If you are a government employee, have you ever questioned whether your pension is funded? You would assume that as a state employee, you can trust your pension has the funds to pay its retirees. As of 2022, that is often not the case.
At Truth in Accounting, we assess the annual financial statements of all 50 states. This financial report is called an Annual Comprehensive Financial Report (ACFR). We have a staff of seven people who manually review every detail presented by the states. Since these ACFRs are not machine readable (check out our four-part XBRL), our staff checks and rechecks numbers reported on these statements. One type of data we verify concerns the states’ retirement funding levels. We look at the number of retirement plans states oversee, as well as whether the contributions in the plans have a positive or negative balance. If the balance is negative, that means the pension has not received the required contributions from the state government to fund the eventual distributions. Here are some of the more interesting details we have found:
1. These states report having 10 or more retirement plans included under their watch: Delaware 11, Georgia 11, Indiana 10, New Jersey 10, New York 17, Oklahoma 16, Utah 11 and Washington 14.
2. Conversely, these are the states which have fewer than five plans: Iowa 3, Kansas 1, Mississippi 3, Nevada 3, New Hampshire 4, Arizona 4, Connecticut 3, Florida 3, Hawaii 1, Idaho 3, North Dakota 4, Oregon 1, Pennsylvania 3, South Dakota 1, Tennessee 1, Vermont 3.
3. These are the states that report none of their plans as having a positive funding status: Arizona, Colorado, Connecticut, Florida, Iowa, Kansas, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, Oregon, Pennsylvania, South Carolina, Texas, Vermont and Virginia.
4. The most frequent positive funded pensions are those that serve state judges with 16 states reporting a positive balance in the judiciary pension funds. The next most often funded are for legislators, which have six states with positive pension balances.
5. In most states, the police, firefighters and teachers’ pensions are not fully funded and are operating with deficit balances.
If you believe your pension will be funded by the state in which you live, it might be a good time to check out the funded status of your state’s annual report. You can google every state with the words Annual Comprehensive Financial Report and add your state’s name to see if your pension plan has a negative or positive balance. They say the truth can’t hurt you. In this case, the truth may be hurting you more than you know. We will release our annual Financial State of the States report at the end of October. Check out the state of your state when the report is released.