Hawaii's State Retirement System in Trouble
Federal spending isn’t the only runaway train in America these days—most of the 50 state governments seems to speeding toward the same cliff. The big problem? Generous retirement packages for government workers that these states cannot afford, including Hawaii.
So says The Pew Center on the States, an independent nonprofit that researches state government policy issues nationwide. In its recent report on underfunded state pensions, it finds that the states, combined, face a $1 trillion gap between the retirement benefits they’ve promised to their worker and their assets to pay for those benefits.
For the Islands, Pew writes, “Hawaii’s management of its long-term pension liability is cause for serious concern and it needs to improve how it handles the bill coming due for retiree health care and other benefits. The Aloha State has funded only 69 percent of its total pension bill, well below the 80 percent benchmark that the U.S. Government Accountability Office says is preferred by experts.”
Then there’s this grim conclusion: “As of fiscal year 2007, Hawaii—like 19 other states—had failed to sock away any assets to cover this long-term bill coming due. Relative to the size of its payroll and population, it has one of the greatest burdens—$10.8 billion—of any state in the country.”
Obviously, state finances are even worse than they were in the fiscal year of 2007. Now we can’t even afford to keep our schools open.
Read the national overview here.
Read the Hawaii report here.
Last month, even before the Pew study was released, an author with inside knowledge of Hawaii’s retirement system wrote a critique for the center-right think tank Grassroot Institute, which is worth read here.
Posted on Thursday, February 18, 2010 in Permalink