Pension Fund Outlook Brightens in 41 States

By Danielle Moran

A record setting run for the stock market has brightened the outlook for most state pension funds. The median funding ratio—a measure of how much pension liabilities are covered by assets currently held—rose to 73.7 percent in 2017 from 71 percent in 2016, though most fell below where they were in 2015. The gap between assets and liabilities widened in only seven states last year.

But states aren’t all out of the woods. Even though New Jersey, Kentucky and Illinois improved in 2017, they continue to have only about one third of the money they need to pay retirement benefits. Minnesota, the only state with double digit gains, saw its assets grow to 63.3 percent, from 53.2 percent of its liabilities in 2016. South Dakota and Wisconsin’s retirement systems have more than what they need, while Tennessee, New York, Idaho, North Carolina, Utah and Nebraska are all more than 90 percent funded.

We’ve ranked the states by the size of their funding gap. The lower the funding ratio, the more money the state will eventually have to raise to meet its pension obligations.

Public Employee Pension Funding Ratio by State

Assets as a percentage of liabilities, 2017 figures
50%
60%
70%
80%
90%
120%
No data available
AK
66.6
ME
81.9
VT
64.3
NH
62.6
MA
59.9
WA
89.6
ID
91.3
MT
72.9
ND
63.8
MN
63.3
WI
102.9
MI
65.1
NY
94.5
CT
43.8
RI
54.6
OR
83.1
NV
74.4
WY
75.9
SD
100.1
IA
82.1
IL
38.4
IN
65.0
OH
78.5
PA
55.3
NJ
35.8
CA
—
UT
90.3
CO
47.1
NE
90.2
MO
77.9
KY
33.9
WV
79.2
MD
68.6
DE
82.8
AZ
—
NM
62.5
KS
67.1
AR
76.3
MS
—
TN
—
NC
90.7
VA
77.2
OK
77.9
LA
65.6
AL
70.9
GA
79.2
SC
54.3
HI
54.8
TX
76.1
FL
79.1
KY
33.9
NJ
35.8
IL
38.4
CT
43.8
CO
47.1
SC
54.3
RI
54.6
HI
54.8
PA
55.3
MA
59.9
NM
62.5
NH
62.6
MN
63.3
ND
63.8
VT
64.3
IN
65.0
MI
65.1
LA
65.6
AK
66.6
KS
67.1
MD
68.6
AL
70.9
MT
72.9
NV
74.4
WY
75.9
TX
76.1
AR
76.3
VA
77.2
MO
77.9
OK
77.9
OH
78.5
FL
79.1
GA
79.2
WV
79.2
ME
81.9
IA
82.1
DE
82.8
OR
83.1
WA
89.6
NE
90.2
UT
90.3
NC
90.7
ID
91.3
NY
94.5
SD
100.1
WI
102.9
TN
—
AZ
—
MS
—
CA
—
Rank 20162016 Rank 20172017 State Funding Ratio 2017 (%) Funding Ratio 2016 (%) Change, in Percentage Points Fiduciary Net Position 2017 ($B) Total Pension Liability 2017 ($B)
2 1 Kentucky 33.9 31.4 +2.5 22.0 64.9
1 2 New Jersey 35.8 30.9 +4.9 79.3 221.6
3 3 Illinois 38.4 35.6 +2.8 85.4 222.3
4 4 Connecticut 43.8 44.1 −0.3 27.8 63.3
5 5 Colorado 47.1 46.0 +1.1 48.7 103.3
9 6 South Carolina 54.3 53.8 +0.5 30.2 55.7
10 7 Rhode Island 54.6 55.3 −0.7 6.6 12.2
6 8 Hawaii 54.8 51.3 +3.5 15.7 28.6
7 9 Pennsylvania 55.3 52.6 +2.8 82.6 149.2
11 10 Massachusetts 59.9 57.5 +2.4 53.4 89.1
20 11 New Mexico 62.5 65.4 −2.9 27.5 44.0
12 12 New Hampshire 62.6 58.3 +4.3 8.3 13.3
8 13 Minnesota 63.3 53.2 +10.1 64.3 101.5
21 14 North Dakota 63.8 65.9 −2.1 5.3 8.2
17 15 Vermont 64.3 64.3 −0.0 4.1 6.4
15 16 Indiana 65.0 63.0 +2.0 32.2 49.5
16 17 Michigan 65.1 64.0 +1.2 60.6 93.0
13 18 Louisiana 65.6 60.2 +5.3 35.0 53.5
14 19 Alaska 66.6 62.7 +3.9 14.5 21.7
19 20 Kansas 67.1 65.1 +2.0 18.6 27.8
18 21 Maryland 68.6 64.9 +3.7 49.3 71.9
22 22 Alabama 70.9 67.2 +3.6 37.1 52.3
24 23 Montana 72.9 71.2 +1.7 11.0 15.1
27 24 Nevada 74.4 72.3 +2.2 38.8 52.1
30 25 Wyoming 75.9 73.3 +2.7 8.5 11.2
29 26 Texas 76.1 73.0 +3.0 175.2 230.3
33 27 Arkansas 76.3 76.9 −0.6 26.2 34.3
28 28 Virginia 77.2 72.4 +4.8 72.8 94.3
32 29 Missouri 77.9 76.7 +1.2 55.5 71.2
25 30 Oklahoma 77.9 71.9 +6.0 30.2 38.7
23 31 Ohio 78.5 71.0 +7.5 188.8 240.6
35 32 Florida 79.1 79.1 −0.0 154.2 195.1
31 33 Georgia 79.2 75.8 +3.5 87.4 110.3
26 34 West Virginia 79.2 72.1 +7.1 15.0 18.9
34 35 Maine 81.9 77.3 +4.6 13.6 16.6
38 36 Iowa 82.1 81.6 +0.5 31.4 38.3
37 37 Delaware 82.8 81.1 +1.7 9.4 11.4
36 38 Oregon 83.1 80.5 +2.6 66.4 79.9
39 39 Washington 89.6 84.0 +5.6 85.1 95.0
43 40 Nebraska 90.2 88.8 +1.4 13.6 15.1
40 41 Utah 90.3 86.0 +4.3 31.9 35.3
42 42 North Carolina 90.7 88.3 +2.3 93.6 103.2
41 43 Idaho 91.3 87.7 +3.5 15.8 17.3
44 44 New York 94.5 90.6 +3.9 197.6 209.1
45 45 South Dakota 100.1 96.9 +3.2 11.6 11.6
46 46 Wisconsin 102.9 99.1 +3.8 104.4 101.4
* ** Mississippi 61.1 60.0 +1.1 26.9 44.0
* ** Arizona 62.7 68.4 −5.7 44.4 70.8
* ** California 66.5 69.8 −3.2 491.7 739.1
* ** Tennessee 96.2 95.9 +0.3 44.2 45.9
Note: **Figures for these states are based on GASB Statement No. 25 and have not been ranked.
Source: Bloomberg, Comprehensive Annual Financial Reports
Methodology: Bloomberg ranked U.S. states based on their pension funding ratios in 2017 (unless otherwise noted) under the Government Accounting Standards Board Statement No. 67. The funding ratio, which is calculated by dividing each state’s aggregated fiduciary net position by its aggregated total pension liability, provides an indication of the financial resources available to meet current and future pension obligations. To assemble these figures, the Bloomberg municipal fundamentals team collected and supplemented data from each state’s Comprehensive Annual Financial Report, a set of government financial statements. Where specific data were missing in the consolidated reported totals, the pension funds were contacted directly. Data are for individual states’ respective fiscal year-ends as of the date of publication of the CAFR. Fiscal year-end of supplemental pension reports may differ from the state’s CAFR. In 2012, GASB released Statement No. 67, which affects financial reporting for pension plans. Implementation of GASB 67 is contingent upon the pension plan type, and figures are not available for four states. They use FASB 25, the previous standard. Calculated medians exclude those four states.
Produced by: Cedric Sam
With assistance of: Karen Altamirano, Frank Yatzun, Xue Yang and Seok Fun Tan
Editor: James Crombie