Pension underfunding crosses party lines

By Cate Long
November 18, 2013

There is no one-size-fits-all condition for state pensions. The condition of state pensions varies from nearly 100 percent-funded plans in Wisconsin, North Carolina, South Dakota, Washington and New York to less than 55 percent in Kentucky, Connecticut, Rhode Island and Illinois.

The reasons for the funding levels span economic and historical explanations, but do they also touch the political? Are states controlled by Republicans, who are known for fiscal conservatism, harboring better-funded pensions than Democrat-controlled states, which are willing to embrace a broader array of government services?

I mashed up data about legislative control of states with funding levels of pensions plans and how much of the “actuarially required contribution” (ARC) they had made in 2012 (data from Pew page 5):

See the balance of states here.

Republicans control 54 percent of state legislatures. Democrats control 34 percent, while 10 percent of legislatures have split control. Nebraska is officially non-partisan. Party affiliation is mixed across pension-funding levels. But note something interesting about the states with the six-lowest actuarially required contributions (ARC). With the exception of laggard Pennsylvania and split-party Kentucky, four of six states have Democrat-controlled legislatures. Washington does not really belong in this group because its pension is 95-percent funded. Washington appears to be slacking off its ARC as some states do when funding levels are high.

The “legislative accountability” data in the far right column is from the State Integrity Investigation State Report Card. State Integrity assigns grades to states related to their standing in political corruption. States with massively underfunded annual pension payments have poor grades for “legislative accountability.” In the end, this may be a more useful metric than party affiliation.

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