Government Spending

Introduction

State and local government pension benefits are paid not from general operating revenues, but from trust funds to which public retirees and their employers contributed during retirees’ working years. These trusts pay out nearly $300 billion annually to retirees and their beneficiaries, benefits that reach virtually every city and town in the nation.i On a nationwide basis, contributions made by state and local governments to pension trust funds account for 4.7 percent of direct general spending (see Figure 1). Pension spending levels, however, vary widely among states, depending on various factors, and are sufficient for some pension plans and insufficient for others. 

In the wake of the 2008-09 market decline, nearly every state and many cities have taken steps to improve the financial condition of their retirement plans and to reduce costs. States and cities changed their pension plans by adjusting employee and employer contribution levels, restructuring benefits, or both.  

Date published

March 2019

Contact

Keith Brainard, Research Director
Alex Brown, Research Manager

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