Georgia is a national leader in saving up for its public employee pension bill, according to a recent study by the Pew Center on the States. The state’s pension trust is sufficient to cover 96% of projected pension costs, compared to the national average among states of 82%.
Most states are in far worse shape than Georgia. Roughly half the states have underfunded public employee pensions, which constitute a substantial portion of the nation’s retirement bill. Some may have to choose between honoring their pension obligations and funding other state programs, which already has happened in New Jersey and West Virginia.
The 50 states together will have to pay out more than $2.7 trillion to cover their pension obligations over the next 30 years.
The study called Georgia a model for other states because of an eight-year-old law that requires a rigorous analysis of long-term costs before making any changes to pension benefits. Georgia also has pre-funded retiree health care and other nonpension benefits with a $100 million appropriation for fiscal year 2008. Legislation passed in 2007 allows local governments to set up benefit trust funds.