State public retirement funds $50 billion short - Health care liability is only 1.9% funded

[Bozita]

http://www.freep.com/article/20100218/NEWS06/2180470/1322/State-public-retirement-funds-50-billion-short

POSTED: FEB. 18, 2010
State public retirement funds $50 billion short
Health care liability is only 1.9% funded
BY DAWSON BELL
FREE PRESS STAFF WRITER


Michigan taxpayers are on the hook for more than $50 billion in unfunded pension and retiree health care for future public sector retirees, according to a new report on state retirement systems from the Pew Center on the States.

On the bright side, it's worse elsewhere. Californians have a $122-billion shortfall. Illinois, with the most underfunded pension system, is about $94 billion in the hole.

The calculations are based on state-by-state analysis of the cost of future benefits and the retirement systems' projected capacity to cover them.

Michigan's pension systems, which include state employees and school teachers, have $70.4 billion in anticipated payouts to current and future retirees.

About $11.5 billion of that is unfunded, according to Pew. Michigan's pension funds actually compare favorably to most other states, funded at an 84% level, above the national average and the 80% level recommended by experts, Pew said.

The picture for retiree health care is bleaker. Pew pegs Michigan's liability for health care and other non-pension benefits (such as life insurance) at $40.7 billion, with only a small fraction (1.9%) currently funded. Only California, New York, New Jersey and Illinois have larger gaps.

In most states, public pension benefits are legally sacrosanct; in Michigan, they enjoy constitutional protection. And a failure to reduce costs or save more in the interim "could lead to higher taxes," Huh said.

more...



Here's the Pew fact sheet on Michigan:
http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Fact_Sheets/State_policy/FINAL_Michigan.pdf