Study: Is Idaho adequately funding its retirement system for public employees?

BOISE (Idaho Statesman) — A recent report on the financial health of state pension funds shows Idaho is among U.S. states with the most well-funded and stable retirement systems.

The Pew Charitable Trusts last month released a study analyzing the health of state pension funds — retirement funds for public employees — across the country. Generally, funds improved in 2020, after a period since 2001 with wide variations in funding levels.

During that period, the Public Employee Retirement System of Idaho (PERSI) was among the nation’s most stable systems, the study found. In 2020, the state’s pension fund was 89% funded, ranking in the top 10 among all 50 states.

“We are very unique, in Idaho, that all the teachers, all the state employees, and many, if not most, of the local government employees are all in one very well-managed plan,” Republican Gov. Brad Little recently told the Idaho Statesman by phone.

Today, PERSI’s funding ratio — the percentage of the fund’s assets compared to liabilities — is closer to 80%, Little said. Last year it was above 100%. Strong investment returns in 2021 boosted pension plan balances, the Pew study said, but market turmoil this year erased many gains.

“We’ve had great management of the portfolio, and whether it’s firemen or policemen, state employees, teachers, they all want to know that their retirement’s safe,” Little said.

Thirty-four states in 2020 had funding ratios below 80%, according to the study. Some, like Illinois and New Jersey, were below 50%. Idaho was among five “top tier” states that has kept its pension plan well-funded since 2007 and is likely to retain stability, the study said.

Those states haven’t faced “trade-offs between annual budgets and pension plan balance sheets that other states confronted during financial downturns,” the study said. And they implemented policies — such as Idaho’s splitting annual retirement plan costs between employees and employers — that have kept employer contribution rates stable.

PERSI manages about $25 billion in assets, which cover benefits for more than 73,000 active members.