Will Hawaii Ever Climb Out of Its $27 Billion Hole?

When Google stock hit $1,000 a share last October, the financial milestone didn’t go unnoticed on the 14th floor of Honolulu’s City Financial Tower, headquarters of the Hawaii Employees’ Retirement System, the state’s $12.5 billion retiree piggybank.

As newly minted Google millionaires in California’s Silicon Valley rushed to their local Lamborghini and Maserati dealers, pension officials in Hawaii were trying to calculate just how much the windfall might contribute to reducing their unfunded liability – that growing shortfall between the money it has, or expects to earn, and the billions it will need to make good on guarantees of financial security for current and future retirees.

On paper the ERS had made a tidy profit of $35.7 million on its Google stock, not a bad return in just three years. But this was mere pocket change when compared to the retirement system’s $8.5 billion long-term debt, a financial burden projected to get larger before it gets any smaller.

Series at a Glance4 ArticlesMondayWill Hawaii Ever Climb Out of Its $27 Billion Hole?TuesdayInvestments: Gambling With Public MoneyWednesdayThe Health Fund’s Quest for SolvencyFridayHouse Works to Wiggle Out from Under Unfunded Liability MandateGo to the Report Page Sidebar PF Bentley/Civil Beat Pension Promises: Here’s How — and Why — We Did This Project June 9, 2014 Civil Beat Debt Details: New Rules To Force Greater Accountability June 9, 2014

If estimates are anywhere near accurate, the ERS liability will grow to $9.6 billion over the next decade before it begins to shrink – but only if ERS investments pay off as hoped. Google shares split two-for-one in April and today are trading at about $562, resulting in no loss to the…

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