Chris Mier and his team at Loop Capital recently published the 11th Annual Public Pension Funding Review. It is the gold standard for public pension reporting. Mier was onto the pension story well ahead of Meredith Whitney and others, including myself. One thing that is great about Mier’s report is how graphic the pension data is.
Here is a map of the “actuarially required contributions” (ARCs) that states made to their pension plans. Note the numerous blue states that that made 100 percent or more of what was required. Laggard New Jersey, meanwhile, only paid 15 percent of what it was required.
Loop Capital commented:
Thirty one states continue to struggle with making their full Annual Required Contributions (ARC). During periods of budgetary pressure, legislators are tempted to use funds to ‘pay the bills’ instead of paying into pensions. While revenues continued to improve at the state governmental level in 2012, the slow rate of improvement in the economy and the continuing trend of reduced federal support maintained ongoing pressure on state budgets.
Here is how well various states have funded their public employee pension plans:
Loop Capital on funded status:
Pension reforms have been enacted in over 40 states with legislative activity heavy over the last 3 years. Unfortunately, the cost savings to date have been insufficient to materially reduce UAALs [Unfunded Actuarial Accrued Liability] and boost funded status because of the time lag involved in realizing savings. While the savings will start to build over time, the overall decline in funded status from 2011 to 2012 does not provide a sense that the legislative progress is being translated into a reduction in state fiscal stress as of yet.