North Dakota retiree health care better than average

In fiscal year (FY) 2018, the most recent fiscal year, state and local governments that use Generally Accepted Accounting Principles were required to report their unfunded liabilities related to other post-employment benefits (OPEB). OPEB comprises mainly retiree health care benefits. State and local governments have long hid retirement benefit obligations, including pensions and OPEB, off their balance sheets.

Since 2009, Truth in Accounting (TIA) has been reporting the amount of state unfunded retirement liabilities, despite the fact that those numbers were not counted on state government balance sheets. In TIA’s most recent report, it found that the 50 states have less than seven cents set aside to pay every dollar of promised OPEB.

Several states have not set any money aside to pay for OPEB, including Mississippi, Nevada, New Jersey, Arkansas, Iowa, Kansas, Louisiana, Minnesota, Montana, Nebraska, Tennessee, Washington, Wyoming, Illinois, and Vermont. The average funding ratio for the 50 states in FY 2018 was 18.5 percent, which is up from less than seven percent in 2009.

However, North Dakota is an exception to the norm. The state’s OPEB plans are more than 59.7 percent funded. There is room for improvement as no state is more than 100 percent funded. Maintaining a surplus is advisable because it is difficult to calculate actual future payments and assets related to the OPEB plans can fluctuate dramatically depending on market conditions.