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Business, Free Enterprise and Constitutional Issues; Pro-Life and Pro Second Amendment. Susan Lynn is a member of the Tennessee General Assembly. She serves as Chairman of the Consumer and Human Resources subcommittee and on the Finance Ways and Means Committee. She holds a BS in economics and a minor in history.

Wednesday, June 22, 2016

Tennessee Does Well on Pension Funding and Retirement Health Benefits

New GASB rules have now standardized the reporting of municipal liabilities, JP Morgan created a single measure for each state.  
Total liabilities include bonds and obligations related to underfunded pensions and retiree healthcare benefits (referred to as “OPEB”, an acronym for Other Post-Employment Retirement Benefits).  Pensions and OPEB are a big part of the debt picture: while US states have ~$500 billion of bonds supported by state tax collections and general revenues, they have another $1.0-$1.5 trillion of unfunded pension and OPEB liabilities, depending on rates used to discount them.
JP Morgan analyzed 330 state pension and OPEB plans.  The chart shows the ratio of what states currently spend on bonds, pensions and OPEB as a percentage of their revenues (blue bars), and what they would be spending assuming a 6% return on plan assets, amortizing any unfunded pension and OPEB liabilities over 30 years (total bars).  
As you can see - Tennessee is doing very well.

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