Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

State pension + debt = big numbers

chart_pension.top.gif By Tami Luhby, senior writer

NEW YORK (CNNMoney) -- States' debt loads are high enough, but when you combine them with their pension obligations, the numbers are really eye-popping.

Hawaii's debt, for instance, is $5.2 billion. But so is its pension obligation. Combined, the dual obligations make up 16.2% of the state's economy, according to a report released Thursday by Moody's Investors Service. That's the nation's highest total liability as a share of the state's gross domestic product.

With state economies continuing to reel from the Great Recession, their pension and debt loads are garnering greater attention. States are having a hard enough time just paying for schools and social services, leaving many struggling to make big pension payments as well.

"These are expensive obligations," said Robert Kurtter, Moody's managing director for public finance. "Not crushing burdens, but they add to states' financial stress at a very difficult time."

Just how deep states are in the hole for their pension payments is a matter of debate. A Pew Center on the States report last year pegged the figure at $452 billion. Overall, state pension systems are 84% funded.

Other experts, however, have said the unfunded liability is much greater. Even Kurtter acknowledges that the pension hole is likely understated because of the rules governing states' accounting for retirement benefits.

While Moody's has always taken pension obligations into account when rating a state, this is the first time it has released a report showing the combined debt and pension liability levels in each one. The rating agency said it was important to show investors a state's total obligations, especially since pension liabilities have been growing more swiftly in recent years.

For instance, New York and California have high debt levels. But since they have well-funded pensions, they are not among the top states in terms of total liabilities as a share of the economy. That honor goes to Mississippi, Connecticut, West Virginia and Massachusetts, in addition to Hawaii. See the chart above for the full picture.

The new reporting method will not prompt any credit rating changes, Kurtter said. To top of page

Search for Jobs

Index Last Change % Change
Dow 18,223.03 77.32 0.43%
Nasdaq 5,309.83 52.43 1.00%
S&P 500 2,151.33 10.17 0.47%
Treasuries 1.76 0.02 1.32%
Data as of 6:09pm ET
Company Price Change % Change
AT&T Inc 36.86 -0.63 -1.68%
Bank of America Corp... 16.77 0.10 0.60%
Chesapeake Energy Co... 6.36 -0.32 -4.79%
Microsoft Corp 61.00 1.34 2.25%
Time Warner Inc 86.74 -2.74 -3.06%
Data as of 4:15pm ET


One of the clear messages from Consumer Reports dependability survey was that cars that have recently been totally redesigned tend be less dependable. More

Stocks are widely expected to drop close to 10% if Trump wins the presidency. But even if Clinton wins, stocks could still sell-off the day after the election. More

Microsoft is raising prices in the U.K. by whopping 22%, in response to the collapsing value of the pound. More

The University of Illinois partnered with Coursera to launch one of the most affordable online MBA programs yet. More