The Center for Retirement Research at Boston College was established in 1998 through a grant from the
Social Security Administration. The Center’s mission is to produce first-class research and forge a strong
link between the academic community and decisionmakers in the public and private sectors around an
issue of critical importance to the nation’s future. To achieve this mission, the Center sponsors a wide
variety of research projects, transmits new findings to a broad audience, trains new scholars, and broadens
access to valuable data sources. Since its inception, the Center has established a reputation as an authoritative
source of information on all major aspects of the retirement income debate.
I have not read the entire article -- its quite lengthy and very detailed. This is the conclusion.
In conversation, state officials frequently indicate that they are concerned about the impact of their pension
decisions on their bond ratings. Our results indicate that, while the rating agencies say they consider pensions,
pension funding does not have a statistically significant effect on bond ratings. In contrast, it does
have an effect on the spread, albeit modest – 3 to 7 basis points. That result is not surprising given that
pension expense accounted for only 3.8 percent of state budgets in 2008. The magnitude could increase,
however, to the extent that pensions become an increasingly important component of state budgets.
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