Late last week, an article in the Rochester Business Journal reported on the health of pension plans in New York State. Citing an analysis from the Tax Foundation, the article stated that New York “ranks among the best states nationwide for funding of pension plans.”
Pensions are certainly important, went gauging state and local government fiscal health. But we have stressed a more holistic view at Truth in Accounting, for a few reasons. For example,
One way a government can boost the funding for its pensions is to borrow money and put the money in the pension plan. This can “improve” pension funding, but with mixed-to-negative implications for the overall government financial health.
Pensions are not the only retirement benefit governments provide to employees. Looking across the 50 states, obligations for retirement health care benefits run roughly as high as total pension obligations.
… And in New York, Truth in Accounting calculates that obligations for unfunded retiree health care benefits run over 10 times as high as unfunded pension benefits.
Looking across the entire balance sheet, including assets available to pay bills along with bonded debt, pension obligations, and retiree health care benefits, Truth in Accounting’s analysis ranks New York 43rd among the 50 states – in other words, among the worst states nationwide for its financial condition, even though it “ranks among the best states nationwide for funding of pension plans.”