State public pension funds saw a decline in liabilities in fiscal year 2013, thanks to favorable investment performance and higher contribution levels, said Moody’s Investors Service.
In a report released Thursday, “U.S. State Pension Medians for FY 2013,” Moody’s found that pension liabilities declined in 27 states, while 21 states with lagging valuations had an average increase of 38.9%. “We believe that states should continue to show improvement in their liabilities in fiscal 2014 due to continued strong investment performance,” Moody’s said in a statement.
The median annualized returns for the period ended June 30, 2014, was 16.1%.
In measuring actuarially determined contribution levels, Moody’s found that 34 states contributed 90% or higher in fiscal 2013 and 12 contributed between 60% and 90%, while only four states contributed less. New Jersey was the lowest at only 29% of actuarial determined contributions.
In terms of pension liability as a proportion of government revenue, the median ratio dropped to 60.3% from 63.9% in fiscal 2013, but 14 states were more than 100%. The highest ratios of pension liability to revenue were in Illinois (268.3%), Connecticut (236%), Kentucky (193.2%) and New Jersey (179.7%).
States with the lowest liabilities-to-revenue ratio included Nebraska (12.6%), Wisconsin (13.8%), Tennessee (20.9%) and New York (24.2%).