The Bill Lane Center's 'Pension Tracker' tool updated with 2019 data
2019 data on public sector debt for pension liabilities, with a focus on California, is now available with 'Pension Tracker'
The Bill Lane Center serves as a relatively new home to Pension Tracker, a tool that looks at public sector debt for pension liabilities across the United States, with a particular focus on California. Formerly housed at the Stanford Institute for Economic Policy Research (SIEPR), Pension Tracker was launched by Joe Nation, a SIEPR researcher and professor of the practice of public policy. In maintaining Pension Tracker, Nation hopes to provide granular data to Californians and other Westerners so that all are aware of the dire financial conditions of public pensions, and the need for lawmakers and pension managers to take action. The Lane Center is excited to have Pension Tracker in our portfolio of projects that examine western governance, and we're pleased to announce that new, 2019 data is now available.
Highlights from the 2019 data are as follows:
U.S. state and local government pension debt is $5.0 trillion, or $41,000 per household. (Note that this is on a “market” basis, the method preferred strongly by financial economists. On an actuarial basis, pension debt is $1.6 trillion, or $12,900 per household. Details on market v. actuarial bases are in the Data & Methodology section of the site.)
California’s pension debt on a market basis is $1.161 trillion, or $88,946 per household.
California’s pension debt ranks as the second highest in the country.
Five western states are in the top 10 in terms of market pension debt per household:
New Mexico: $54,495
In addition to these highlights, Joe Nation had this to say about rising pension debt: “Despite sizable growth in assets, total pension debt of state and local governments rose to nearly $5 trillion in 2019, an increase of $356 billion over 2018. The average debt per household measured more than $41,000. Alaska tops the list at more than $90,000, with Indiana as the lowest at about $14,000.”
For more information about the origins of the Pension Tracker project, the data it yields, and its relevance to California and the western region, read on for a Q&A with Joe Nation.
A Q&A With Professor Joe Nation of Pension Tracker
Q: When was the Pension Tracker project initiated, and what was the purpose of developing it?
In 2016, we added a U.S. Pension Tracker that provides summary data for all 50 states. We are working on the 2019 update now for both the California and U.S. sites.
Q: What does your work with Pension Tracker currently entail? What do you and your student researchers do to maintain Pension Tracker?
A: One of our objectives with Pension Tracker is just to provide data. We think the numbers (and math) speak for themselves, so we don’t write a lot of op-eds, etc., except to explain what the data are “saying.” Our work involves mostly “scraping” data from a number of sources, cleaning those data, adding value with metrics like “pension debt per household,” and then publishing this. Currently, I’m relying on one student research assistant to collect the data – a public policy sophomore named Noah Bartelt. But we may add a second student researcher when we move on to updating California data.
Q: Who might want to use Pension Tracker and why? How can someone new to Pension Tracker use it?
A: We don’t require registration so we can only describe general characteristics of our users. A majority of our use has been from California, and we suspect from inquiries that most users are from local government, the media, and advocacy groups.
Q: Is there anything concerning or surprising about the data you are collecting with Pension Tracker?
A: Well, that’s a great question! We initially had a very tough time getting some of the data from CalPERS and CalSTRS since they aren’t exactly excited about someone highlighting their poor financial situation. But we’ve now established processes that work well.
The single most surprising finding is how the financial situation for public pensions in California has not really improved since 2010. For example, the actuarial funded ratio (simply, assets divided by liabilities) has been about 65-70% over the entire period, even though the U.S. stock market (S&P 500 specifically) has more than tripled over this time period! (See our glossary for additional details on terminology.) So, despite positive economic trends, public pensions are still in pretty awful shape. That will put pressure on governments to cut other programs, and eventually, this will lead to benefit cuts for workers and retirees, in my honest opinion.
Q: Why does the work you're doing with Pension Tracker matter for California and the West?
A: As noted, we tend to focus more on California, but the fact is that this is a problem throughout the West. For example, we estimate the market pension debt per household is the highest of any state in Alaska, at $99,624 in 2018. Effectively, that means that each Alaska household would need to write a check to that state government for nearly $100,000 to reduce their debt share to zero. You can see rankings for all states on our U.S. home page. New Mexico is at $52,000, Nevada is at $48,000, and Oregon is at $47,000. Short story is: Everyone is in trouble, and in the end, states will need reforms, from reduced benefits to governance.
Another useful metric, noted above, is the funded ratio. The market funded ratio for Colorado, Alaska, Arizona, North Dakota, New Mexico, Wyoming, Nevada, Montana, California, and Oregon is less than 50%. That means, in short, that they have less than 50 cents for every dollar of debt. That’s a pretty awful place to be. Some people think our “market funded ratio” is too conservative, but my advisors (including a Nobel Prize winner) think we are spot on.
Q: And finally, can you share any more about your background for interested readers?
A:Here’s a link to my Public Policy bio. I’m kind of a nomad on policy, working on pensions (public finance), health (I built this COVID site earlier this year when most people were more or less ignoring the pandemic), and data transparency. But as I like to say, my true love is climate policy. On that last note, I recently taught a Human Biology course called Climate Perspectives (HumBio 116), which includes climate science, policy, negotiations, equity, and advocacy. I'm teaching that again this quarter.