A Widening Gap in Cities

Jan 15, 2013

Key Findings: Pensions

  • The big picture. Altogether, the 61 cities had enough assets to cover 74 percent of $385 billion in projected pension obligations as of fiscal year 2009, the most recent year with complete data for each city. That left a gap between assets and liabilities of $99 billion. More recent, complete data for 40 cities showed the gap widening in fiscal year 2010.
  • Performance on two key indicators. Cities were assessed on: (1) their funding level, which is the percentage of projected liabilities covered by assets; and (2) the extent to which they are paying the annual contribution their actuaries recommend to meet their pension obligations, generally over 30 years.[i]

Between 2007 and 2009—one of the most volatile financial times in their history —16 cities maintained funding levels above 80 percent and consistently made at least 90 percent of their annual pension payments: Albuquerque; Baltimore; Charlotte; Dallas; Denver; Des Moines; Los Angeles; Milwaukee; Salt Lake City; San Antonio; San Francisco; Seattle; Sioux Falls; Virginia Beach; Washington, D.C.; and Wichita.

Nine cities fell below the benchmarks for both funding level and annual pension contributions each year from 2007 to 2009: Charleston; Chicago; Fargo; Jackson; Little Rock; New Orleans; Omaha; Philadelphia; and Portland, Oregon.

  • Best- and worst-funded in 2009. Twenty-four cities emerged from the recession with funding levels of 80 percent or higher in fiscal year 2009; 37 cities fell below that mark. [ii] This snapshot captures cities’ pension holdings at a low point because of the recession.
  • Best and worst at making annual payments. More than half—35—of the 61 cities made at least 90 percent of their annual pension payments each year between 2007 and 2009, including 25 that paid at least 100 percent each year. Six cities regularly shortchanged their pension funds and made less than two-thirds of their annual recommended contributions: Charleston, Chicago, Little Rock, New Orleans, Omaha, and Portland, Oregon.[iii]
  • Results in 2010 and beyond. A look at 40 cities that reported results for all of their pension plans for fiscal years 2005 through 2010 showed declines in funding levels beyond the end of the recession. Their aggregate funding levels reached 82 percent in 2007, before dropping to 78 percent in 2008, 73 percent in 2009, and 70 percent in 2010. [iv]

Total Funding Chart

X
(All Fields are required)