About News Scheppach: COVID-19 Will Turn the State Pension Problem Into a Fiscal Crisis Jun 16, 2020 Raymond Scheppach Scheppach: COVID-19 Will Turn the State Pension Problem Into a Fiscal Crisis You may be wondering why, over the last few months, the state pension problem – normally not a subject of widespread discussion – has been in the news. In fact, you may be wondering just what the state pension problem is. The problem – and it’s a big one – is that many of the public employee pension plans run by states don’t have enough money in them to make upcoming pension payments to retired state workers. The first time the subject came up recently was toward the end of February. That’s when teachers in Kentucky called a sick-out and protested various pension changes advocated by the state legislature. Kentucky’s public pension plans are among the worst-off financially of all the state systems, with only enough money in them to cover 34% of future pension payments as of 2017. Then, in late April, five GOP senators wrote to the president to say they didn’t want the federal government to give additional aid to states hard-hit by COVID-19. “We believe additional money sent to the states … will be used to bail out unfunded pensions, reward decades of state mismanagement, and incentivize states to become more reliant on federal taxpayers,” they wrote. The senators’ sentiments were echoed by many in the Senate Republican leadership, including Senate Majority Leader Mitch McConnell, who said, “There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations.” The problem has been a long time coming, but COVID-19 may make it into a crisis. Read in The Conversation Raymond C. Scheppach Ray Scheppach is the former Executive Director of the National Governors Association (NGA) serving from January 1983-January 2011. Here, he became a specialist in the role of states in the formulation and implementation of public policy as well as in a broad range of domestic policy issues including welfare, education, health care and economic development. He was listed as a top association lobbyist by the Hill Magazine in 2006, 2007, 2008 and 2010, and Fortune Magazine listed NGA as the 12th most powerful lobbying organization in 1999. Read full bio Related Content Raymond C. Scheppach The Intergovernmental Grant System Research State and local government fiscal systems have increasingly become vulnerable to economic changes. Over the past three decades, state and local deficits during economic recession have been larger and deeper each time. New Roles for States in Health Reform Implementation Research State policies and implementation practices will largely determine whether the new federal health reform law translates into more affordable coverage and access to health care services. States will play particularly important roles with respect to Medicaid expansion, the creation of insurance exchanges, and the new market rules for insurance. Scheppach on the Opportunity States Have to Attack Income Inequality News As they rebuild their education, health-care and tax systems after the devastation of COVID-19, they can take important steps that can significantly narrow income and wealth disparities. Plummeting Tax Revenues Will Put Governors in Tough Budget Situations News According to Batten's Ray Scheppach, the magnitude of the coronavirus fiscal crisis that governors and their states will have to face is just starting to emerge. And that crisis will affect states’ abilities to do everything from paying teachers to paving roads to providing social services.