Missouri Receives Financial Grade “C” for Underfunded Retirement Pensions, Health Benefits | Missouri


(The Center Square) – Missouri’s financial condition is better than many states, but its pension obligations are a cause for concern.

Truth in Accounting (TIA), a nonprofit dedicated to educating and empowering citizens with understandable, reliable, and transparent government financial information, gave Missouri a “C” rating and the 24th out of 50 states in its latest report . “Financial position of the states in 2021.”

The organization’s investigation found Missouri had $ 13.5 billion in assets to pay $ 21.7 billion in bills, resulting in a shortfall of $ 8.2 billion. It shared the shortfall among all Missouri taxpayers. Each taxpayer would have to pay $ 4,400 in taxes “for which they would not receive any related services or benefits,” the report said.

The TIA investigation found that Missouri has $ 9.5 billion in unfunded pension obligations and $ 3.4 billion in unfunded health benefits for retirees. The organizations with the largest unfunded retirement benefits were the Public School Retirement System of Missouri ($ 7.4 billion) and the Missouri State Employees’ Retirement Plan (MOSERs) ($ 6 billion). Dates for 2019.

the Show checkbook, the Missouri State Treasurer’s online transparency portal, showed that MOSERs’ unfunded provisions increased 4.7% to $ 6.8 billion in 2020. Its assets currently cover 54.3% of its liabilities.

“This is a classic problem,” said Michael McShane, National Research Director at EdChoice and a Senior Fellow at the Show-Me Institute. “Basically, you have a bill that is due too far in the future, long after a lot of people have figured out how much to put in. And they are from public office. So there are many incentives not to fully finance pensions. “

On the same day that TIA published its report, the Show-Me Institute published an essay by McShane, “Why we have to take pension costs seriously.”

“These are promises we made for the future, but we need to put enough money away now and have strong incentives to put enough money away,” said McShane.

The TIA report said Missouri did not set aside enough money to weather the pandemic.

“Like all other states, Missouri received federal aid from the Coronavirus Aid, Relief and Economic Security (CARES) law and other COVID-19-related grants that had restrictions on how the money was used,” the report said. “However, the state is in bad fiscal shape because it has not properly funded its pension and health promises for retirees, which is a burden for future taxpayers.”

The American Legislative Exchange Council (ALEC) has established unsecured liabilities of the state governments nationwide totaled $ 5.82 trillion, an average of $ 17,748 per person. Total unfunded other post-employment benefit liabilities (OPEB) exceeded $ 968 billion. OPEB includes health insurance, life insurance, Medicare supplemental insurance, and more.

According to a. strengthened some government balance sheets Report published by The Pew Charitable Trusts in September. It found that in 2021 the gap between the cost of pension benefits states promised their workers and what they made available for them fell to its lowest level in more than a decade. Pew estimates that for the first time since 2008, state pension systems are more than 80% funded.

“Pew found over $ half a trillion in wealth accumulation in government retirement plans, driven by market investment returns of more than 25 percent in fiscal year 2021 (the highest annual returns on public funds in over 30 years) and significant contribution increases from taxpayers and public employees Service to pension funds, ”says the report.

While good years of market growth are beneficial, McShane advocates ways to avoid peaks and troughs in returns.

“We need to be safe and careful when investing,” said McShane. “The problem is that great returns are promised and safe investments, especially in today’s conditions, will not produce such high returns. That is why they have invested in risky assets for higher returns. If 2020 turns out differently and the crash doesn’t turn around so quickly at the beginning, you are in a world of pain. That could happen in the future. “

McShane admits that influencing lawmakers to allocate more funding to pensions that haven’t been paid out for decades is a challenge. Unlike new highways and buildings, there is never a ceremony when a government employee receives their first pension check.

“Truth in Accounting and Pew have been waving the flags for years saying this problem is looming,” said McShane. “But it is a very difficult political climb because many politicians want to spend money today. You don’t want to spend any more money in 30 years. “

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