One of the many dramatic effects of the Great Recession was an unprecedented amount of public pension reform activity that is just now starting to ebb.
After state and local pension fund assets plummeted to $2.17 trillion in March 2009 from $3.15 trillion at the end of 2007 and the governments' own coffers took a hit, policymakers began looking hard at ways to manage rising pension costs, according to a December report from the National Association of State Retirement Administrators. The report found nearly every state passing "meaningful" reform for one or more of its pension plans.
"States have always made reforms, but what was untypical was the magnitude," said Alex Brown, the Washington-based research manager for NASRA.
The number of states enacting pension reforms skyrocketed to 27 in 2011, up from five in 2007, NASRA found. In 2016, reforms were enacted by three states, then spiked again to 13 in 2017, falling once again to just five last year.
So far in 2019, just a few states are actively discussing reforms.
In Kentucky, a legislative working group is reviewing the pension systems for possible changes after the Kentucky Supreme Court in December struck down on procedural grounds a pension reform bill signed into law in April. The law enrolled new teachers into a cash balance plan and reset the 30-year amortization period to pay off the unfunded liabilities of the $17.4 billion Kentucky Retirement System, Frankfort, among other changes.
Georgia legislators will soon have pension reform proposals to consider, following an audit showing potential cost savings from plan design changes for teachers' pensions and cost-cutting measures at the $16 billion Employees' Retirement System of Georgia, Atlanta.
In New Mexico, legislators will be working on a pension solvency plan with input from the board of the $15.5 billion New Mexico Public Employees Retirement Association, Santa Fe, which in December recommended increasing contributions from employees and employers, plus temporarily suspending and later reducing cost-of-living increases.