State Budget Solutions - March Newsletter

News from State Budget Solutions

March 2014

Increased federal aid to states is a long term trend

States receiving money from the federal government is unsurprising, but what is shocking is the states’ increased reliance on money from Washington, D.C. in the past decade. State Budget Solutions’ analysis of the latest data shows that, between 2001 and 2012, the percentage of general revenue dollars coming from the federal government increased in 41 states.

In all, states received $5.27 trillion from the federal government since the start of the 21st century. Since 2001, 34 states saw over 30 percent of all their collected general revenue come from the federal government. 

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Defined-contribution plan could curtail pension liability
SBS Op-ed in Crain's Chicago Business

Temperatures might be all that has fallen faster or further than Chicago's credit rating these past few months. According to Moody's Investors Service, which recently reduced the city's rating again, unfunded public pension liabilities are to blame.

Last year, State Budget Solutions found that Chicago residents faced a staggering unfunded liability of $87.3 billion. Chicago's Municipal Employees' Annuity and Benefit Fund provides one example of the costs that come with such a massive unfunded liability. In 2013, according to the latest valuation, the plan required an $820 million city contribution, equal to a whopping 52 percent of payroll. Only $261 million of that total was the result of the plan's "normal cost," or benefits earned over the course of the year. The remainder was required just to service the existing unfunded liability.

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State Budget Solutions In the News

State Budget Solutions is a known expert in fiscal responsibility and pension reform. Every month, countless media outlets and financial professionals cite the work of SBS's expert analysis and publish the opinions of SBS leaders. Here are a few highlights from February:

Where is the money for NJ's state pension fund?
New Jersey Watchdog
Bob Williams, president of State Budget Solutions, sees it differently. “The governor has taken small steps forward, including increased employee contribution rates and COLA adjustments, but he is taking two large steps back with this latest short changing of the pension fund.” READ MORE

Deval Patrick’s failures forgiven by Dems
Boston Herald
That’s how you end up with a state that has the fourth highest debt per capita in the country — not including our unfunded public pensions and retiree health benefits.

According to State Budget Solutions, our state debt level when measured without loopholes or paperwork dodges is a mind-blowing $129 billion. READ MORE

Lessons learned from the mess in Motown
The Detroit News
Detroit must address how to treat already-earned pension benefits in the bankruptcy process. In addition, the Motor City must also contend with the implications of its earlier attempts to reduce unfunded liabilities by using shortsighted gimmicks. Other cities can look to how Detroit got itself into bankruptcy and learn what not to do. READ MORE

The Williams Report

As a former state legislator, gubernatorial candidate and auditor with the Government Accountability Office, State Budget Solutions' President Bob Williams is a national expert in fiscal and tax policies.  Each week, he compiles the latest news and headlines pertaining to state budgets, collective bargaining and state public pensions into The Williams Report.

Governor orders more transparency on fiscal funds. Idaho Reporter

Unfunded retiree health care costs increase to $64.6 billion - an increase of $730 million over the last year. L.A. Times

State budget snag hits House. Arizona Republic

State budget stuffed with turkeys poses election risks for Scott. Tampa Bay Times

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