State Pension Plans for Public Employees: A Rough Road Ahead

31 Pages Posted: 20 Apr 2016

See all articles by James R. Barth

James R. Barth

Auburn University; Milken Institute

Jitka Hilliard

Auburn University

John S. Jahera

Auburn University - Harbert College of Business

Sunghoon Joo

Auburn University, Harbert College of Business, Department of Finance, Students

Kang Lee

Auburn University - Department of Aviation Management and Logistics

Date Written: April 19, 2016

Abstract

Many public pension funds face serious funding shortfalls. In fact, more than half of the states currently have public pension funds with funded ratios that are less than 80 percent, a level many prefer. In this paper we examine factors important in explaining the funded ratios of state and local pension funds for public employees. We extend the study of Munnell et al. (2011) by (1) considering additional factors that may affect the funded ratio, (2) using panel data from 2001 to 2013, and (3) using different statistical methods. We demonstrate the importance of using the lagged funded ratio in our regressions to explain the current level of the funded ratio and its impact on the statistical significance of other coefficients.

Keywords: Public pension funds, funded ratio

JEL Classification: G22, H55

Suggested Citation

Barth, James R. and Hilliard, Jitka and Jahera, John S. and Joo, Sunghoon and Lee, Kang, State Pension Plans for Public Employees: A Rough Road Ahead (April 19, 2016). Available at SSRN: https://ssrn.com/abstract=2766997 or http://dx.doi.org/10.2139/ssrn.2766997

James R. Barth

Auburn University ( email )

415 West Magnolia Avenue
Auburn, AL 36849
United States
334-844-2469 (Phone)
334-844-4960 (Fax)

Milken Institute ( email )

1250 Fourth Street
Santa Monica, CA 90401
United States

Jitka Hilliard (Contact Author)

Auburn University ( email )

415 Magnolia Ave.
Auburn, AL 36849
United States
334-844-5520 (Phone)

John S. Jahera

Auburn University - Harbert College of Business ( email )

415 Magnolia Ave.
Auburn, AL 36849
United States
334-844-5344 (Phone)

Sunghoon Joo

Auburn University, Harbert College of Business, Department of Finance, Students ( email )

Auburn, AL 36849
United States

Kang Lee

Auburn University - Department of Aviation Management and Logistics ( email )

United States

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