Impact of unfunded pension obligations on credit quality of state governments

Christine R. Martell, Sharon N. Kioko, Tima Moldogaziev

Research output: Contribution to journalArticlepeer-review

34 Scopus citations


This study reviews the funding status of state-administered pension plans and their impact on state credit quality. As the fund ratio (actuarial assets/actuarial accrued liability) of state-administered pension plans decreases, states are more likely assigned a lower rating. Moreover, rating outlooks are sensitive to the fund ratio, especially for migration between stable and negative outlooks for states with lower fund ratios. These results are a timely pretest to the 2013/2014 implementation of GASB Statements No. 67 and 68, serving as a benchmark to assess whether new reporting requirements will yield information to alter the market's response to unfunded pension liabilities.

Original languageEnglish (US)
Pages (from-to)24-54
Number of pages31
JournalPublic Budgeting and Finance
Issue number3
StatePublished - Sep 2013

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Public Administration


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