FILE - Pension

State and municipal pension funds have billions of unfunded liabilities on their books. 

(The Center Square) — Georgia ranks among the worst states nationwide for its total unfunded pension liabilities, a new report shows. The Peach State, however, fares better when looking at the liabilities from a per capita perspective.

According to an American Legislative Exchange Council report, The Peach State’s risk-free unfunded liabilities surpass $208 billion. That ranks the state No. 42 in the country.

The report's methodology uses a risk-free discount rate (the rate of return on a pension plan’s investments) based on the yields of U.S. Treasury Bonds (down to 1.13% from 2.34% due to historically low interest rates) and a fixed discount rate of 4.5% that is considerably less than the investment expectations of most pension funds.

Both of Georgia’s largest two pension systems — the Employees’ Retirement System and the Public School Employees Retirement System — use an annual, expected discount rate of 7.2% that was reduced recently from 7.3%.

California ranked at the bottom of the list with more than $1.5 trillion in unfunded pension liabilities, edging out Illinois, Texas and New York. Vermont topped the list with more than $14.4 billion in unfunded state pension liabilities, besting South Dakota, North Dakota and Delaware.

Nationwide, unfunded state pension liabilities stood at nearly $8.3 trillion. That represents nearly $25,000 for every man, woman and child in the country, ALEC said.

Based on the per capita liabilities, Georgia fared better with unfunded state pension liabilities totaling $19,423.16. Overall, the state ranked 20th.

Tennessee topped the list with the lowest per capita liabilities of $8,511.92, besting Indiana, Nebraska and Florida. Conversely, Alaska ranked at the bottom, totaling $42,829.02, edging out Illinois, Connecticut and Hawaii.

Georgia’s funding ratio, which ALEC said is a measure of a pension plan’s health, stood at slightly more than 32%, ranking 20th nationwide. The number is a ratio of a plan’s assets to its liabilities, and according to ALEC, states should strive for a 100% ratio.

According to their annual reports, Georgia PSERS has a funding ratio of 86.3% while the ERS one is at 71.6%.

Nationally, Wisconsin had the best ratio at nearly 56.3%, while New Jersey had the lowest at slightly less than 18%. Between fiscal 2012 and fiscal 2020, Georgia’s funding ratio decreased by 1.4%.

In Georgia, in April, the boards of Trustees for the ERS, the Legislative Retirement System, the Judicial Retirement System, and PSERS signed off on a 1.5% monthly cost of living adjustment for retirees and beneficiaries. The increase begins on July 1.