articles Corporate /en/research-insights/articles/us-state-retiree-medical-and-other-post-employment-benefit-liabilities-keep-rising-as-states-prioritize-other-obligations content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

U.S. State Retiree Medical and Other Post-employment Benefit Liabilities Keep Rising as States Prioritize Other Obligations

S&P Global

Daily Update: August 3, 2020

S&P Global Platts

Deglobalization trend gains pace in lithium battery supply chain

S&P Global

Daily Update: July 31, 2020

S&P Global Platts

Italy’s gas market – an ecosystem where price takers thrive


U.S. State Retiree Medical and Other Post-employment Benefit Liabilities Keep Rising as States Prioritize Other Obligations

Total unfunded state other post-employment benefit (OPEB) liabilities have increased, according to S&P Global Ratings' latest survey of U.S. states. Many states have completed new OPEB actuarial studies since our last survey (which used 2015 or previous studies) and total unfunded liabilities across all states increased $22.7 billion or 3.9% in fiscal 2016. The rise in unfunded OPEB liabilities in our fiscal 2016 survey builds upon a trend of rising liabilities reported in our fiscal 2015 survey ($59.4 billion or 12% growth) after stable to declining liability trends in our 2013 and 2014 surveys.

Despite recent efforts to curb liabilities, growth in total state OPEB liabilities have continued as most states fail to fully fund their actuarially required contributions (ARC). In our opinion, many have chosen to direct their limited resources elsewhere rather than prefund retiree health benefits, which are not legally protected in most states, because they face various budgetary pressures. According to our report,"Poised To Strengthen In Fiscal 2018, U.S. State Budget Conditions Remain Under Longer Term Pressure", projected budget gaps are smaller than those in recent years and states could see revenues rebound in fiscal 2018. Many states are forecasting tax revenue growth for fiscal 2018 but we believe it is unclear if improved performance would lead to significant progress in addressing unfunded OPEB liabilities in the near term.

Overview

  • Overall unfunded state OPEB liabilities growth has slowed but remains somewhat high.
  • Per capita liabilities remain low for most states, with several notable exceptions.
  • Only a handful of states meet their actuarially recommended OPEB costs as most prioritize other spending.
  • Despite many states' ability to change OPEB benefits, thus reducing liabilities, OPEB ratios still affect credit quality.
  • The upcoming implementation of Governmental Accounting Standards Board (GASB) Statements Nos. 74 and 75 could increase comparability across states but might mask plan funding progress.