Moody’s Take On State Pension Liabilities

According to a research announcement released this week by Moody’s:

US states’ adjusted net pension liabilities (ANPL) declined in fiscal 2018 reporting due to healthy investment returns the prior fiscal year, Moody’s Investors Service says in a new report. Continued favorable investment returns, along with a rise in interest rates, will lead to another modest decline in fiscal 2019 reporting, before pension liabilities jump up again the following year.

The full report is only available to subscribers but they did release the names and ANPLs of some states and (after estimating state own-source revenues from this site and assuming one-half as the state portion) here is how those states stack up as ranked by highest burden:

On top of that there are the OPEBs:

Fiscal 2018 was the first year states reported other post-employment benefit (OPEB) liabilities under new accounting rules, allowing for improved comparisons between pension and OPEB liabilities. Adjusted net OPEB liabilities range widely among the states. South Dakota has no OPEB liabilities and New Jersey has the largest OPEB burden. New Jersey, Connecticut, Vermont and Illinois have both high pension liabilities and high OPEB burdens.

24 responses to this post.

  1. Posted by Rex the Wonder Dog! on September 19, 2019 at 10:32 pm

    The full report is only available to subscribers…

    IL= #1 @ $241 BILLION, NJ #2@ $107 billion!

    #1 IL $241 BILLION is more than DOUBLE #2 NJ $107 Billion…I would like to know where CA fell, as I think their net liabilities would exceed NJ’s $107 billion in absolute liabilities, but obviously not as a % of population….CA is at least $107 billion in net liabilities, maybe even as high as $150 billion, but as a % of population CA is in better shape than IL or NJ, but not by much. I am really curious as to just HOW/WHAT and WHEN IL will respond to the next downturn. That impossible to pay off debt is going to destroy the IL economy. The ridiculous tax rates/hikes in IL are also going to destroy ANY chance of a comeback, rebound. If IL cut the pensions to the amount they were funded, be it 20%, 25%, 30% or whatever it is, and then tried to grow their economy with lower taxes they would have a good shot at a comeback, but that will never happen.


  2. Reports that only look at state pension systems (because there are only 50 of them) understate how screwed NYC is.

    The NY State pension system covers local government workers in the rest of NY State as well as state workers, and is relatively well funded.

    The NYC pension system, which is almost as large, covers local government workers in NYC. It is almost as bad off than NJ despite NYC taxpayers putting in more as a percent of public employee wages (or their own incomes) than those in any other state over the decades. All due to retroactive increases and other schemes.

    All pension funds have reported data to the Census Bureau over the decades, and this data can be used to get a back-of-the-envelope estimate of how each state stands. I analyzed that data in this post.

    And yes, with regard to the overall “Sold Out Future Ranking,” based not only on pensions but also debt and past infrastructure investment (or lack thereof), NJ is still screwed — but not as bad as NYC. And in NJ past taxpayers got a much lower state and local tax burden by shorting the pensions, where in NYC we’ve had the highest and worse public services to pay for pensions.


  3. Posted by geo8rge on September 20, 2019 at 9:16 am

    Honeywell moved their HQ from NJ #4 to North Carolina #50.


    • Posted by Rex the Wonder Dog! on September 20, 2019 at 2:40 pm

      Honeywell is one smart company… Warren Buffet said this word for word, if he was running a company in one of these grossly underfunded states he would not expand and consider moving because the gov is going to come after anyone and everyone, via insane taxes, to try to make the funds whole again.


      • Posted by NJ2AZ on September 20, 2019 at 9:16 pm

        i don’t live in a disaster state (AZ, officially something like 60% funded but i imagine out here pensions are a lot less ‘untouchable’ than elsewhere) and it still makes me nervous as a landowner

        “This guy owns a house, lets raise his property taxes til his balls fall off, what’s he gonna do?”


  4. Posted by Eric on September 20, 2019 at 9:53 pm

    New Jersey cannot raise taxes more on its corporations since rumors have now surfaced that the pharmaceutical companies may relocate. If one were to leave, the rest would shortly follow. The process of using corporations to “help balance the books” was popularized by Jim McGreevey for which he received much criticism.
    Few believed that Mercedes Benz would leave Bergen County. Remember?
    I doubt that Murphy would seek another term since the “can kicking” is now over, and if a democrat were to win the White House, he may seek another position as he did under Obama as Ambassador to Germany. It sounds better than MF Global.


    • Posted by NJ2AZ on September 20, 2019 at 10:50 pm

      i know it will never happen because there will always be some parasite seeing it as means for personal enrichment, but imagine a world where no one actually ran for governor because of the looming disaster with the state’s finances?

      a person can dream 🙂


  5. Posted by geo8rge on September 21, 2019 at 6:15 am

    “Sovereign control is what will help states get through the next economic downturn.”

    Pensions, Recession Pose Risks to State and Local Governments

    What is sovereign control?

    God’s Sovereign Control

    The U.K.’s giant delusion of sovereign control

    Genius Ideas: NJ could sell parts of NJ to other states or countries. “What if countries’ right to territorial integrity were predicated on a corresponding duty to govern well? ”

    A Market for Sovereign Control


  6. Ah well at least NJ is #4, I would have thought at least #2 or 3…… so so glad we sold when we did as I know so many people who can’t sell their house for one reason or another at least in south Jersey. I believe that I posted before about these articles I receive about personal individual accounts of those who are trying to get out of IL all together. Taking big losses on their homes just to get them sold. One family had a home assessed around 450,000 and all they could get was an offer of 175k to pay off the remaining mortgage balance and they begrudgingly took it just to be done.

    Can anyone in fiancé on her imagine that happening to their families, neighbors and co-workers?? Elderly people who were counting on selling their homes as part of their retirement nest egg? Sad, very sad all around just to pay all of these pensions and years of debt


    • Older people are those who benefitted from lower taxes from underfunding pensions, and/or made a big score through retroactive enrichment.

      Having the massively screwed generations coming after pay so little for their houses that it makes up for some of the damage isn’t the problem. It is the solution.


      • Posted by Tough Love on September 21, 2019 at 8:16 pm

        Hopefully (and RIGHTFULLY) these CLEARLY ludicrously excessive PUBLIC Sector pensions & benefits (the result of bribery, collusion and racketeering between the Public Sector Unions and our Elected Officials) will be reneged-upon instead of a housing price collapse resulting from massive tax increases (to fully pay for these ludicrous pensions & benefits)..


        • It would seem to me that NYC residents have a lot more to complain about than those in NJ.

          Average taxpayer contribution as a percent of payroll from 1987 to 2016: NYC 17.0% plus Social Security, the most by some way.

          New Jersey 6.7%, not nearly as much. U.S. average 9.8%.

          State & local tax burden as a percent of all state residents’ personal income in 2016: NYC 16.2%, the highest. U.S. 9.9%. NJ, somewhat above average at 10.8%, after having been at or below the average for decades.

          Public employee pension benefit payments percent of public employee wages and salaries in 2016: NYC 41.1%, second highest behind Illinois. NJ, 30.1%, slightly behind the U.S. average of 30.7%.


  7. Posted by Eric on September 21, 2019 at 2:37 pm

    New Jersey is probably #1. The numbers used are all lies. Glad you sold when you did.
    I am seeing multi-generational families, living in one home, in New Jersey, becoming a more common practice.


    • Eric, yes I know many families where parents, grandparents and children even young adult children live together. Some of their refinished basements are pretty darn nice too complete with full bathrooms. Our home had a fully refinished basement, walk out to the pool, full bath, full wet bar, fireplace, living area with TV etc. I also said I would love to live just in our basement. Don’t miss it though, the high taxes, maintenance, high utilities, just too much. Glad we got out when we did. Lots of the houses from our old neighborhood are just sitting with no one taking care of them. This is becoming a problem in many south Jersey communities.


  8. Posted by Anonymous on September 21, 2019 at 8:54 pm

    Tough Love:
    Housing prices are already collapsing in New Jersey.


    • Posted by Tough Love on September 21, 2019 at 9:52 pm

      Not where I live.


      • And not where I live either. They are still very high.


        • Posted by Rex the Wonder Dog! on September 21, 2019 at 11:05 pm

          Not where I live.
          Where do you live?
          And not where I live either. They are still very high.
          And where do you live?

          I want all of US to get together for a coffee and bagel chat-fest 🐶🐶🐶🦴🦴🦴


          • You won’t even give a general location(all that we expect). We know that MJ is south jersey. TL and I are north jersey, she may be central, I don’t know. We got AZ and CA representing and Stanley is CA I think? And Bury himself is in NJ. PS is also Jersey i think. Marine 1 too.
            I couldn’t imagine all of us in the same room. We are better off staying in cyberspace. Lol.

          • Posted by Rex the Wonder Dog! on September 22, 2019 at 1:13 pm

            TL, tell EG where the Pup resides… TY …🐶🐶🐶🦴🦴🦴

          • Posted by Tough Love on September 22, 2019 at 2:19 pm

            California ……. don’t know what City.

          • Posted by Rex the Wonder Dog! on September 22, 2019 at 7:28 pm

            TY TL … EG doesn’t need to know the City🐶🐶🐶🦴🦴🦴

          • Posted by stanley on September 23, 2019 at 8:05 am

            “Stanley is CA.

            I wrote that I am west of LA. You can live in Bend, OR and live west of LA.

            .5 N NV, .5 AZ. Home prices are falling here (Reno/Sparks). Toll Bros just whacked the price of a new spec home from 520 to 470. Another house (2006) was first listed in April for 480 and is now listed for 420. My neighbor bought his house in 12 for 180K and sold it recently for 343K. The builders here build about 85%-90% two story houses. The one story houses are outselling the two story. There is still much building here and an employee told me that sales are holding up.

            I’m reading that home prices in Manhattan are falling and more than likely that will influence home prices in N NJ and SE CT.

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