…. This column reviews how women’s work is segmented and undervalued; how workers at the margins—such as domestic workers, farm laborers, part-time workers, and gig economy workers—face persistent barriers and inequality; and how policymakers must prioritize centering workers’ voices and holistic needs and experiences as they craft meaningful economic policy. While this column does not detail the myriad ways in which women often struggle to maintain their economic security to the detriment of their health, it is important to emphasize that women do not live their lives in silos, and access to a range of programs and policies, such as comprehensive reproductive health services, as well as access to affordable education and skills-based learning, are critical to women’s economic success. ….
Illinois’ (Baa3 stable) pension funding slightly improved under our adjustments in the year ended June 30, 2018, despite higher unfunded liability figures that the state reported December 7 (see Exhibit 1). Rising interest rates that lowered liabilities, combined with favorable investment returns, drove down the state’s adjusted net pension liability (ANPL) by an estimated 2%-5% in the year. Nonetheless, Illinois’ recent pension funding gains lag those of other states, largely because of its weak contributions and rising payouts.
Heavy pension burdens have weakened credit quality for many Illinois cities in recent years, but some Illinois municipalities have maintained exceptional credit profiles.
Without changes to New Mexico’s two statewide cost-sharing pension plans, municipalities’ elevated pension burdens will intensify. Although pension contribution rates are set by state statute, if rates increase through legislative reform, local governments will likely be responsible for these cost hikes.
Source: Thomas Aaron, Timothy Blake, Moody’s Investors Service, Sector In-Depth, Local government – US, December 18, 2018
Adjusted net pension liabilities (ANPLs) reached new peaks for most of the 50 largest local governments (by debt outstanding) in fiscal year 2017 reporting, due to poor investment returns and low market interest rates. Most governments report pension funding with up to a one-year lag, so favorable investment returns in fiscal 2017 and 2018 will lead to a decline in ANPLs through many of those governments’ 2019 reporting. Nonetheless, pensions continue to drive historically high leverage and elevated annual costs for some governments, and risks from potential pension investment losses are significant…..
Source: S&P Global Ratings, January 9, 2019
Although 2019 is starting out with growing economic uncertainty in the U.S., S&P Global Ratings believes the U.S. local government sector remains stable and resilient for now. Local governments benefited from positive economic trends in 2018 (such as higher GDP growth and low unemployment), but 2019 already show some signs of slowing, including lower GDP projections and higher interest rates. (For more on our 2019 economic projections, see “The New Year Will Likely Ring In A Record U.S. Expansion; Could It Be A Last Hurrah?“, published Dec. 4, 2018, on RatingsDirect.)
Slower GDP growth and mounting fixed costs can start to put pressure on states before local governments, but local governments can feel the impact relatively quickly. (For more on our state sector outlook, see “U.S. State Sector 2019 Outlook: Caution – Slower Speeds Ahead,” published Jan. 8, 2019.) Should state revenue sharing decrease, other costs be pushed down from the state level, or other localized pressures stem from federal policy changes such as the Tax Cuts and Jobs Act (TCJA) or tariff increases, we believe some local governments will need to start showing their resilience and make difficult budget choices sooner rather than later, or risk credit deterioration.
Source: S&P Global Ratings, January 8, 2019
For the U.S. states, S&P Global Ratings’ baseline economic forecast of slower growth in 2019 holds the potential for renewed fiscal strain. Although now long in duration, the economic expansion that began in mid-2009 has been shallow. One consequence of this was the persistence of narrow fiscal margins for many states and, relatedly, an uncharacteristically high downgrade-to-upgrade ratio lasting through 2017. This changed in 2018 when, along with stronger economic growth, state fiscal health and credit quality stabilized. However, the higher GDP growth rate in 2018—while beneficial—was driven in part by an infusion of late-cycle federal fiscal stimulus (tax cuts and deficit spending). As the effect of this stimulus fades, and in light of the Federal Reserve’s ongoing tightening, we expect the pace of economic growth to decelerate in 2019. A protracted federal government shutdown would only accentuate the drag on growth emanating from Washington (see “A U.S. Federal Government Shutdown Won’t Immediately Threaten State Credit Quality, But It Sets An Ominous Tone For 2019,” published Dec 21, 2018).
Furthermore, the Tax Cut and Jobs Act of 2017 may have caused some taxpayers to move income into (calendar) 2017. While this contributed to windfall tax collections in 2018, states can expect growth rates to decline in 2019 as revenues revert to trend.
Source: S&P Global Ratings, January 16, 2019
• Volatile markets could affect future pension costs and funding status.
• States might need to offload pension costs to local governments.
• Updated disclosure on reported retiree health care obligations could heighten awareness and spur reform.
• States continue to pass pension reform and sustainability measures in an effort to manage costs and improve system health.
• The combination of environmental, social, and governance obligations and retirement obligations could also stress long-term government costs.
In this economic recovery period since the Great Recession a decade ago, many state and local governments faced rising costs and risk further increases related to funding long-term pension and other postemployment benefit (OPEB) obligations. S&P Global Ratings incorporates a forward-looking view of pension risks to costs in its credit opinion and ratings approach. As we look forward to fiscal 2019, we believe there are five key trends related to pension and OPEB liabilities that could have implications for future government costs: market volatility; states’ offloading of costs to local governments; retiree health care liabilities; pension reform; and the management of environmental, social, and governance (ESG) obligations and retirement obligations.
From the summary:
In its second year of annual analysis, the Rockefeller Institute of Government has examined the distribution of Federal Budget receipts and expenditures across the United States. This report examines where Federal funds are generated and spent, the balance of payments differential that exists between states, the primary explanations for those differences, and how these gaps may change over time.
Our annual analysis is designed to aid policymakers as they continue to discuss whether there is too much redistribution or too little, and the impact of those redistribution decisions on states. The Rockefeller Institute examined detailed revenue and spending data for Federal Fiscal Year (FFY) 2016 and developed a preliminary data series for FFY 2017, paying close attention to New York….
Recent national surveys show health care costs are a top concern in U.S. households. While the Affordable Care Act’s marketplaces receive a lot of media and political attention, the truth is that far more Americans get their coverage through employers. In 2017, more than half (56%) of people under age 65 — about 152 million people — had insurance through an employer, either their own or a family member’s. In contrast, only 9 percent had a plan purchased on the individual market, including the marketplaces.
In this brief, we use the latest data from the federal Medical Expenditure Panel Survey–Insurance Component (MEPS–IC) to examine trends in employer premiums at the state level to see how much workers and their families are paying for their employer coverage in terms of premium contributions and deductibles. We examine the size of these costs relative to income for those at the midrange of income distribution. The MEPS–IC is the most comprehensive national survey of U.S. employer health plans. It surveyed more than 40,000 business establishments in 2017, with an overall response rate of 65.8 percent…..