10 states where the public pension fight is fierce
Oct 7, 2012, 9:03 AM
(AP) – Many are dealing with big pension bills by reducing retirement benefits. Here’s a look at 10 states that have taken steps to address unfunded pension liabilities _ or the amount of money the state has to pay out but for which it has no funding in the pension pool.
CALIFORNIA
Unfunded liability: $100 billion in the Public Employees’ Retirement System and $65 billion in the State Teachers’ Retirement System.
Changes: Gov. Jerry Brown last month signed legislation expected to save billions of dollars in coming years by increasing the retirement age for new employees, limiting annual pension payouts to $132,120 and requiring workers who are not contributing half of their retirement costs to pay more. San Diego this year moved its city workers to a defined contribution plan similar to a 401(k).
Court challenges: Recent pension changes in San Diego and San Jose are being challenged. A state worker’s organization says it’s considering a challenge to the state changes.
ILLINOIS
Unfunded liability: $85 billion.
Changes: The state has reduced benefits for new employees, but efforts to do so for existing employees and retirees have stalled. The changes for new employees include raising the retirement age to 67 and ending 3 percent cost of living raises, compounded annually, for their pensions. Instead, new employees qualify only for raises of 3 percent or half the inflation rate, whichever is lower.
KANSAS
Unfunded liability: $9.2 billion.
Changes: Over the past two years, the state has committed to additional funding for the pension system. It wants to give existing employees the choice of increasing the percentage of their salaries going into pensions. It’s also starting a new plan for workers hired after 2014 that moves toward a 401(k)-style plan, in which workers contribute a lump sum and are guaranteed at least 5.25 percent in interest earnings annually.
KENTUCKY
Unfunded liability: $30 billion.
Changes: Lawmakers suspended pension increases this year, raised the retirement age for new hires in 2008 and raised the employee contribution in 2008 from 5 percent to 6 percent of their wages.
LOUISIANA
Unfunded liability: $18 billion.
Changes: In recent years, lawmakers have made changes to increase the retirement age and retirement benefits for new workers, but Gov. Bobby Jindal’s attempt to change benefits for existing workers failed to win legislative support.
Court challenges: A plan to switch new state employees to a cash balance plan with many of the features of a 401(k)-style account is tied up in litigation.
NEW HAMPSHIRE
Unfunded liability: $4.26 billion.
Changes: The state cut benefits in 2009 and 2011, has raised some retirement ages and increased contributions from employees. Some lawmakers plan to push legislation to create 401(k)-style retirement plans next year.
Court challenges: Lawsuits challenging the increased member contributions and benefit changes are pending.
NEW JERSEY
Unfunded liability: $41.7 billion.
Changes: In 2011, a law increased pension contribution requirements for public employees and suspended pension increases.
Court challenge: A judge sued, saying the increased pension and health care contributions amounted to an unconstitutional salary reduction for judges. A court agreed, and now there’s a call to amend the state constitution to allow the changes.
NEW YORK
Unfunded liability: $9 billion.
Changes: In March, state leaders, facing union opposition, reached a budget agreement to reduce pension benefits for future public workers, requiring higher contributions and lowering the retirement age from 63 to 62. The changes are projected to save local governments $80 billion over 30 years. It omitted Gov. Andrew Cuomo’s proposal for a defined contribution alternative for all future employees.
New York has one of the healthier state pension systems in the country, thanks in part to a law requiring the state to make annual contributions to the pension system.
OKLAHOMA
Unfunded liability: $10.6 billion.
Changes: In 2011, lawmakers eliminated the common practice of approving an automatic 2 percent pension increase and required that all future increases be funded by the Legislature. Other changes included increasing the retirement age for some future employees.
RHODE ISLAND
Unfunded liability: $4 billion; was $7 billion before recent changes.
Changes: Last year, lawmakers suspended pension increases, raised retirement ages for many workers and created a new type of retirement plan that combines traditional pensions with 401(k)-style accounts.
Court challenge: Public-sector unions are suing to block the changes, which they say are illegal and unfair.
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