According to a report by the American Enterprise Institute, public pensions are underfunded by more than $3 trillion. Following is a state-by-state interactive map I put together from the report. Note: Please give the map a few extra seconds to load.



Public Pension Funding Ratios



Table 2. Market valued funding ratios and unfunded liabilities

Public Pension Plans Less Than 30% Funded

Other Pension Estimates

Hedge-fund manager Orin Kramer, who is also chairman of the badly underfunded New Jersey retirement system, insists the gap is at least $2 trillion, if assets were recorded at market value and other pension-accounting practices common in Corporate America were adopted.



Finance professors Robert Novy-Marx at the University of Chicago and Joshua Rauh of Northwestern University asserted in a recent paper that the funding gap for state pension plans alone might exceed $3 trillion, in part because state funds are using an unrealistic long-term annual investment return of 8% to compute the present value of future payments to retirees, as is permitted in government standards for pension-fund accounting.

California's $500-Billion Pension Time Bomb

The state of California's real unfunded pension debt clocks in at more than $500 billion, nearly eight times greater than officially reported.



That's the finding from a study released Monday by Stanford University's public policy program, confirming a recent report with similar, stunning findings from Northwestern University and the University of Chicago.



To put that number in perspective, it's almost seven times greater than all the outstanding voter-approved state general obligation bonds in California.

Stanford Study

Adjusting the discount rate used on liabilities to a risk-free rate, we estimate the combined funding shortfall of CalPERS, CalSTRS, and UCRS prior to the 2008/2009 recession at $425.2 billion (see Table 2).







click on chart for sharper image



At the time of this writing, the funds have not released more recent financial reports, but due to the previously mentioned $109.7 billion loss the three funds collectively sustained, we estimate the current shortfall at more than half a trillion dollars.