employees are emsiderally broader in coverage and more geneous compared
with those for private sector emp;oyes. According to the bureau of labor
statistic’s employee compensation survey (March 2010), 84 percent of all
state and local government employees had access to a defined retirement
plan, 29 percent to a defined contribution retirement plan, and 23 percent to
both types of plans during 2009. 59 percent with access to defined
amtribution plans 14 with accees to both private sector workers and 14 with
access to booth types of plans. Using employer cost per households worked
as an indictcator generosity of defined benefits pension plans at the state and
local government cost are $3.32 per household worked of which $3.00 is
accounted for by defined benefit plans. State and local government,have
opted to continue provding defined benefit retirement plans to employees.
Although a small minority of state and local governments also offer defined
contributions retirement plans.
The continued predominance of defined benefit plans amoung state
and local government entities means that those agwncies continue to assume
the responibilites and risk associated with funding and managing retirement
plans for their employees.Those responsibilites and risk however coexist and
sometimes run counter economic imperatives facing state and local
government, moreoney state and local government pension boards may be
inherned by the political refernces of their elected represntatives. The desion
of poliy makers to allocate government revenues primarily to projects that
immediately and directly benefit their taxpayers and residents. Education,
healthcare infrastructures,community development and makes ensuring
adequate funding of state and local government defined benefit retirement
plans.
Asset price declines during recessions (2001-2002 and 2007-2009)
and the slow economic rebound since the latter recession ended home
exacurbuted the funding problem of state and local government retirement
plans. However beyond the difficulities of ensuring adequate contributions
into those plans many pension boards also appear to have made questionable
decisions about valuing their future pension plan liabilites, managing the risk
exposures of pension plan assets, and community information about pension
shortfalls to state and local government employees and taxpayers in a timely
manner. This is a continuing defiriencies in pension plan management may
soon force a wrenching transformation of state and local governments
pension plans in a direction similar to that which has already occurred in the
private sector. As a result, current and new state and local government
employees in a several states may soon be forced to assume the
responibilties and risks associated with providing retirement security for
themselves, their dependents, and their surviors.
This report contains a detailed description of the funding erosion in
state and local government employee pension plans during the last decade,
controlling for the decsions in pension plan asset values during the recent
recessions it also analyse wheather atleast some of the blame for the current
poor funding condition of state and local government pension plans can be
assigned to insufficant contributions by both employees and employees.
Finally because the pension plans are operated by government entities that
are unlikely to be shut down it is useful to examine how their pension
funding conditions would change if future contributions and benefits are
taken into account.
The pension crisis is a predictr difficulty in paying for
corporate,state and federal pension in the Unitied States due to a differences
between