Rhode Island is only 23 years away from paying off its unfunded pension liability.

Joe Newton, the state’s actuary, offered his latest projections [pdf] to the Retirement Board last week during an annual check-up on the overhauled pension system. The size of the projected contribution taxpayers will need to make to the pension fund for the 2014-15 fiscal year is actually “slightly lower” than what was expected when the General Assembly passed the pension overhaul in November 2011, he said.

Rhode Island’s unfunded pension liability for state employees and teachers – the two largest groups in the system – rose to $4.5 billion as of June 30, 2012, an increase of $142 million. That reduced the pension system’s funding level by a percentage point compared with a year earlier, to 57.8%.

Rhode Island’s state payroll continues to grow significantly more slowly than expected. Back in 2001 actuaries projected the state’s total payroll would be $814 million in 2011-12; it turned out to be only $644 million, or 21% less. The same was true for teachers: the 2011 projection was a $1.1 billion payroll in 2011-12, but the reality was a $972 million payroll.

This chart compares old and new projections for the pension system’s future funding level, with the red dots showing the June 2011 projection and the blue line showing the new June 2012 projection:

And this chart shows how much state taxpayers will need to contribute to the pension system (as a percentage of the state’s payroll) to pay off the unfunded liability – the final large deposit comes in the 2034-35 fiscal year, which explains the dramatic drop in 2035-36:

Unfortunately for state retirees, Newton projects that under the terms of the 2011 law pensioners won’t start getting annual cost-of-living adjustments (COLAs) again until 2032 due to the size of the shortfall in the pension fund – unless, that is, judges throw out the pension law altogether.

• Related: RI pension fund’s assets dropped by $200 million in 2011-12 (Jan. 14)