Tuesday, March 6, 2007
Similar to the pure pension benefit, the teachers pension fund has disclosed (in a small footnote) the fact that it's promised health benefit is underfunded by $14 BILLION. Again, at what point does this become a problem. The audit indicates the fund is in good health, but that's qualified in a very narrow sense. Interestingly, this page is in a letter of transmittal that is not searched using Adobe's find function - it's hidden on page 8 of the full report (find it here for 2006) unless you know where to look.
Here is a copy of the page from the current state audit of the pension system. Notice how the problem is GETTING WORSE even as schools have been required to contribute more to the system. My simple question is this: How can the audit report that the pension system is in good health? Maybe because it assumes an UNLIMITED ability to tax the local school districts to continue funding the growing deficit. The column to note is the fourth, it shows how the unfunded liability (shown as a positive number) is growing, now approaching $10 BILLION. This is from page 43 of the full report (find it here for 2006).