Joshua Rauh pens an essay which updates previous research by the Hoover institution at Stanford University on the public pension crisis facing state and local governments. As demographics and investment fundamentals in our country have shifted, the level of unfunded liabilities of our state and local governments has risen to untenable levels. In some states (see below) the stated liabilities are less than half of the true liability, as calculated by Rauh using a net present value methodology.
People are living longer, and the ratio of retired to active workers has ballooned, while expected investment returns have compressed. This combination of factors has led, and will continue to lead to fiscal crises in our state and local governments if benefits are not curtailed. This thoughtful and comprehensive essay should be on every taxpayer’s reading list.