Underfunding Annual Pension Contributions: Examining the Factors Behind an Ongoing Fiscal Phenomenon

Inadequate contributions are one factor behind the gap between pension assets and benefit liabil-ities. Each year, many states fail to meet their required pension contribution while others con-sistently meet or exceed their required amount. This study seeks to identify the factors that shape actual pension contributions across the states. Results suggest that states with smaller long-term funding gaps are more likely to fund required contributions. Legislative professionalism and consti-tutional collective bargaining privileges reduce annual funding. The effect of partisan and institutional traits was sensitive to methodology. Revenue changes and balanced budget requirements had no sig-nificant effect on pension contributions. These results suggest a number of reform avenues, including constitutional, institutional, and programmatic changes of varying political feasibility