| |  Print This Article

Study detailing Hawaii’s hidden retirement liabilities should haunt taxpayers

(photo courtesy of State Data Lab)

BY MALIA ZIMMERMAN - HONOLULU, Hawaii — Which is scarier: Frankenstein’s monster or billions in unfunded obligations to public-sector retirees?

If you’re John Q. Taxpayer, it’s probably the latter.

This Halloween, the Chicago-based government watchdog group, Truth in Accounting, issued what its authors call a “haunting” report, detailing the state governments with the highest share of debt in items left off the balance sheet.

The spookiest news for Hawaii taxpayers, according to the report, is the state’s No. 1 ranking, meaning Hawaii has the highest percentage of pension and retirement health liabilities hidden from citizens. In Hawaii’s case, it’s 75 percent.

“Hawaii residents deserve to receive truthful, transparent financial information from their state,” said Sheila Weinberg, founder and CEO of Truth in Accounting. “Unfortunately, government budgeting and accounting rules have permitted states to hide their retirement liabilities from the public.”

Donna Rook, president of StateDataLab.org, a division of Truth in Accounting, said Halloween is a good time to look at the “hidden bones” of Hawaii’s retirement liabilities — compensation promises that were not paid for and not clearly disclosed to citizens.

“These skeletons will demand their pound of flesh from future taxpayers, who may not have benefited from past services,” Rook said.

Hawaii’s unfunded liabilities, now at $20.4 billion, include $14.29 billion for state retirees’ health care benefits and $6.16 billion for state retirement pensions, according to figures provided by State Data Lab.

Taxpayer watchdogs, such as Lowell Kalapa of the Tax Foundation of Hawaii, say too little is being done to address looming debt, and they are concerned overly generous benefits promised to thousands of public employees in influential public labor unions could eventually bankrupt the state.

Kalbert Young, director of the state Department of Budget and Finance, said a large part of the unfunded liabilities is due to the Employee Union Trust Fund, which, to be fully funded, requires $18 billion.

During the 2013 legislative session, lawmakers set aside $217 million over two years for the Employee Union Trust Fund and implemented other legislation to ensure future payments. At this rate, it would take more than 100 years to satisfy the liability.

The amount the state needs to contribute each year is over $500 million based on the last actuarial study, and the state would have to do so for the next 30 years.

“One-hundred million dollars is only about 20 percent of what is required,” said Young, who would like to see legislation requiring the Legislature to pay $500 million a year for 30 years to wipe out the debt.

The legislation also establishes a trust fund task force; requires the annual public employer contribution to be determined by an actuary, not the Legislature, beginning in fiscal year 2018-19; and will take revenue from state general excise and hotel taxes.

Kansas and Michigan follow Hawaii on the State Data Lab report at 69 percent.

The table below from the State Data Lab lists the 15 states with the highest shares of  retirement liabilities that aren’t fully disclosed.

1

Hawaii

75%

2

Kansas

69%

3

Michigan

69%

4

South Carolina

65%

5

New Hampshire

64%

6

Alabama

63%

7

New Mexico

61%

8

Alaska

60%

9

Oklahoma

59%

10

North Carolina

58%

11

Colorado

55%

12

Delaware

54%

13

Texas

54%

14

Illinois

54%

15

Connecticut

54%


Short URL: http://www.hawaiireporter.com/?p=460819

1 Comment for “Study detailing Hawaii’s hidden retirement liabilities should haunt taxpayers”

  1. The only guaranteed payout from a pension fund is what is in the fund. Period. If there is a discrepancy between what is in the pension fund and the 'promised' payout from the fund, then that represents gross negligence of fiduciary oversight by the fund managers and by the recipients themselves. And this has been going on for decades? The idea that non-participants in a pension fund are liable for gross fiduciary negligence by fund participants, and 'promises' made in return for political favors, is absolute nonsense. The only guaranteed pension in the USA is social security.

You must be logged in to post a comment Login

News Cycle on The Rick Hamada Show








Recently Commented

  • guest: Remeber this pono choices controversy is the fault of IMUAlliance who's helped to draft the SB-1/SSM...
  • Cholan: This report states the federal district court approved the settlement……so it's not...
  • Guest: I am glad there is at least one journalist in this state who is keeping tabs on this case. The rest of them...
  • Guest: But I like westing my time!
  • Guest: It's for commercial goods. It sounds like you contract with private parties, so it wouldn't apply to...