No one is going to argue that teachers, firefighters, and policemen deserve better wages and benefits considering the crucial work they do. Most would argue though that “other public sector employees” probably should not be growing at an alarming rate when one looks at the numbers facing the states.
By Nicole Bullock in New York
Published: February 18 2010 05:02 | Last updated: February 18 2010 05:02
US states face a funding gap of at least $1,000bn for the retirement benefits they have promised teachers, firefighters and other public sector employees, threatening already strained budgets, according to research released on Thursday.
The Pew Center on the States found that, at the end of fiscal year 2008, states and localities had set aside $2,350bn to pay for pension, healthcare and other non-pension benefits, such as life assurance, that were estimated to cost $3,350bn.
About half of the gap comes from healthcare and other benefits, which are largely funded as they are incurred by retirees.
The bad news on state retirement systems comes as governments have been grappling with several years of ballooning budget deficits and as concerns have raged recently about the financial health of individual European countries.
Orin Kramer, chairman of New Jersey’s investment council, told the Financial Times that funding gaps could be three times the Pew estimates. He puts the shortfall for the US public pension system at more than $2,000bn by the end of 2009 with another $1,000bn for healthcare.
From Pew Center On The States:
California’s financial problems are in a league of their own. But the same pressures that drove the Golden State toward fiscal disaster are wreaking havoc in a number of states, with potentially damaging consequences for the entire country.
This examination by the Pew Center on the States looks closely at nine states, in addition to California, that are particularly affected by the recession. All of California’s neighbors–Arizona, Nevada and Oregon–and fellow Sun Belt state Florida were severely hit by the bursting housing bubble, landing them on Pew’s list of states facing fiscal difficulties similar to California’s. A Midwestern cluster of states comprising Illinois, Michigan and Wisconsin emerged, too, as did the Northeastern states of New Jersey and Rhode Island.
“Beyond California: States in Fiscal Peril” makes clear that the recession severely impacted states from different geographic regions with different types of economies, tax structures and political leanings.
The Pew Center on the States hosted a briefing on November 13 with officials from California and Michigan following the release of “Beyond California: States in Fiscal Peril.”
View video clips and listen to the full audio from the event.
Much more information at the above link.