It's been well and widely reported that state pension funds in general, and teacher pension systems in particular, are seriously underfunded. In NCTQ's last analysis of teacher pension systems, published in our 2010 State Teacher Policy Yearbook, the picture was none too pretty: just 20 states had systems that were at least 80 percent funded.
But what might be less commonly reported is that there's generally a considerable time lag in the data states report about the health of their pension systems. For our 2010 report, we were able to include 2010 data for just one state, with other states still reporting data from 2008 or 2009, when the full effects of the recession were not yet known.
So we were curious (but not particularly optimistic) about how the next round of financial reports would look, and the results are downright grim. The chart below shows the current funding levels of states' pension systems and how this compares to our last report. (We haven't attached years because of the time lag noted above; "most recent" can be anywhere between 2009 and 2011, depending on the state .)
Forty-five states report lower funding levels (i.e., an increase in unfunded liabilities) from their last report, and 29 of those states are down more than 5 percent. Of the four states reporting higher funding levels, twoRhode Island and Kansasare among the worst funded in the country, so while any uptick is good news, it's hardly time to call off the alarm in those states.
When funding cannot keep up with promised benefits, a new approach is clearly needed. Let's hope states get the message before the house of cards collapses.