NASBO Releases 2021 State Expenditure Report

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NASBO Releases 2021 State Expenditure Report

On November 19, 2021, the National Association of State Budget Officers (NASBO) released its 2021 State Expenditure Report: Fiscal Years 2019-2021. This annual report examines spending in the various areas of state budgets including: elementary, secondary and higher education; public assistance; Medicaid; corrections; transportation; and other areas. It also includes data on capital spending and revenue sources in state general funds. 

Some of the key findings include:

  • In fiscal year 2021, total state spending (including general funds, other state funds, bonds, and federal funds) is estimated to increase 16.2%. The strong gains from federal funds to states is directly related to the COVID-19 pandemic response and recovery efforts. In fiscal 2021, states reported spending $321.6 billion in overall federal COVID-19 aid. 
  • Federal funds spending is estimated to sharply increase 35.7%. The significant increase is mainly due to additional federal aid states received in response to the COVID-19 pandemic, including the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the American Rescue Plan Act of 2021 (ARPA).
  • Spending from the states’ own funds (general funds and other state funds combined, excluding bonds) is estimated to increase 5.7%.
  • The “all other” category is estimated to have the largest gain in total state spending at 29.3%. Many of the top expenditure areas for both CARES Act and ARPA funds fall under the “all other” category such as unemployment insurance, public health programs, housing assistance, emergency management, economic relief, aid to local governments, and broadband and other technology upgrades.
  • State general fund revenue is estimated to increase 12.8% mainly due to federal stimulus measures which have helped to bring additional money into the economy. Furthermore, revenues in both fiscal 2020 and fiscal 2021 were impacted by the shifting of the 2020 tax deadline from April 15 to July 15.

The report is available here.

NIRS Releases Issue Brief on Americans’ Viewpoints of State-Facilitated Retirement Programs

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NIRS Releases Issue Brief on Americans’ Viewpoints of State-Facilitated Retirement Programs

On November 18, 2021, the National Institute on Retirement Security (NIRS) released its issue brief, Americans’ Views of State-Facilitated Retirement Programs. The new research indicates that about 72% of Americans support state-facilitated retirement programs for workers without workplace plans.

According to the brief, most working Americans are not on track to maintain their standard of living in retirement. The retirement savings shortfall can be attributed to many factors, including fewer pensions, stagnant wages, lack of employer sponsored plans, lower Social Security benefits and rising costs for health, long-term care, and housing.

About 75% of Americans indicated that they would participate in state-facilitated retirement programs. Some of the key features that are viewed as highly favorable include portability (84%), higher returns (82%) and lower fees (82%). Typically, the state-facilitated programs require private sector employers lacking retirement plans to provide their employees with access to retirement accounts through payroll deductions.

Since 2012, about 46 states have either considered, studied or enacted legislation that would establish state-facilitated retirement programs. Currently, 14 states and two cities have enacted these new programs for private sector workers.

The brief is available here.

Kaiser Family Foundation Releases 2021 Employer Health Benefits Survey

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Kaiser Family Foundation Releases 2021 Employer Health Benefits Survey

On November 10, 2021, the Kaiser Family Foundation (KFF) released its survey report, 2021 Employer Health Benefits Survey. The survey provides detailed information regarding health insurance premiums, employer and employee contributions, employee cost-sharing, wellness programs and other topics. This year’s report also examines changes employers made to their health benefits due to the COVID-19 pandemic such as increases in telemedicine and mental health benefits.

Some of the key findings include:

  • Employer-sponsored health insurance covers about 155 million of the non-elderly population in the U.S.  Approximately 59% of all employers offer health care benefits to at least some workers, and 62% of workers are covered.  All of these percentages are similar to 2020.
  • For employer-sponsored family coverage, annual premiums averaged $22,221 in 2021, up 4% from 2020. 
  • For employer-sponsored single coverage, annual premiums averaged $7,739 in 2021, up 4% from 2020. 
  • With regard to employee cost-sharing for health care, about 85% of all covered workers faced a general annual deductible, which averaged $1,669 for single coverage in 2021.  Workers in small firms (i.e., with 3 to 199 employees) were more likely to have larger deductibles, which averaged $2,379 as compared with $1,397 in large firms (with 200 or more employees).
  • Almost all large firms and many small firms have health and wellness programs that help workers identify health issues and manage chronic conditions (i.e., health risk assessments, biometric screenings and health promotion programs).  

KFF also updated an interactive graphing tool to examine trends in premiums and worker contributions among workers covered by employer-sponsored coverage at different types of firms.  The tool uses a web-based interface to the underlying Kaiser/HRET data from the Employer Health Benefits Surveys from 1999-2021. 

The survey report and interactive graphic tool are available here.

CRS Reports on Social Security Coverage of State and Local Government Employees

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CRS Reports on Social Security Coverage of State and Local Government Employees

On November 10, 2021, the Congressional Research Service (CRS) released its report, Social Security Coverage of State and Local Government Employees. Over the years, there have been many proposals to make Social Security coverage mandatory for newly hired state and local government employees. As of 2018, about 72% of state and local government employees participated in Social Security; however, about 28% of these workers are not covered by Social Security through their government employment.

Every state has a combination of state and local government employees with and without Social Security coverage. As a result, every state would be affected by a Social Security coverage mandate. The impact on state and local plans and the net effect on total benefits would vary across plans as well as among individuals. 

Overall, in 2018, eight states accounted for nearly 73% of noncovered state and local government employees (California, Colorado, Georgia, Illinois, Louisiana, Massachusetts, Ohio and Texas) and three states accounted for about 48% of noncovered state and local government employees (California, Ohio and Texas).

The report is available here. 

James Rizzo Serves as Co-Presenter at the Marcum Government Symposium

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November 18, 2021

James Rizzo Serves as Co-Presenter at the Marcum Government Symposium

James Rizzo will serve as a co-presenter for the topic,  Investment Return Assumptions for Pensions (AU-C 540 AND ASOP NO. 27).  The webinar is being sponsored by Marcum, LLP.   Hermes Garzon, Manager, Assurance Services at Marcum LLP is also a presenter.   An overview of the session is here.

GRS Publishes Research Alert on Maximum Deferral and Threshold Limits for 2021 and 2022

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GRS Publishes Research Alert on Maximum Deferral and Threshold Limits for 2021 and 2022

On November 10, 2021, GRS released its Research Alert, Maximum Deferral and Threshold Limits for 2021 and 2022.  This publication summarizes the Internal Revenue Service’s (IRS) new maximum deferral and threshold limits effective for limitation years beginning on or after January 1, 2022.  The Internal Revenue Code (IRC) establishes a number of limits on retirement plan benefits and contributions.  The limits are located in various sections of the Code and often apply in different ways to private and public-sector plans.  Generally, plans must comply with the limits to maintain their tax-qualified status.

This GRS Research Alert is available here.  

James Rizzo Discusses Expected Pension Return Assumption at CCA Annual Meeting

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October 25, 2021

James Rizzo Discusses Expected Pension Return Assumption at CCA Annual Meeting

James Rizzo participated in a panel discussion for the session “Practical Aspects of Setting the Expected Pension Return Assumption” at the 2021 Conference of Consulting Actuaries Annual Meeting.

Mr. Rizzo discussed different methods to calculate a portfolio’s expected geometric mean return, which utilize capital market assumptions for each asset class as provided by professional investment forecasters. The expected geometric return is a measure presented by actuaries that informs plan trustees in setting the actuarial valuation’s investment return assumption.  

GRS Consultants Serve on Speaker Panel at the Conference of Consulting Actuaries (CCA) Annual Meeting

Events​

October 26, 2021

GRS Consultants Serve on Speaker Panel at the Conference of Consulting Actuaries (CCA) Annual Meeting

James Rizzo and Piotr Krekora served on the panel session “ASOP No. 6 Practice Note-Actuarial Valuations of Retiree Health Valuations” at the 2021 CCA Annual Meeting.  

Mr. Rizzo and Mr. Krekora served on the American Academy of Actuaries (AAA) Work Group for this practice note, as chairperson and member, respectively.