Adjusted for inflation, state and local government revenues have more than doubled since the 1970s. But state and local politicians haven’t collected nearly enough taxes to pay for the retirement promises they’ve made to their friends in government employees unions.
In 2011, Wisconsin Governor Scott Walker signed a controversial piece of legislation known as Act 10. The bill restricted collective bargaining to base wages, required annual recertification for bargaining unit representation, and raised teacher contribution rates to the state pension and health care
A recent Wilshire Consulting report estimates that at the end of fiscal 2017, state government pensions nationwide were only 70 percent funded, down from 87 percent in 2007.
Stress testing is a rigorous analysis showing likely outcomes under various scenarios of tax collection, market performance and fiscal health, and provides an underpinning for policymakers to understand and respond to the impact of economic volatility on pension plans.