Half of America’s Public Pension Debt is in Just Five States

Anthony Randazzo
Sep 29, 2020 · 4 min read

State of Pensions 2020 Series


There is a $1.35 trillion shortfall in funding for statewide retirement systems in America, as of the end of 2019. These unfunded pension liabilities are not equally distributed across the country. In fact, more than half of this pension debt — money that is owed to retirement systems to pay for the benefits promised by state and local governments — is held by just five states.

California, Illinois, New Jersey, Texas, and Pennsylvania collectively owe their statewide retirement systems $693 billion, as of 2019. And this does not even account for any of the retirement systems that are managed by local governments in those states — such as Chicago Teachers, Dallas Police & Fire, or San Francisco City & County. As we showed in “State of Pensions 2020,” this variance in where unfunded liabilities are geographically located in the country matters for understanding the broader national challenges with pension funding.


CalPERS — the largest retirement system in the country — has more than $160 billion in unfunded liabilities and accounts for 12% of the nation’s pension funding shortfall all on its own. With nearly $100 billion of its own unfunded liabilities, CalSTRS has a larger funding shortfall than all of Texas or Pennsylvania (the fourth and fifth largest states by pension debt in the country). The remainder of California’s $273 billion in statewide unfunded liabilities is held by the University Retirement System that covers higher ed staff and professors. There are a few dozen city and county only pension plans in California that are not accounted for in these totals.


Most of the $146 billion in unfunded liabilities in Illinois are held by the state’s Teacher Retirement System ($81 billion). The rest of the statewide pension unfunded liabilities are spread among the Illinois State, Municipal, Judges, and Universities plans. The city of Chicago has separate retirement systems for teachers, public safety, and municipal civilian workers that are not accounted for in these totals.

New Jersey

The pension plan for teachers in New Jersey also accounts for about half of the state’s unfunded liabilities, with $61 billion as of 2019 (and based on GASB accounting rules). Most of the rest of the funding shortfall for statewide pension plans is evenly distributed between the State Plan ($17 billion), Local Plan ($24 billion), and Public Safety Local Plan ($16 billion).


There are five statewide defined benefit plans in Texas, but almost all unfunded liabilities among those plans rest in two pension plans — Texas Teachers ($51 billion) and Texas State ($30 billion). Texas also has two defined benefit plans that are formally known as “cash balance” plans, which guarantee a certain rate of return on member contributions and then turn these into pensions (rather than calculating pension income based on a formula using years of service). These two guaranteed return plans — Texas Municipal and Texas County and District — have been in operation for decades and are each roughly 89% funded as of 2019 with a relatively small pension funding shortfall. There are 99 other locally managed pension funds across Texas that are not accounted for in these figures.


Two-thirds of Pennsylvania’s statewide pension funding shortfall can be found in the state’s retirement system for teachers and public school employees ($44 billion). The remaining pension debt is owed to the retirement system for state workers. However, the statewide system for municipal employees is collectively fully funded (and as of 2019 slightly overfunded). The PA Municipal Retirement System manages hundreds of small plans, some of which are underfunded and some of which are overfunded, balancing out around a 100% funding ratio.

Unfunded Liabilities by Employment Type

The experience of statewide retirement systems has also varied based on who the pension plans cover. Nearly half of the country’s $1.35 trillion in unfunded liabilities as of 2019 rest with statewide systems that are only for teachers and public school employees. The worst funded pension plans are those that exist solely for state workers, and some of the best funded plans are those for public safety and municipal employees — though “best” in this case is a relative term. The nearby table breaks out how much in total unfunded liabilities rests with different kinds of plans and what their collective funded status is as of 2019.

Looking to the Future

The states that hold most of America’s largest unfunded liabilities are some of the largest states. Naturally, Texas and California will have larger unfunded liability amounts than Connecticut and Delaware. But it is a problem that most of America’s largest states are so deeply underwater on their retirement fund commitments. The outlier in this list is New York State, which has mostly well funded pension plans with the exception of New York City (whose systems hold significant unfunded liabilities relative to the size of the city). America’s largest states often are setting standards and breaking ground on policies that are adopted by the rest of the country later on, so it is incumbent upon them to prioritize solutions to their unfunded liabilities.

This article is part of a series based on Equable Institute’s “State of Pensions 2020” report.

Equable Institute

Equable is a 501(c)(3) non-profit working to solve complex…

Equable Institute

Equable is a 501(c)(3) non-profit working to solve complex pension funding challenges with bipartisan, collaborative, data-driven solutions, ensuring that public sector employees receive the retirement security they were promised.

Anthony Randazzo

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I think people’s politics are unconsciously shaped by their moral intuitions. And I write a lot about how public pensions are influencing state governments.

Equable Institute

Equable is a 501(c)(3) non-profit working to solve complex pension funding challenges with bipartisan, collaborative, data-driven solutions, ensuring that public sector employees receive the retirement security they were promised.