Shortfalls in state-run retirement systems continue to grow and in fiscal year 2012, the gap between promises to state workers and funding reached $915 billion. “Many states are facing rising costs to pay for pension obligations and unfunded liabilities for future pension costs that are squeezing other budget priorities,” said Adrian Moore, vice president of the Reason Foundation.

A coalition of retiree groups, unions and state workers won a temporary restraining order and preliminary injunction yesterday that will delay significant reforms to the Illinois public retirement system from taking effect on June 1. Lawyers for the coalition argued that the reforms, which were signed into law by Gov. Quinn in 2013 to help solve the state’s $100 billion pension shortfall, are unconstitutional. A status hearing for the case is scheduled for May 22.

Yesterday Illinois Gov. Pat Quinn signed legislation that will make historic changes to the state's public employee pension program, which faces a $100 billion funding shortfall and has caused multiple downgrades to the state's credit rating.The law is designed to save the state $160 billion over the next thirty years and guarantees Illinois will make its full annual contribution to the pension funds. Legislative leaders have estimated the plan will reduce the current unfunded liability by about $21 billion and fully fund the retirement systems by 2044.

Moody’s Investor Service report, released on June 27, 2013, presented adjusted pension data for all 50 states in fiscal year 2011. Ten states had pension liabilities equal to or greater than their annual governmental revenues.  Of all the states, Illinois had both the largest Adjusted Net Pension Liability (ANPL), $133 billion, and the highest ANPL as a percentage of revenues, 241%.

California enacted sweeping public pension reforms in 2012. Despite competing claims that extensive reform either wasn’t warranted or didn’t go far enough, California’s pension legislation will provide immediate savings and reduce unfunded liabilities over the long term.1
Citizens and governing bodies are demanding more transparency regarding a government's overall financial condition and individual transactions than ever before. The movement toward more transparency began just before the economic downturn that emerged in 2008, but really gathered steam with the passage of the American Recovery and Reinvestment Act in 2009, which required quarterly reporting on a national website of Recovery Act-related expenditures. States and many local governments followed by creating their own transparency websites. In 2012, the Governmental Accounting Standards Board, known as GASB, issued two new accounting principles that are designed to provide increased transparency into one of government’s largest unfunded liabilities—pension systems. GASB, through the issuance of Statement No. 67 for pension plans and Statement No. 68 for employers, has dramatically changed the way pensions are calculated and reported in a government’s financial statement. This article will highlight the changes relating to Statement No. 68, focusing on how the new standard will assist state and local policymakers and the public to better understand their pension liabilities.

States and local governments need to develop a pension funding policy and a new report offers guidelines for developing that policy to help states and local governments continue to reform and improve their public retirement systems. The report comes from the Big 7, a consortium of seven associations in Washington, D.C., serving state and local governments, which includes The Council of State Governments.

Oklahoma Rep. Randy McDaniel is blunt in his assessment of state obligations to employees and retirees. “We have a moral, legal responsibility to keep the retirement promises that have been made,” McDaniel, chairman of his state’s Pension Oversight Committee, said during a December webinar, "Pension Reforms in the South,” sponsored by The Council of State Governments’ Southern Legislative Conference.

Jennifer Burnett, CSG's fiscal policy expert, outlines the top five issues related to fiscal and economic development policy, including state revenue recovery, federal funds availability, Medicaid, state employee and retiree health care costs, and rethinking economic development strategies.  

The Council of State Governments’ Southern Office, the Southern Legislative Conference, convened a webinar on December 11 entitled “Pension Reforms in the South: Lessons from Louisiana, Oklahoma and West Virginia.” The webinar featured presentations from legislators in three SLC states that are leading the effort to enact reforms and bolster the fiscal position of their pension plans.