Tennessee’s Post-Employment Benefit Liabilities Growing At Rapid Rate
Image Credit: sos.tn.gov
The Center Square [By Jon Styf] –
Tennessee has one of the fastest growing unfunded state pension debt for things like retired public employee health care coverage, according to a new report.
The American Legislative Exchange Council report ranked Tennessee as having the second-fastest growing section of pension debt referred to as Other Post-Employment Benefit liabilities with a 29.3% increase in FY 2018-19. Virginia (36.96%) was the only state with a faster growing liability.
Overall, there are $959 billion in OPEB liabilities throughout the United States, which is approximately $3,000 for every man, woman and child in the U.S.
Tennessee has the 20th lowest overall OPEB liabilities with $2.86 billion. Nebraska and South Dakota have $0 in OPEB liabilities after implementing defined contribution health care while California has $124.6 billion in OPEB liabilities.
On a per capita basis, Tennessee ranks 16th lowest at $419.36 per resident. Tennessee also ranked 25th with a 6.94% funding ratio. The state ranks 15th in unfunded liabilities as a percentage of the state’s gross domestic product at 0.76%.
The report notes that Tennessee, along with New Hampshire, Oregon and Utah have closed their OPEB plans to new hires.
***Click HERE to support Conservative Journalism in Tennessee. We can’t bring you articles like this without your support!***
Any employees hired on or after July 1, 2015, cannot join the Tennessee Group OPEB plan or the Tennessee State Employees’ OPEB Plan. Instead, Tennessee state employees now join the Medicare Supplement Plans.
ALEC’s study used a “risk-free discount rate, a percentage that assumes the state’s inability to default on promised benefits, that is lower than the discount rates used in many state financial documents by at least two percentage points.”
Tennessee’s fund has an expected discount rate of 7.25%.
About the Author: Jon Styf, The Center Square Staff Reporter – Jon Styf is an award-winning editor and reporter who has worked in Illinois, Texas, Wisconsin, Florida and Michigan in local newsrooms over the past 20 years, working for Shaw Media, Hearst and several other companies. Follow Jon on Twitter @JonStyf.
