(April 14, 2010) — According to a new study, taxpayers nationwide owe public school teacher retirement accounts about $933 billion, nearly triple the amount reported by the plans. The researchers attribute $116 billion of the shortfall to havoc in the stock market.
“States are already caving under the pressures of the recession and this is bad news for governors and state legislatures,” said Robert Enlow, president and CEO of the Foundation for Educational Choice, in a press release. “Every dollar in the red ink column for pensions is one less dollar that is used to educate children.”
The report by the Manhattan Institute for Policy Research, which covered 59 plans for 13 million working and retired educators, is the third study in less than two months to suggest that pension costs of about $1 trillion may overwhelm state and local budgets hurt by falling tax revenue.
According to the study, five plans are 75% funded or better: teacher-dedicated plans in the District of Columbia, New York State and Washington State and state employee retirement systems in North Carolina and Tennessee that include teachers. The worst was West Virginia’s at 31% funded, along with the California’s State Teachers’ Retirement System (CalSTRS), with a $97.5 billion shortfall.
“This report makes clear that it will be even more difficult than previously thought for states and school districts to honor pension benefit promises to teachers—without putting actual classroom services at risk” says Howard Husock, vice president of policy research at the Manhattan Institute. “Taxpayers and beneficiaries alike need to know the extent of these unfunded liabilities, however—and this report is an important contribution to that understanding.”
Previously, a study by the Stanford Institute for Economic Policy Research (SIEPR) found that the three largest Californian pension funds face a funding shortfall of more than half a trillion dollars, nearly eight times larger than what public employee retirement funds previously estimated and more than six times the value of the state’s outstanding bonds.
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