8:38 AMMonique,
In the short-term, it keeps taxes down (or less up) by postponing payments. In the long-term, it drives costs up because less money is in the account garnering interest.
Posted by: Justin Katz at June 19, 2012 9:00 PM