Pensions/Employee Benefits & Actions

 

Expenditures for employee retirement plans, health insurance, and other benefits, comprise a relatively small portion of total state spending. However, as public employee demographics shift and greater segments of the public sector workforce approach retirement, many states are reexamining the financial costs of promised benefits. Gradual policy and fiscal reforms are being implemented across states to reduce the future budgetary impacts of pensions without drastically undermining the retirement security of present employees or retirees.

Staff Contact: Michael Streepey

NASBO Publications

  • After several years of slow recovery in the national economy, fiscal distress is finally beginning to subside for most states. However, the unemployment rate continues to remain high and the economic recovery is relatively weak compared to other post-recessionary periods. Thus, state operating budgets likely will be constrained by elevated expenditure pressures and slow revenue growth in the upcoming fiscal year.
  • The latest edition of NASBO’s State Expenditure Report finds that the recent improvement in the national economy has not translated to strong growth in total state spending. This is largely due to the fact that state revenues have not increased as fast as Recovery Act funds have declined, leading to a unique situation in which total state expenditure growth has slowed during the same time that the national economy has been improving.
  • State fiscal conditions in fiscal 2013 are modestly recovering in step with the slowly improving national economy. General fund spending levels are expected to increase by 2.2 percent this fiscal year, which is less than half their historical average growth rate. Signs of budget volatility have subsided compared to the years immediately following the recession, and fiscal conditions in most states reflect continued fiscal stability.

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