A new study by the Washington-based Center on Budget and Policy Priorities suggests that long-term, common-sense steps toward fixing state employee pensions will accomplish a lot more than the dire moves often talked about in the media.
The current unfunded pension liabilities are not the cause of the current state fiscal problems, and addressing them need not overwhelm state and local budgets now or reduce states’ ability to recruit and retain a high-quality workforce, according to the report released on May 12.
Instead, the report suggest "states should act now to make a few relatively straightforward legislative changes — increases in plan and employee contributions and sensible changes to pension eligibility rules and benefit levels — to remedy underfunding over time." If over the next five years states and localities boost their pension contributions to an average of 5% of their budgets (compared to the current level of 3.8%), they can make major progress in restoring plans to full health, the report advises.
