Wisconsin: Best Funded or Best Fudged

Morningstar released a study this week based solely on official actuarial reports and deemed Wisconsin “the strongest system, with a 99.9% funded ratio and a UAAL of $18 per capita.”  A Daily Kos blogger jumped on this report as proof that the State Budget Solutions funding number assigned to the Wisconsin plan of 57% was a lie at the behest of the Koch brothers and ALEC.

So are we to believe that the people at State Budget Solutions are a bunch of liars catering to their sponsors while the same actuaries who in their June 30, 2012 report claimed that the Detroit Police & Fire Retirement System was 96.1% funded have credibility?  Let’s look at excerpts from the latest GRS valuation of the Wisconsin Retirement System (page numbers in brackets) and see who is really lying.

The Actuarial Value of Assets exceeds the Market Value of Assets by approximately 7% as of the valuation date. (I-4)

Net assets in the trust as of 12/31/10 (12/31/11 was not available) came to $75.872 billion (II-2)

For 2010 (2011 was not available) the plan was getting about $1.5 billion in contributions but paying out over $3.9 billion (II-3)

But it is II-4 on Funding Progress that should tell you all you need to know about how much faith should be put into that 99.9% funded ratio. Officially it is $76,465.9 million in assets over $76,565.2 in liabilities but the chart reveals an eerie correlation between assets and liabilities over the years – they are almost identical over the years.  Weird in that liabilities usually trend up (absent a change in underlying actuarial assumptions) while assets vary with contribution levels and market dips and jumps.  Yet in 2007 the Wisconsin plan had $3.5 billion MORE in liabilities which almost mirrored the $3.3 billion more in assets it had.  Even in 2010 when assets were $4.2 billion higher the DROP in liabilities from 2011 to 2010 came to $4.2 billion.

What’s going on here?

I would say that the actuaries hired by the states are fudging their numbers to keep their jobs and, these days, I don’t feel so alone in that position.

3 responses to this post.

  1. Posted by eatingdogfood on September 20, 2013 at 11:53 am

    If The Democrats Didn’t Give ” Sweetheart Deals ” To Your Public Service Union.
    Goon Employees To Get Reelected; You Would Have Plenty Of Money and The.
    Taxpayer would have Some Spare Change in His Pockets! Democratic Hustler
    Politicians + Corrupt Union Goons = BANKRUPTCY BABY! Time To Bring.
    RICO Conspiracy Charges Against The Hustler Corrupt Democrats and the.
    Criminal Unions! EVERYBODY GETS NOTHING !!!


  2. Posted by Anonymous on September 20, 2013 at 7:14 pm

    Look at the footnote. The funded ratio is based on frozen initial liability and not comparable to other methods. Surprised an “actuary” would not understand that.


    • Keep in mind you’re dealing with an actuary in the private-plan world where we have not had FIL since 2007. Perhaps you can explain to the rest of us how FIL funding allows for decreases in liabilities.


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