State pension payments projected to hold at 20.1 percent of state expenditures over five years
Wednesday, Nov 16, 2022 - Posted by Rich Miller
* Let’s go back to the state’s Economic and Fiscal Policy Report that the administration is required to submit to the General Assembly each year. I posted the walk-down on Monday, but I wanted to look closer at pension payments, since the usual suspects are beating that particular war drum again.
Here are the annual projected state payments for the Teachers Retirement System, the State Employees Retirement System and the State University Retirement System by fiscal year. Dollar amounts are in millions…
FY24 $9,789 (+1.6%)
FY25 $10,051 (+2.7%)
FY26 $10,317 (+2.6%)
FY27 $10,514 (+1.9%)
FY28 $10,884 (+3.5%)
Pension payments are estimated to be 20.1 percent of all expenditures this fiscal year and they’re projected to be 20.1 percent of all expenditures in five years.
Of course, that’s only if the current projections hold, which they sometimes don’t. Back in 2019, FY23’s projected state pension contribution was projected to be 20.4 percent of all state expenditures.
That’s obviously manageable.
* The problem is that projected expenditures will start outpacing projected revenues in FY25 by $464 million, and that gap will widen to $792 million by FY28. But those are small percentages and also include annual $80+ million in rainy day fund contributions. But even with those contributions, the budget deficit in FY25 is projected to represent just 0.9 percent of overall spending, and it’ll be 1.5 percent of spending by FY28.
Still, without a new revenue source, this means the state will have to keep a rein on spending.