When the Numbers No Longer Add Up
The new report also factors in the cost of other post-employment benefits, which cities and towns, as well as the state, have only recently begun to show on their accounting statements. With those costs added to the pension costs, whether state-managed or locally managed, the annual payments needed to keep pace with current and future retirement benefits begins to eat up a significant portion of some local tax levies.
What sorts of numbers are we talking about?
While the unfunded liability for locally managed pension plans totals about $2 billion, the unfunded liability for other post-employment benefits totals another $2.4 billion, according to the report. This does not include the millions of dollars in retirement obligations that cities and towns share with the state for teacher pensions.
From the sampling of numbers reported in the Providence Journal, there appears to be significant variation from municipality to municipality, but the average city or town would have to devote about one-quarter of its annual budget to support employees who are no longer working. Pawtucket, Central Falls, and Johnston would need 59%, 57%, and 47%, respectively. And, again, that’s excluding payments that the state subsidizes.
Keep in mind, too, that government continues to operate and to grow. This is an after-the-fact payment to those who’ve already retired.