Nationwide, states are dealing with a pension crisis. A December 2017 report from the American Legislative Exchange Council (ALEC) found that the unfunded liabilities of state and local pension plans skyrocketed from $433 billion to more than $6 trillion in the last year alone, largely because state governments can’t make their annually required contributions.
“Current state workers and retirees are not the only people affected by this unfunded pension crisis,” the report said. “Taxpayers ultimately provide the wages for public sector employees and the financial resources to cover the promised benefits of traditional pension plans. And all residents are impacted when pension costs absorb limited government resources, rather than core government services such as education, public safety, and roads.”
The somewhat good news for North Carolina is that it’s one of the states in better shape than the rest of the nation. According to the ALEC report, the state’s total unfunded public pension liability is $111,048,459,937—the 33rd worst in the U.S. Per capita, that comes to $10,944 per North Carolina resident—the fifth best in the nation.
North Carolina’s public pension funding ratio is 45 percent, which is also the fifth best in the nation. Comparatively, the national average funding ratio is 33.7 percent, or $18,676 per person. California’s total liability is the worst ($987,774,192,764), Alaska’s is the worst per capita ($45,689 per person), and Connecticut’s funding ratio is the worst (19.7 percent).
“But even calling some ‘better’ and others ‘worse’ misleads,” an Investors Business Daily editorial said, “since they’re all at risk of bankruptcy.” North Carolina has been an example for the nation on many other fiscal measures; can it lead the way on pension stability as well?