Treasurer: Budget underfunds pensions

March 24, 2009 4:23:26 AM PDT
State Treasurer Janet Cowell says the Governor's budget underfunds the pensions of state employees by $300 million.State retirement checks are still going out to employees, but Cowell says after the stock market tanked, state tax-payers have to pay more for pensions.

Half a million state employees and retirees depend on the state pension fund which has been one of the nation's most solid state retirement plans.

"The perception is this pension fund is in such good shape," Cowell said.

But North Carolina's new state treasurer warns Governor Perdue's second year budget short changes the pension fund by $307 million.

"If you don't aggressively fund this pension plan, we will very rapidly start down a slippery slope," Cowell said.

Over the last 25 years, state employees have always chipped in 6 percent of their salaries to the pension fund managed by the state treasurer. But the state's match has swung from 10 percent down to zero at times, depending on investment returns.

And after last year's stock market plunge Cowell says the state must come up with much more to keep the pension fully funded.

"It's a strong system if you take action," Cowell said.

The state employees association does not blame Cowell or Perdue for the short-fall. They point to their predecessors.

"The previous administration for the last eight years, in some cases took a complete holiday from the employer funding and in some cases put nothing in it," said Ardis Watkins with the State Employees Association.

But after Perdue just proposed a budget which raises taxes, cuts spending and slashes jobs; some wonder where law-makers would find another $300 million dollars.

"We sort of need to dial up the heat a little bit," Cowell said.

Governor Perdue's office said Monday they are fully funding the state pension based on the estimates they have received from the treasurer. If there are other numbers, they say they have not seen them.

The governor's office implied this was simply a communication breakdown.


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