Wisconsin is on top in national pension study
MILWAUKEE - There's a bright spot in a new study that warns of an impending pension crisis for states. It's Wisconsin.
The study by the Pew Center on the States finds a $1.4-trillion gap between promises states have made to workers and actual funding to pay for those commitments.
The study breaks the funding down into two categories: pension funding and funding for future health care for retirees. Wisconsin is the only state that gets a solid performer rating on both categories.
In addition, Wisconsin is the only state in the nation that is listed as having a fully funded pension.
"The state has been effective at managing these promises," said David Draine, a senior researcher at Pew.
While the news is good here, it's not good elsewhere. And that's the point of the study. "States that continue to kick the can down the road and fail to deal with this may find themselves facing an unmanageable crisis in the future," Draine said.
It's a potentially huge issue for taxpayers. Draine points out, "for the states that have racked up large unfunded liabilities, they not only have to pay for the benefits that are being earned, but they have to pay for their past mistakes." Draine points to New Jersey and New York. in 2000, both had fully funded pensions. In subsequent years, New Jersey underfunded its pension, while New York made the payments. Now, New Jersey's payment is $2-billion dollars more each year than New York. And New York's system is larger.
Draine points out that it's very difficult to take away pension benefits that have already been earned. That means that state that underfund their pensions will likely either have to raise taxes or cut services, or both.
The numbers the study cites are from 2010.