Piggybacking on a theme at the end of today’s Brief an article in today’s Financial Times examines recent research done on the condition of statewide pension systems done in part by a professor at Northwestern University that asserts more than half of the states might find themselves with insolvent pension systems in two decades.
The professor notes that the fiscal strain could put "pressure on the Federal government for a bail out that could potentially cost more than $1,000 billion".
In 1994 the university’s home state of Illinois had a $17 billion gap for its statewide pension fund that it planned to retire by 2011. Today its unfunded liabilities stand at $78 billion.
As we pointed out today with the expected rate spikes for PSERS, as well as SERS and the weight of unfunded liabilities in Philadelphia and Pittsburgh, pressure is building toward finding a long-term solution. A Federal bailout would be far from it.
