Editor’s note: According to the report by ALEC cited below, Vermont’s Other Post-Employment Benefit (OPEB) Liabilities total $2,695,723,726 — or $4,320.15 per capita. This amounts to 7.9% of the Vermont’s gross state product.
By Casey Harper | The Center Square
Unfunded state debt for things like retired public employees health care coverage continues to balloon to an unsustainable level, according to a new report.
The American Legislative Exchange Council released its report Thursday on “Other Post-Employment Benefit (OPEB) Liabilities,” which total about $959 billion.
The Center Square recently reported on the huge debt levels for state pensions, which have grown to more than $8 trillion in unfunded liabilities. Thursday’s ALEC report details the other state employment obligations that are not included in pensions that public employees can receive after they retire. This can include things like life insurance, health insurance and more.
“Without real policy reforms, defined benefit OPEB plans will place a severe burden on taxpayers and other state spending priorities,” ALEC Chief Economist and Executive Vice President of Policy Jonathan Williams said. “By offering a range of defined contribution options for new employees, states can keep the promises made to both public employees and taxpayers.”
The OPEB debt obligation is about $3,000 for every U.S. resident, according to ALEC, leaving taxpayers footing the bill.”
Nebraska, South Dakota, Kansas, Utah, Montana, and Idaho rank as the five best states for OPEB plans, according to the report. Nebraska and South Dakota have no unfunded liabilities while Kansas has $138,373, a small sum compared to other states.
California, Texas, New York, New Jersey and Illinois rank as the five worst states. California alone has about $125 billion in OPEB obligations.
“Well governed states such as Nebraska and South Dakota have switched to defined contribution plans to reduce the burdens on taxpayers to zero,” ALEC Center for State Fiscal Reform Research Manager Tom Savidge said. “Utah’s common-sense reforms in recent years have led to a drop in their unfunded OPEB liabilities for the past 5 years. Today that liability is down to just $35 per person in Utah.”
This report comes a day after President Joe Biden touted a bailout for certain private union pensions that were on track to become insolvent.
Biden spoke in Cleveland, Ohio, Wednesday about the American Rescue Plan’s Special Financial Assistance program, as The Center Square previously reported. That federal program will keep pension benefits from being slashed for about 10 million Americans when their multi-employer plans become insolvent.
Now, those plans that are set to become insolvent, as many are expected to in the next few years, can receive a federal bailout.
“This was $90 billion, O.K.?” Biden said in his speech. “But it is small in comparison to the bailouts of businesses and major corporations and banks…”
Critics, though, say the plan leaves taxpayers on the hook for the liabilities and does not require the necessary reforms to make sure this doesn’t happen again.
“[Biden] is saving private union pensions by making ordinary Americans pay for them,” said Rachel Greszler, an expert at the Heritage Foundation. “And 6% of private sector workers are unionized so many of the blue collar workers that aren’t part of a union, or maybe they are part of a union that no longer has a pension plan, they are the ones who are going to bear the burden.”
2 thoughts on “States owe nearly a trillion dollars in liabilities on top of unfunded pensions, report shows”
In the Vermont Legislature, there is no consideration of the burden on taxpayers and no assignment of priorities. The supply of money is considered infinite. That is why every “feel-good” piece of legislation passes regardless of the cost. Who’s minding the store?
I think a lot of why this is going on is because of our culture now.
The states that have their financial houses in order are states full of people that also have their financial houses in order- because that is what their culture demands of them.
Go talk to people out there in Middle America.. they are good, salt of the earth people still practicing Morality, they are religious, they are conservative people that don’t want for all the riches in life..they don’t think debt is a good thing to have a whole lot of.
They have very different values systems. They are happier people too.
Failed states=Failed Governments.. this is not rocket science.
Like they say, “You get the government you deserve”.
Think about that one.
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