State pensions have received increased attention in recent years as most state plans do not have enough assets to pay for future employee retirement benefits. These underfunded pension liabilities have placed added stress on fragile state budgets, taking up a larger portion of state revenue than before the Great Recession, potentially crowding out higher education funding.
Funding levels of public pensions also have implications for the well-being of SHEEO agency employees. State higher education agencies are predominantly made up of state employees who are personally invested in public pension programs and dependent upon them for retirement savings. The long-term structural issues inherent in many state pension programs complicates the efforts of SHEEOs to hire and maintain competent, motivated staffs committed to promoting higher education as a public good and reaching attainment goals.
In this newly published white paper, SHEEO Senior Policy Analyst Dustin Weeden provides background information to help SHEEOs better understand the current status of state pension obligations across the states. The paper explains how public pensions have become underfunded, common reforms states have taken to address the financial health of their retirement systems and highlights several complicating factors that may limit the effectiveness of the reforms or lead to future funding challenges.