States face $1.26 trillion shortfall in funds to pay retiree benefits

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    Apr 26, 2011 5:45 PM GMT
    http://www.washingtonpost.com/business/economy/states-face-126-trillion-shortfall-in-funds-to-pay-retiree-benefits/2011/04/25/AFpprVmE_story.html

    The state funds that pay pension and health-care benefits to retired teachers, corrections officers and millions of other public workers faced a cumulative shortfall of at least $1.26 trillion at the end of fiscal 2009, according to a new report.

    The study, to be released Tuesday by the Pew Center on the States, found that the pension and health-care funding gap increased by 26 percent over the previous year. Pew officials said the growing shortfall was driven by inadequate state contributions, an aging population and market losses that accompanied the recession.

    Although investment markets have recovered substantially since the period covered by the report, its authors warn that states still face an increasing burden from retiree costs that are beginning to crowd out critical services.

    β€œIn many states, the bill for public-sector retirement benefits already threatens strained budgets and is competing for resources with other critical needs, including education, infrastructure and health care,” said Susan Urahn, managing director of the Pew Center on the States.

    The report, which is based on state financial reports, found that states faced a $660 billion pension funding gap. Meanwhile, retiree health-care liabilities β€” which most states handle on a pay-as-you-go basis β€” totaled $604 billion, the report said.

    Even as they face increasing liabilities, the report said, many states are not making pension contributions in amounts recommended by their actuaries as they juggle retiree and other costs against a backdrop of weak revenue.
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    Apr 26, 2011 5:48 PM GMT
    This is more proof of just how severe the Bush recession was - and of the fact that there are still many ill after-effects of the Bush recssion that are hurting the economy.
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    Apr 26, 2011 5:52 PM GMT
    I think this gives weight to the argument of a single payer system for healthcare.

    Some products don't work as well in a market based economy even though most do better. Insurance is one of them. Having the largest pool of insures allows the spread of risk more efficiently and can leverage the economy of scale on healthcare/drug companies. The bonus of having no profit incentive means people won't be extorted for a bottom line. People's health and education for that matter shouldn't be a product for sale.