Nineteen states took steps to reduce pension liabilities in the first 10 months of this year, either by reducing benefits or increasing employee contribution requirements, said a brief issued Wednesday by the Pew Center on the States.
According to the brief, posted on the center’s website, 11 other states made similar changes during 2009, while eight did so in 2008.
The brief says the states are in a fiscal squeeze because they have been promising more in retirement benefits than they have been willing to set aside to pay the bills — a practice that led to the creation of a combined pension funding deficit of $452 billion for state and local governments in fiscal 2008, Stephen Fehr, a Pew Center researcher, said in a telephone interview.
“It took years for states to get into their current pension predicament, and it will take years for reforms and fiscal discipline to get them out,” the brief continued.
States that have reduced pension benefits this year, according to the brief, are Arizona, California, Illinois, Maryland, Michigan, New Jersey, New Mexico, Rhode Island, South Dakota and Utah. The two states that increased employee contribution requirements this year were Louisiana and Wyoming.
States that increased employee contribution requirements and reduced benefits were Colorado, Iowa, Minnesota, Mississippi Missouri, Vermont and Virginia, the brief said.
The full brief is available at http://www.pewcenteronthestates.org/initiatives_detail.aspx?initiativeID=61599#MD.
