The big promise that government employers make to public employees is guaranteed monthly income for life in retirement. In order to fulfill that promise, pension funds need to balance the dollars it receives and invests with the pension payments it’s required to make.
This is known as funded status, and it’s measured in two main ways: funded ratio and unfunded liabilities.
What is Funded Ratio?
Funded ratio is calculated by dividing a pension fund’s assets by its promised benefit payments (liabilities). It can be calculated for a state on the whole or for the various individual plans within the same state.
For example, a plan with $10 billion in assets and $10 billion in promised benefits is considered 100% funded. A plan with just $5 billion in assets and $10 billion in promised benefits is 50% funded.
What Are Unfunded Liabilities?
Unfunded liabilities are calculated by subtracting a pension fund’s promised benefit payments from its assets. Instead of a ratio, the unfunded liabilities measurement looks at the difference between assets and liabilities in terms of dollars and cents.
Continuing the example above, a plan with $10 billion in assets and $10 billion in promised benefits is fully funded and has unfunded liabilities of $0. A plan with just $5 billion in assets and $10 billion in promised benefits has $5 billion in unfunded liabilities (pension debt).
2025 Funded Ratios by State
As of June 30, 2025, Washington, D.C., Tennessee, Nebraska, Wisconsin, Washington, Utah, and South Dakota have the best average funded ratios across the United States. Each has a funded ratio of 100% or above, meaning they are fully funded.
The states with the worst average funded ratios are Illinois, Kentucky, and Mississippi. All of them have funded ratios below 60%.
However, some states carry a larger share of pension unfunded liabilities (or pension debt) than others. California, Illinois, Texas, and New Jersey have the highest levels of unfunded liabilities in the United States by dollar value.
2025 Unfunded Liabilities by State
Public pension plans in the U.S. are available to a wide range of workers. Teachers, state and city employees, public safety officers, public utility staff, and more have the opportunity to collect a pension. The U.S. has promised at least $7.2 trillion in future retirement benefits to the members of the largest 234 public retirement plans (those with liabilities of $1 billion or more). But nationally, the U.S. has only set aside $6 trillion to pay those benefits.
This means there is a national public pension funding shortfall (unfunded liability) of around $1.3 trillion, as of June 30, 2025. Collectively, that is just 82.5% of the money that should be in state and local pension funds today (funded ratio).
2025 Funded Status by State
Together, unfunded liability and funded ratio metrics help reveal the best and worst states in terms of funded status. We have aggregated the various pension plans in each state to create the following list of pension funded status by state.
What Do Unfunded Liabilities Mean for State Pension Plans?
There are a wide range of funded ratios for different pension plans within states. For example, California has an average funded ratio of 84.2%. However, individual plans might have a different story. San Francisco City & County Employees’ Retirement System is 98.2% funded. On the other hand, Judges’ Retirement System 1 depends on state legislature to pay for its benefits each year.
The dollar amount of unfunded liabilities is typically also dependent on the size of a state’s public workforce and economy. States like Texas and Florida have large dollar-valued unfunded liabilities. This is because their state and local pension systems have struggled and also because they are simply very large states.
A helpful way to understand how much of a problem state pension unfunded liabilities are is to compare them to each state’s economy, commonly measured using state GDP, or gross domestic product. Below is a chart that shows how the funded status of all 50 states (plus D.C.) stack up against their economic output.
Notes
- The data in this article come from Equable Institute’s “State of Pensions 2025.” The list of states is based on Equable estimates of public pension plan finances through June 30, 2025. The chart of state funded ratios and GDP is based on fiscal year 2024 data because there is not yet sufficient state economic data for 2025. See the full report for methodological details. The 234 state and local pension plans in this analysis account for over 90% of all public pension plan assets in the U.S.
