Tag archive for unfunded liabilities

Pensions: Inaccurate financial reporting, bad investment incentives…

The Rockefeller Institute of Government has added its voice to those decrying the current composition of public sector pensions in America, scoring a system that has been rife with questionable financial assumptions which have led states and cities to task their pension fund managers with …

The bizarro world of municipal bankruptcy

Ch. 9 municipal bankruptcy may be understood as the pursuit of fiscal stability by alternative means. A city goes into bankruptcy to get something (debt adjustment) that it tried and failed to get outside of federal court.
But developments in Detroit have already illustrated that, in …

Is Illinois’ pension system fraudulent?

A group of business leaders in Chicago argue that the Prairie State’s pension system is beyond repair and that putting more money into it amounts to fraud. According to them, the state’s $83 billion unfunded pension liability and other debts that have exploded to an …

Soaring retirement benefit costs at Harvard

The Boston Globe reports today that Harvard University has a problem with unsustainable employee benefit costs. Cost growth has outpaced that of the total budget and unfunded pension and retiree healthcare liabilities (particularly the latter) have grown even more (Chart and Table).
Harvard Chart.png

Who’s down with O-P-E-B?

The vast majority of local governments in California, for one, and it’s a $130 billion+
problem. The new report Reform before Revenue: How to Fix California’s Retiree
Healthcare Problem
, has all the details.

USA Today blasts crazy new pension law

USA Today leveled an excellent criticism at a new California law that will create a new mini-Social Security system for private-sector workers here. These braintrusts can’t even manage the public system they created, but presume to tell us that the real problem with pensions is that the government is not sufficiently involved in the private sector. The system will add burdens to private employers, create a constituency for higher benefits and may be designed merely to prop up the existing unfunded liabilities through the California Public Employees’ Retirement System.

California: Anatomy of an exploding government obligation

Troy Senik notes below a new report which determines that California’s debt is much larger than previously thought. The analysis includes a look at rising state debt from not properly funding  retirement promises to workers. Many readers have become familiar with the way in which politicians have used defined benefit pensions to promise workers retirement perks but not adequately fund them right now. The same process is taking place with promises of health care for life for government workers, because the temptation to underfund these is just as powerful. California illustrates the problem

Pension shootout brewing in Texas

Texas Watchdog has a piece today on the battle brewing in Texas over pension reform. I got a first hand look at this when I visited Austin in August to speak with some legislators. Although the state’s retirement system for public employees is better funded than many states’, unfunded liabilities are growing and a recent evaluation of the health of the funds by the state’s Employee Retirement System concluded that, “Without action, the unfunded liability will continue to increase and make today’s situation unmanageable.” Still, the sticking point is what to do.



GASB standards assume away reality

The average public pension plan is only 41 percent funded, when calculated with the same financial methods used in the private sector, according to a recent report written by PublicSectorInc.org contributor Andrew Biggs. Using a fair market valuation approach that captures the value of pension benefits guaranteed to be paid as opposed to using unrealistic Government Accounting Standards Board assumptions based on the highly unlikely expected returns on stocks, private equity, or hedge funds, Biggs finds that public pensions “face unfunded liabilities of approximately $4.6 trillion dollars.”

Brokest state: Another dubious distinction for Illinois

Below I linked to a new report by the by the Illinois Policy Institute totaling up retirement-related debts held by Illinois. Those debts are one reason that the state’s auditor general deems Illinois in the worst fiscal shape of any state, with liabilities outpacing assets by about $43.8 billion, according to a new report (see chart of all states’ fiscal positions on jump page). Some analysts quibble, arguing that their state is in even worst shape. In any case, you probably won’t be surprised by the states deeply in the red, according to the auditor’s report.