COLUMBUS — Ohio’s unfunded liabilities for pensions and retiree health care have reached $87 billion, according to a report by the Pew Center on the States.
The state has $58 billion in unfunded liability for its pensions, and $29.4 billion in unfunded retiree health-care obligations, the Pew Center concluded.
The present value of Ohio’s total retirement liability is $218.6 billion, which is covered by just $131.6 billion in assets.
The total liability grows by roughly 8 percent annually, while growth in assets depends on investment returns and contributions by workers and taxpayers.
Exacerbating the problem,“Ohio failed to consistently pay its full annual pension contribution from 2005 to 2010,” notes the report, which was released Monday.
The longer the state waits to reckon with the problem, the deeper the cuts it will have to make to government services.
One bright spot is that Ohio has begun to tackle the problem of unfunded retiree health care, unlike most other states.
“The state’s maximum pension contribution was set in statute at 14 percent of payroll for general employees in the Ohio Public Employees Retirement System — one of five statewide systems,” the Pew Center wrote in last year’s report. “In many years, this has exceeded the actuarially required contribution. But the state took the extra money and put it aside to fund future retiree health care benefits.”
The result is that the obligation for retiree health care in Ohio is 32 percent funded, while in most states, it’s completely unfunded.
Ohio should have set aside $6.3 billion in 2010 to make progress in paying off the debt, but paid just $3.4 billion instead, the Pew Center found.
The findings were part of a nationwide report on unfunded liabilities by the Pew Center, which found that the combined unfunded liability of the 50 states is up to $1.38 trillion. The Pew Center on the States is a nonpartisan reporting and research, advocacy organization.