States must monitor pensions ongoing

Most states do a poor job of making long-term budget plans and one place they often fail is in considering the funding needs of their public pension systems, a report from the Center on Budget and Policy Priorities said.

The center, a Washington, D.C., think tank that focuses on tax and budgeting policy, said state lawmakers need to have strict oversight of pension funds and their future liabilities to accurately calculate annual contributions.

The center noted that the budget process does not end when a bill outlining expenditures is signed into law. States need to create ways to regularly check on pension obligations and liabilities and other long-term expenses for roads and other infrastructure projects to ensure funding obligations are met.

In the case of pensions, annual contribution must be made. If a state is temporarily unable to make such a contribution, catch-up payments are essential, the center said.

States have been wrestling with pension funding and attempts to lower future expenses by reducing benefits have been met with lawsuits by unions that say changes to retirement systems can be made only through collective bargaining.

As part of its report, the center rated all 50 states on their use of tools it considers essential to good budgeting. The tools generally allow states to monitor revenues and expenditures in various areas for five years into the future as well in the current year.

The states that best used such tools were Connecticut, Tennessee and Maryland. Those at the bottom were Oklahoma, South Dakota and New Jersey. Most states were somewhere in the middle

Connecticut, for instance, had a well-designed system for ensuring its pension funding stayed on course. On the other hand, the state that fared worst in the rankings, Oklahoma, does not employ the tools to monitor its pension obligations.

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