All Teacher Pension Plans Underfunded

This study by the Manhattan Institute for Policy Research is scary. Every one of the 59 teacher pension funds they studied in the U.S. is underfunded (some of these are for all public employees and some are just for teachers). Here are a few summary findings:

• All fifty-nine pension funds studied face shortfalls.
• California, the most populous state, has the largest unfunded teacher pension liability: almost $100 billion.
• The worst-funded plan in our sample is West Virginia’s, which we estimate to be only 31 percent funded.
• Five plans are 75 percent funded or better: teacher-dedicated plans in the District of Columbia, New York State and Washington State and state employee retirement systems in North Carolina and Tennessee that include teachers.
• These plans’ unfunded liabilities total about $933 billion.
• Only $116 billion, or less than one quarter, of this discrepancy is attributable to the stock market drop precipitated by the 2007 financial crisis.

This is not surprising when, as NJ Gov. Christie mentioned a few weeks ago that a mere $124K investment by a teacher over the life of his career can result in a $3 million payoff for his retirement. It's simply not sustainable for more than one generation before it all collapses.