Texas has about 89 cents of every dollar it needs for pension benefits.

Public pensions in Texas are in relatively good financial shape, but the state has taken no action to address the huge bill coming due for health care and other retirement benefits for state employees and public school workers, according to a report released Tuesday by the Pew Center on the States.

The Pew report, a first-of-its-kind report on state pensions and investments, said Texas has about 89 cents of every dollar it needs for the pension benefits it has promised to pay state employees and teachers in the next 30 years. Nationally, public pensions have 85 cents of every dollar needed for pension payments.

The report said states will spend an estimated $2.73 trillion on pensions, health care and other retirement benefits in the next 30 years. The breakdown: $2.35 trillion for employee pensions and $381 billion for retiree health care and other nonpension benefits — and the latter figure includes only state workers' nonpension benefits.

All told, states have set aside about $2 trillion for these costs, meaning they are 27 percent short of the required amount.

As reported by the American-Statesman last month, the state faces a $36.8 billion unfunded liability in providing health care and other benefits to current and future retirees. The estimates — $19.1 billion from the Teacher Retirement System and $17.7 billion from the Employees Retirement System — were disclosed in response to a national accounting standard on the long-term costs of public-sector retiree benefits.

The Pew Center report said the five largest states by population — California, Texas, New York, Florida and Illinois — have set aside no money to pay for health insurance and other retiree benefits. The report said New York figures show that it is estimated to owe $50 billion, while California owes an estimated $48 billion.

"States' fiscal health and economic vitality depends greatly on their ability to wisely manage these bills coming due," said Susan Urahn, managing director of the Pew Center on the States.

Texas, like most states, handles retiree benefits on a pay-as-it-goes-basis. If Texas were to set aside money for retiree benefits — money in a trust could be invested, with proceeds used to pay the bills — then the unfunded liability would decrease.

The report cited four states that have set aside at least $1 billion for these benefits: Ohio, Alaska, Wisconsin and Arizona.

"Putting money in the bank" to pay for these benefits "means short-term pain, but long-term gain," Urahn said. "Unfortunately, state leaders don't always rise to meet that challenge. A lot of states have a buy-now, pay-later mentality."

She said in the past year, 13 states have established trusts for themselves or for local governments to help pay for nonpension benefits.

The report said public-sector benefit plans will come under increasing pressure because public employees are older on average than private-sector employees. This "massive demographic shift," it said, combined with rising health care costs, will mean huge future liabilities for states.

relder@statesman.com; 445-3671

Price of public benefits in Texas

Pensions

Bill coming due: $132 billion*

Funds set aside: $117 billion

Unfunded: $15 billion

Percent funded: 88.5 (2006)

10-year funding high: 107 percent (2000)

10-year funding low: 88.3 percent (2005)

Other benefits

Bill coming due: $36.8 billion**

Funds set aside: $0

* Pension funds for state workers, law enforcement, judicial and emergency services personnel, and public school employees

** Health, life insurance and other post-employment benefits for state employees and public school workers

Source: Pew Center on the States