In 1992, unfunded liabilities totaled roughly $200 billion, according to our estimate from the PPCC sample. 1). State and Local Government Contributions Have Fallen Short of Actuarially Required Amounts

In 1992, state and local government contributions to their pension funds fell short of the actuarially required amounts; the contribution ratio was 88 percent for all plans in the sample with complete contribution data.The contribution ratio is the proportion of the actuarially required contribution covered by actual contributions. About 15 percent of plans received less than 60 percent of required amounts. Recent Changes in Funding and Contribution Status

According to our analysis of the PPCC survey data, the funding status of state and local pension plans improved between 1990 and 1992. Of the 117 plans that had complete data for both years, 90 were underfunded in both years. More than half of underfunded plan sponsors are contributing enough to reduce their unfunded liability, while the other plans are not. Most significantly, one-third of state and local pension plans were both underfunded in 1992 and receiving less than the actuarially required sponsor contributions. Scope and Methodology

To analyze the current status of state and local pension plan funding and contributions, we used data from the Public Pension Coordinating Council (PPCC).
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the status of public pension plan funding, focusing on the basic pension plans of state and local governments.

What GAO Found

GAO found that: (1) states and localities with underfunded pension plans run the risk of reducing future pension benefits to taxpayers or raising revenues; (2) unfunded liabilities for all state and local pension plans totalled $200 billion in 1992; (3) contributions to pension funds in 1992 fell short of the actuarially required amounts by 60 percent; (4) 75 percent of state and local pension plans involved in a Public Pension Coordinating Council (PPCC) survey were underfunded; (5) more than half of the pension plan sponsors surveyed continued to make payments to pay off their unfunded liabilities; (6) between 1990 and 1992, 20 percent of the plans were both underfunded and not receiving required sponsor contributions; and (7) of 117 plans with complete data in 1990 and 1992, 90 were underfunded.