Most taxpayers are not aware of the enormity of this problem. The system's fiscal health has gradually deteriorated over the past decade. In fiscal 2000, the system's actuarial liabilities consistently grew faster on an annual basis than its actuarial value of assets, resulting in its unfunded liabilities increasing each year to the present. As a result, the system's actuarial funded status reached 100% in fiscal 2000 - and that is the good news. However, since then - the fund has dropped to 64.1% as of June 2010. This has prompted the growth rate for State pension contributions to far outpace its revenues. From fiscal 2002 to 2011, the annual State cost of teacher pensions grew 159%, while general fund revenues grew just 39%. Current projections predict that the annual State general fund expenditures on pensions for both State employees and teachers will grow at twice the annual rate of general fund revenues between fiscal 2012 and 2015. While general fund revenues are expected to grow 4.9% annually during that time, pension costs are projected to grow 9.9% annually. This trend makes the current structure of State pension benefits unsustainable.
The State has tried to prop-up the sinking fund by diverting a portion of the ARRA stimulus money - (which ought not have been allowed - emphasis added by author). But the ARRA stimulus money is set to expire by the end of 2012.
Overview of the State Retirement and Pension System
Total State expenditures for employee and teacher pensions is projected to be 1.54 billion in fiscal 2012, of which $975.6 million is projected to be for teachers, community college faculty, and librarians employed by local governments. Of the total figure, about 84% is projected to be paid from State general funds, with the remainder evenly dived between special and federal funds. As recently as fiscal 2006, the State contribution was approximately 652.4 million, less than half the current payment. As I said - it is a Time Bomb - and it is soon set to go off.
The taxpayers of Wicomico have been warned - not only by SBYnews analyst and professional banking analyst like Meredith Witney - but also by the major bonding underwriters like Fitch.
New Posts to fall below.