About half the states have underfunded the retirement plans of their public workers, according to a recent study by the Pew Center on the States. The center warns that states on the bottom half of the list may have to choose between honoring their pension obligations and funding other state programs, as has already happened in New Jersey and West Virginia.
The 50 states together have to pay out more than $2.7 trillion to cover their total pension obligations for the next 30 years.
States leading the pack for preparation are Alabama, Arkansas and North Carolina, which have diligently prepaid their retirement obligations. Among the states that have fallen behind, Florida and Iowa have skimped only slightly. States with the deepest funding deficits include Illinois, Kansas, Oklahoma, Michigan, New Jersey, Virginia and Washington.
Unlike companies, state and local governments are not subject to federal pension laws, which set uniform funding standards.