It should be pretty simple. The state withholds funds from your paycheck and invests for your retirement. But do you really trust government to do this properly?
So not only do they underwithhold, they have to borrow funds to cover the shortfall.
According to the Pew Charitable Trusts, only 4 states had funding levels of 90%. South Dakota, Tennessee, Wisconsin and New York. The worst funded states? Illinois and Kentucky for starters.
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In terms of operating cash flow rations, New Jersey and Kentucky are the worst. And Kansas is the only one in positive territory!
What is really surprising is that The Fed has kept rates so low for so long resulting in an asset bubble. So even with this massive aid of The Fed, state funds are STILL underwater.
So, we will all be called on to bail out state pension funds at some point in the future.
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