PROVIDENCE – Rhode Island has promised its public employees pension, health and other retirement benefits of $12 billion but has only set aside $6.8 billion to pay for them, according to a study released Thursday.
Rhode Island’s pension plans alone had the fourth-largest funding gap in the nation as of June 2008, according to the report by the Pew Charitable Trusts’ Center on the States. The state had set aside $6.8 billion to cover $11.2 billion in liabilities for state-administered pension plans, or 61 percent of the total, down from 83 percent in 1999.
That was the lowest pension-funding level in New England, although it was not far behind Connecticut (61.6 percent) and Massachusetts (63 percent).
On top of that, Rhode Island has promised current and future retirees an additional $788.2 million in health care, life insurance and other benefits, but no money has been set aside to cover those programs, Pew found.
Nationwide, the 50 states had promised current and retired employees a combined total of $3.35 trillion in benefits as of June 2008, but only contributed $2.35 trillion to pay the bills, the study found.
“While the economic crisis and drop in investments helped create it, the trillion-dollar gap is primarily the result of states’ inability to save for the future and manage the costs of their public sector retirement benefits,” Susan Urahn, managing director of the Pew Center, said in a statement.
If anything, the Washington-based nonprofit said, its figures understate the problem because they only cover the fiscal year that ended June 30, 2008, before the major investment losses that occurred in the second half of that year.
“The growing bill coming due to states could have significant consequences for taxpayers – higher taxes, less money for public services and lower state bond ratings,” she added. “States need to start exploring reforms.”
Only four states – Florida, New York, Washington and Wisconsin – had fully funded pension systems as of June 2008, according to Pew.
Illinois had the largest funding gap for pensions, with the state having put aside enough money to cover only 54 percent of its obligations. After Illinois came Kansas, Oklahoma, Rhode Island and Connecticut.
