Concentration of Pension Debt
Pension debt is heavily concentrated in a few entities in a manner that is disproportionate to their population. Populous entities tend to hold most of the unfunded pension liabilities, even when adjusted at per capita levels. This section breaks down some of the ways pension debt is allocated throughout the country.
This is a slice of the Reason Foundation’s Government Financial Transparency Project, which compiles and visualizes data from governmental entities' point of view rather than the plans as seen in this report.
Summary of Findings:
- Refers to the most recent fiscal year available for all entities, FY 2022
States:
- U.S. states owed $501.8 billion as net public pension liabilities.
- Illinois and New Jersey account for 42.8% of the total net pension liability held by U.S. states while only being responsible for 6.6% of the U.S. population.
- The ten most indebted states account for 86% of all U.S. states' total net pension liability.
Municipalities:
- The 100 most populated U.S. municipalities owed $135.6 billion as net public pension liabilities.
- The top ten most indebted municipalities alone are responsible for 76.55% of the total net pension liability held by all 100 most populous municipalities.
- New York and Chicago were responsible for 57.3% of the total net pension liability held by all 100 most populous municipalities.
Counties:
- The 100 most populous U.S. counties owed $71.8 billion as net public pension liabilities.
- The top ten most indebted counties alone are responsible for 58% of the total net pension liability held by all 100 most populous counties.
- The two most indebted counties were responsible for 24.8% of the total net pension liability held by all 100 most populous counties.
School Districts:
- The 100 most populated U.S. school districts owed $50.9 billion as net public pension liabilities.
- The top ten most indebted school districts alone are responsible for 62.4% of the total net pension liability held by all 100 most populous school districts.
- The Chicago and Los Angeles school districts were responsible for 37.4% of the total net pension liability, while only 8.2% percent of the student population of the 100 most populous school districts.
Distribution of Total Net Pension Liability by Government Level
Figure 19: National Breakdown of Total Net Pension Liability Across State, City, County, and School District Levels
Figure 19 illustrates the distribution of the total net pension liability, which amounts to $987.8 billion, across different levels of local government: state, municipality, county, and school districts. The graph reveals that states bear the largest share of this liability, accounting for 50.8% ($501.8 billion) of the total. The municipality share of the liability represent 21.2% ($209.5 billion), while school districts hold 18.9% ($186.8 billion) of net pension liability and county-level plans hold 9.1% ($89.4 billion).
This distribution reveals distinct challenges for each level of government. While state governments clearly manage the majority of unfunded pension liabilities, municipalities, school districts, and counties, despite holding smaller shares, might be more heavily burdened by their share of unfunded liabilities, as such entities often face greater constraints in raising revenue. Additionally, they are frequently excluded from discussions on pension benefits and contribution schedules, which typically take place at the state legislature—leaving them with limited control yet full responsibility over their share of unfunded liabilities.
Note: These figures are based on FY 2022 data compiled from financial reports filed by government entities, representing the most recent fiscal year available for all such entities. In contrast, the figures cited in the Funding Health section come from financial reports filed by public pension funds, incorporating data from both FY22 and FY23. During these years, public pensions experienced significant investment losses, resulting in a sharp increase in net pension liabilities. This has created substantial discrepancies between the latest figures reported by governments and those reported by public pensions, as reflected in the differences between this section and the rest of the report.