There is no doubt that Maryland (and many, many other states) are in dire need of pension reform. Simply put: we have made too many expensive promises to too many people and allocated too little money for the fulfillment of those promises. And the time is coming when our state and local governments will have to either break those promises or simply tax the rest of us more just to make good.

Marc wrote a great blog post yesterday about how Maryland should scrap the special session for gambling (and pitbull legislation) and focus on something really useful and necessary: pension reform. I couldn’t agree more. Why are we spending so much time focusing on side-issues this year when there are some very real problems facing Maryland that go largely ignored?

But we have more to worry about than just pensions. Sure, pensions get a lot of the attention, but they’re actually a smaller (though still potentially catastrophic) issue than OPEBs: other post-employment benefits.

Last year, I compiled pension and OPEB data from all the counties in Maryland and created an interactive map displaying just how big the pension/OPEB gap in each county is. The map tells a cautionary tale, but if you download the data, you can see an even more startling one.

The majority of counties had (as of last year) unfunded liabilities in their pension funds. Full data wasn’t available for each and every county, but the worst seems to be Carroll County, with 54% of its pension obligations unfunded. Keep in mind this was last year – before the dismal performance of our investments most recently. Things have likely gotten worse.

But OPEBs are much further behind than pensions. The average unfunded liability per county for OPEBs is more than twice the average unfunded liability per county for pensions. Eleven counties have unfunded liability ratios at 100%! (This fact is so discouraging that, as I write this blog post, I honestly hope that I made some very big and stupid errors during my research phase last year.)

Why are OPEBs in such a woeful state of underfunding? Because they were never supposed to be as big and expense as they have become. Healthcare benefits were never supposed to become so expensive for state and county employees. But public unions are powerful and healthcare costs are rising much faster than they should be. And so counties have had to scramble to establish similar funds for OPEBs as they have for pensions.

It is certainly true that our state and local governments need to address pensions – and soon. But we are kidding ourselves if we think that that’s the only issue that needs addressing. Once we get pensions under control, we still have to worry about OPEBs.