The U.S. Chamber of Commerce released a state-by-state report card yesterday, grading all 50 states on various areas, including education and fiscal responsibility.
New Jersey graded well on education. But it flunked the fiscal responsibility portion of the report card, earning a solid “F” from the Chamber of Commerce.
Why? The under-funded pension system was singled out as the main reason for the failing grade. From the report:
“Grade: F – New Jersey receives very low marks on fiscal responsibility. Only 65 percent of the state’s pension is funded, and the state’s most recent contribution was a meager 39 percent.”
More on the rationale behind the grade, from NewsWorks:
The grade is comprised of two factors: one, the percentage of pension obligations that are currently funded and, two, the amount of money allocated from each state’s 2012 budget for pension fund contributions.
For the first factor, the U.S. Chamber of Commerce calculates N.J.’s total pension funding at 65 percent. A few other states share that large a gap in available funds for pensioners. But no other state made as low a contribution to pension funds in 2012 as N.J.’s paltry 39 percent. Even renowned laggard Illinois managed to earmark 76 percent in funds toward pension obligations that year.
The N.J. Pension and Health Benefit Study Commission reported last week that N.J. has a combined $90 billion in unfunded pension liabilities. That’s three times our annual state budget. This week Fitch Ratings and Standard & Poor’s dropped our bond rating down yet again. There are no quick fixes to this, like millionaire taxes or amnesty programs or even higher contributions from already-strained state workers. Indeed, it’s unclear how to fix this at all.
Ten other states received F’s in the fiscal responsibility category.
View the entire report card here.