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Carolina Journal News Reports

VIDEO: General Assembly Underfunds State Pension

Extra $1.2 billion needed next year; shortfalls could explode

Jul. 23rd, 2010
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RALEIGH For the first time in nearly 70 years, the North Carolina General Assembly failed to contribute 100 percent of its share to the Teachers and State Employees Retirement System.

Politicians were required to pay $684 million to keep the pension fund balanced. Instead they set up two scenarios, neither of which amounts to $684 million. The final figure will depend on whether the federal government continues to pay for some state Medicaid programs.

The state budgeted nearly $364 million dollars to contribute to the TSERS fund. The contribution equals 53 percent of the actuarially required $684 million contribution.

It also set aside $138 million in case the federal government does not deliver the Medicaid money. North Carolina will add the $138 million set aside for Medicaid to fund TSERS if the federal government provides the Medicaid money. So, the state could potentially spend $502 million on the TSERS fund.

Neither scenario adds up to the actuarially required $684 million. The result is an underfunding of the pension and a possible long-term inability to pay benefits fully.

To watch CarolinaJournal.tv's full report on state pension funding, click on the video.