An Examination of U.S. State Pensions by Total State Expenditures, State Budget Deficit, and Red v. Blue State
International Journal of Economics and Accounting, 7(1): 27-44, 2016
29 Pages Posted: 15 Sep 2017
Date Written: 2016
Pensions are important to government employees. In the United States, some states fund almost 100 percent of the present value of future pension obligations; while in other states, the funding is substantially lacking. Results of this study show that states with lower state expenditures per capita, relative to states with higher expenditures, have provided better funding of their state pensions. States with lower budget deficits, relative to states with higher budget deficits, paid a significantly higher percent of annual required contributions. This suggests that states that are more fiscally conservative (lower budget deficit) do a better job of making required annual contributions to their state pensions. The red (Republican) states paid a higher proportion of required annual contributions than blue (Democrat) states, 90 versus 84 percent, respectively; but this difference was not significant. All states have an ethical responsibility to meet the pension obligations owed to their state government employees.
Keywords: pensions, state government, state pensions, government accounting
JEL Classification: G3
Suggested Citation: Suggested Citation