By Jeff Hurley

State and local retirement systems have already pre-funded the majority of their pension costs and have more than $3.7 trillion assets held in trust for both current and future retirees, according to a fact sheet released last week by NCSL and other groups representing state and local governments.

pie chartWhile there are legitimate concerns about underfunding pension obligations, the vast majority of state and local pension plans have funds sufficient to continue paying promised benefits well into the future. In addition, state and local governments are taking steps to strengthen their pension systems, with 49 states having made changes to benefit levels or contribution rate structures over the past five years.

Other key facts include:

  • From 2003 and 2012, states and municipalities have invested $3.2 trillion in infrastructure financing through tax-exempt municipal bonds, more than double the amount invested by the federal government for public works.
  • Bankruptcy is not an option for states, as constitutionally recognized sovereigns.
  • Municipal securities are considered to be second only to Treasuries in risk level as an investment instrument. Between 1970 and 2012, there were 73 rated municipal bond defaults, of which only five were rated city or county governments.
  • State and local government retirement systems do not require, nor are they seeking, federal financial assistance. One-size-fits-all federal regulation is neither needed nor warranted and would only inhibit recovery efforts already underway at the state and local levels.

NCSL worked alongside the National Governors Association, the Council of State Governments, National Association of Counties, United States Conference of Mayors, National League of Cities, International City/County Management Association, National Association of State Auditors Comptrollers and Treasurers, Government Finance Officers Association, the National Association of State Budget Officers , and the National Association of State Retirement Administrators to create this factsheet.

Jeff Hurley is a senior policy specialist in NCSL's State-Federal Relations division.


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This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.


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