OPEB Funding Ratio

Source: Truth in Accounting
Latest Data: 2018 for states, 2017 for cities
Frequency: Annual
Contact: Bill Bergman, 312-589-5101, bbergman@truthinaccounting.org

This ratio relates the assets raised to support government retiree health care benefits (OPEB, or Other Post-Employment Benefits) to the overall OPEB liability. The assets are in the numerator of the ratio, and the liabilities are in the denominator. Higher ratios indicate better funding.  We express the ratios as percentages. For example, if assets are $80, and liabilities are $100, we report the funded ratio at 80 percent.

Many state and local governments historically distributed these promises as compensation and did not raise money and set it aside to cover the present value of those promised benefits. As a result, OPEB funding ratios are far below pension funding ratios in many governments.

For those governments, such as Nebraska, which have not promised post-retirement health care benefits, no data have been entered.  A government with a 0 means that the government has not put any assets aside to fund the promised OPEB benefits. State and local government employees earn these benefits as part of their compensation each year and governments incur corresponding liabilities, but many governments do not prefund these benefits, choosing rather to pay the benefits on a pay-as-you-go basis.

You can review a more complete description of our OPEB methodology at this page at Data-Z.