Monday, January 28, 2008
Philly’s Pension System Stinks…
But it is not as bad as Pittsburgh’s. That’s one of the interesting findings of the recent report by the Pew Charitable Trusts and the Economy League of Philadelphia.
The new report states that Philadelphia now has more claimants than workers and that “of comparison cities around the country, only Pittsburgh is in worse shape” on its percentage of liabilities that are unfunded.
We pointed this finding out in a 2007 report on local government pensions in the state and found that, taken together, Philadelphia and Pittsburgh’s unfunded liabilities accounted for 75 percent of the aggregate unfunded liability of the Commonwealth’s 3,000 local pension plans, which totaled close to $5 billion in recent years.
Both cities issued debt to shore up the deficit in funding, which did not help. Now the mayors of both cities are debating an “east-west” union that could address similar problems, one of them being pensions. “Strength is in numbers, as far as I'm concerned, specifically when you're dealing with the Legislature in Harrisburg, because many times our problems are similar…” were the words of Pittsburgh’s mayor.
The problem for municipal pensions and local officials is that the strongest numbers the state is looking at are the status of their own state employee retiree plan and the school employee retiree plan, both of which are projected to require steep increases to the employer share in the coming years. Those crises will likely be dealt with first. A comprehensive solution—one that moves to a defined contribution system, finds a pot of money, etc.—is likely far off.
The new report states that Philadelphia now has more claimants than workers and that “of comparison cities around the country, only Pittsburgh is in worse shape” on its percentage of liabilities that are unfunded.
We pointed this finding out in a 2007 report on local government pensions in the state and found that, taken together, Philadelphia and Pittsburgh’s unfunded liabilities accounted for 75 percent of the aggregate unfunded liability of the Commonwealth’s 3,000 local pension plans, which totaled close to $5 billion in recent years.
Both cities issued debt to shore up the deficit in funding, which did not help. Now the mayors of both cities are debating an “east-west” union that could address similar problems, one of them being pensions. “Strength is in numbers, as far as I'm concerned, specifically when you're dealing with the Legislature in Harrisburg, because many times our problems are similar…” were the words of Pittsburgh’s mayor.
The problem for municipal pensions and local officials is that the strongest numbers the state is looking at are the status of their own state employee retiree plan and the school employee retiree plan, both of which are projected to require steep increases to the employer share in the coming years. Those crises will likely be dealt with first. A comprehensive solution—one that moves to a defined contribution system, finds a pot of money, etc.—is likely far off.
