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States face $2.73 trillion bill for retirees: study
NEW YORK (Reuters) - Retirement benefits for U.S. public employees could cost states some $2.73 trillion over the next three decades, according to a report released on Tuesday by the Pew Charitable Trusts.
While states have saved about $2 trillion to meet these obligations, their promises to retirees are still underfunded by about $731 billion, the study showed.
The study, which evaluated all 50 states, also found wide variations among state practices, with only a third of states consistently setting aside the amount their actuaries tell them is necessary to cover the cost of long-term benefits.
Eleven states were found to have long-term liabilities of more than $10 billion, including New York, California, Connecticut and New Jersey.
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New York faced the largest obligation of $50 billion, followed by California which faced $48 billion, according to the study.
"Now we know the magnitude of this bill -- and paying it will require an enormous investment of taxpayer dollars," Susan Urahn, managing director of the Pew Center on the States said in a statement.
The study also found that the states have set aside enough to cover about 85 percent of long-term pension costs, but that they have only saved 3 percent of the funds necessary to cover promises made to retirees about health care and other benefits.
Just six states -- Arizona, North Dakota, Ohio, Oregon, Utah and Wisconsin, were on track at the end of fiscal 2006 to have fully funded their non-pension promises for the next three decades.
"For states that have dug themselves into a deep hole, there are no quick and easy solutions," Urahn said. "These will require time, attention and, above all, political will."
Pew said its figures were "conservative" and did not include all costs for teachers and local government employees.
It said it compiled its figures from state financial reports and interviews with actuaries, economists, state controllers, auditors and other experts.
(Reporting by Emily Chasan)
