State pension systems in an even bigger hole
Jeremy Hobson: Well here in this country, there's a report out this morning that shows a huge gap between the retirement benefits that states have promised to the workers and the money that's actually been set aside to pay for them. The Pew Center on the States says in total states are more than a trillion dollars short.
Marketplace's Nancy Marshall Genzer reports.
Nancy Marshall Genzer: We all have unpaid IOUs. Right now I owe our bureau chief, John Dimsdale, two bucks. He knows I'm good for it. But if you're a state and you've promised pension and health care payments to millions of workers, things can get ugly.
Susan Urahn is managing director of the Pew Center on the States.
Susan Urahn: So the gap between the promises that states have made for their employees' retirement benefits and the money that's set aside to pay for them has worsened significantly in just one year.
That year? 2009, the height of the financial crisis. Tax revenues withered, and so states' investments. How do they dig themselves out? Pew research director Kil Huh.
Kil Huh: Twenty-nine states made changes in the last three years to their retirement plans by either increasing employee contributions or reducing benefits in some way.
Or state legislators can pass tough laws requiring their states to set aside enough money for all their obligations. So far, only three states have done that.
In Washington, I'm Nancy Marshall Genzer for Marketplace.