Public Pension Plans: Myths and Realities for State Budgets
AbstractWe explore the interaction of state pension systems with state finances. We find that changes in pension assets are an important source of funding for state governments, but that states face incentive problems that impede funding efforts with the result that many plans are underfunded. We analyze the substantive differences between defined benefit and defined contribution plans for public employees and state governments. Regression analysis using a panel of 85 state public pension plans indicates some evidence of actuarial assumption manipulation to reduce funding pressure. Plan demographics and state tax revenues are significant influences on funding ratios, while plan features are not.
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Bibliographic InfoArticle provided by National Tax Association in its journal National Tax Journal.
Volume (Year): 60 (2007)
Issue (Month): 2 (June)
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- Richard F. Dye, 2008. "The dynamic between municipal revenue sources and the state-local relationship in New England," New England Public Policy Center Working Paper, Federal Reserve Bank of Boston 08-1, Federal Reserve Bank of Boston.
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