States With the Best Retirement Funding
At the state level, the differences in funding are extreme, ranging from as little as $73.6 million annually to $4.2 billion, depending on the state. Per-capita spending ranges from as little as $26 to well over $1,500.
There is little relationship currently between the amount spent per capita on pensions and the level to which these pensions are funded, but many state pension funds appear to be drastically underfunded, and continued pressure could result in crisis for some of these states.
As of 2016, 14 states had less than 60% of the funds needed to meet their future pension payment obligations. Speaking to 24/7 Wall St., David Draine, senior officer of the public sector retirement systems project at The Pew Charitable Trusts, explained the extent of the potential crisis.
“The Great Recession caused substantial losses for state pension plans; nine years into the recovery many state pension plans have failed to make up lost ground and overall public sector retirement systems have never been more vulnerable to the next recession,” Draine said.
To identify what each state spends on retirement, 24/7 Wall St. reviewed the detailed expenditures for State governments toward retirement, as well as State revenue and Cash / Security Holdings, provided by the U.S. Census Bureau’s 2015 State and Local Finance data. State pension deficit data was provided by The PEW Charitable Trust’s “The State Pension Funding Gap: 2016.” State government employment as a share of total nonfarm employment came from the bureau of labor Statistics, and is as of May 2018. State tax collections are from the Tax Foundation’s Facts and Figures report. The report, which was released in 2018, includes collections for the 2015 fiscal year.