States that have fallen behind on their pension obligations have been underfunding their pensions for years. Many have also used outdated investment forecasts that count on unrealistic returns.
Some states have implemented pension reforms, closing their funds to new employees and freezing existing plans. But those measures have also cut contributions from active workers, reducing new funding to pay workers who have already retired.
Eventually, those liabilities will have to be met. And the burden on individual taxpayers varies widely from one state to another.
In New Jersey, the funding gap represents nearly 42 percent of the Garden State’s Gross State Product – or more than $27,000 for every resident, according to S&P Global Ratings.
Other underfunded states include Connecticut ($22,700 per person), Hawaii ($15,700), Illinois ($15,900) and Alaska ($18,200)
That compares with Nebraska, where the underfunding represents just $242 for every resident. Taxpayers in South Dakota ($598 per person), Idaho ($472), Iowa ($752), and Tennessee ($806) also face relatively low risk of having to make up for unfunded state liabilities.