Quote
Originally posted by: vegasdev
that is a very interesting map, thx for posting it dondiego. I did not realize that KY was in such bad shape. or that FL was in such good shape, but otherwise not too may surprises jumped out at me.
Originally posted by: vegasdev
that is a very interesting map, thx for posting it dondiego. I did not realize that KY was in such bad shape. or that FL was in such good shape, but otherwise not too may surprises jumped out at me.
The primary contributor to the troublesome financial condition of many states is unfunded pension benefits. Surprisingly politicians often discover that if they fund projects which provide immediate benefits to an appreciative electorate their fortunes improve, . . . to the detriment of those government employees who expect the retirement benefits promised them. eventually.
"?Kentucky’s Employee Retirement System (KERS) covering nonhazardous employees has reported an exceptionally low ratio of assets to liabilities, at only 22.3% as of June 30, 2014, but assumes a 7.75% discount rate for its entire liability; there is no depletion date. Kentucky, like New Jersey, is one of a handful of states whose sizable retiree obligations and history of inadequate contributions have led to credit downgrades in recent years.
KERS’ ability to avoid reporting a depletion date in fiscal 2014 for its nonhazardous employees highlights the impact of recent reforms on the system’s forecast sustainability. Kentucky enacted SB 2 in 2013, which lowered benefits of future employees, limited COLAs, closed the system’s amortization period and required full ADEC payments beginning in fiscal 2015. These reforms and the Legislature’s appropriation of the full ADEC in fiscal 2015 resulted in the KERS actuary being able to forecast that all future benefits would be covered by system assets ? in other words, no depletion date is warranted. While a single year of the state fully appropriating the ADEC is clearly positive, this must be repeated annually for decades to pay down the state’s UAAL."
Ref: Fitch Ratings
". . . the good news is that Florida’s pension fund ranks very well, particularly when compared to the other major states. It is one of the reasons why Florida has a top credit rating from national analysts like Standard & Poors and Fitch Ratings – which both give Florida a AAA rating.
[Ben] Watkins’ [head of the state Division of Bond Finance] report put Florida’s pension liability at $18.7 billion, which is a lot of money but it is dwarfed by amounts owed by other major states. For instance, California is facing a $189 billion liability, Illinois $168 billion and Texas $104 billion. The national median is $12 billion."
Ref: Herald Tribune
"?Kentucky’s Employee Retirement System (KERS) covering nonhazardous employees has reported an exceptionally low ratio of assets to liabilities, at only 22.3% as of June 30, 2014, but assumes a 7.75% discount rate for its entire liability; there is no depletion date. Kentucky, like New Jersey, is one of a handful of states whose sizable retiree obligations and history of inadequate contributions have led to credit downgrades in recent years.
KERS’ ability to avoid reporting a depletion date in fiscal 2014 for its nonhazardous employees highlights the impact of recent reforms on the system’s forecast sustainability. Kentucky enacted SB 2 in 2013, which lowered benefits of future employees, limited COLAs, closed the system’s amortization period and required full ADEC payments beginning in fiscal 2015. These reforms and the Legislature’s appropriation of the full ADEC in fiscal 2015 resulted in the KERS actuary being able to forecast that all future benefits would be covered by system assets ? in other words, no depletion date is warranted. While a single year of the state fully appropriating the ADEC is clearly positive, this must be repeated annually for decades to pay down the state’s UAAL."
Ref: Fitch Ratings
". . . the good news is that Florida’s pension fund ranks very well, particularly when compared to the other major states. It is one of the reasons why Florida has a top credit rating from national analysts like Standard & Poors and Fitch Ratings – which both give Florida a AAA rating.
[Ben] Watkins’ [head of the state Division of Bond Finance] report put Florida’s pension liability at $18.7 billion, which is a lot of money but it is dwarfed by amounts owed by other major states. For instance, California is facing a $189 billion liability, Illinois $168 billion and Texas $104 billion. The national median is $12 billion."
Ref: Herald Tribune
