Multi-City Look at OPEB Funding

As touched upon by our Brief this week the Pew Center for the States looked at the funding of retiree health care in 61 cities. The data, which reflects fiscal year 2009, shows how much money the city is required to put in (ARC), how much they actually put in, the total liability, and the percentage at which the other post-employment benefits (OPEB) are funded.

Let’s start with the last point first. It was only a few years ago that cities were required by accounting standards to begin showing an actuarial statement on OPEB, and there is no requirement to pre-fund or set aside assets for OPEB the way things are done for pensions. That’s why only 23 cities of the 61 showed a greater than zero balance in terms of percent funded. Los Angeles was the highest at 55% and Denver was close behind at 51%.

Total liability ranged from a high of $73 billion in New York City to $3 million in Cheyenne. Eighteen other cities besides New York had OPEB liabilities of $1 billion or more.

Several cities-including Charlotte, Little Rock, Phoenix, and Virginia Beach-paid in more than 100% of what was required under the terms of the annual required contribution.

One city that was not included in the measurement? Our very own Pittsburgh, PA. It takes OPEB measurements every other even year (2008, 2010, 2012); in 2008 its total (unfunded, as there are no assets set aside) liability was $359 million and by 2010 it had climbed to $488 million. In 2009 it was required to pay in $29 million but put in 70% of that ($20 million).

Sizing up City Council

The Pew Charitable Trusts just released a comparative study of city councils in 15 U.S. cities, the focus being Philadelphia where the Trusts’ Philadelphia Research Initiative is based. The study covers a wide range of cities: from New York, with a population of 8.3 million and 51 council members to our own Pittsburgh with 311 thousand and nine council members.

There are multiple opportunities for classification and grouping of the data. There are five cities with no at-large council seats (Los Angeles, New York, San Diego, Chicago, and Pittsburgh) and one with no district seats (Detroit); four cities have a professional manager as their chief executive/administrative officer (Phoenix, San Jose, Dallas, and San Antonio) while the remainder are mayor-council cities; only four have fewer than ten total seats (Pittsburgh, San Diego, Detroit, and Phoenix); likewise only four cities have population-per-seat of less than 50k people (Boston, DC, Baltimore, and Pittsburgh); seven cities have no term limits (Pittsburgh, Baltimore, Boston, Chicago, Detroit, Philadelphia, and DC); and all councils represented 1 percent or less of all general fund expenditures.

The study found that Pittsburgh is quite frugal on spending attributable to council functions: $225k per council seat, $6.52 per resident. Los Angeles, DC, and Detroit exceeded or approached $1.5 million on the first measure, and DC tallied a staggering $32.41 on the per resident measure, more than twice that of the next closest city (Detroit at $14.53).

An interesting measure to examine with the Pew data is the ratio of employees on each city council to elected council member. Pittsburgh is shown to have 33 "council employees" including the 9 elected members. That means there are 24 non-elected staff members, or 2.6 staffers per 1 council member. This was second lowest in the 15 city sample with Dallas at 1.4/1.

The average for the group is 6.7/1. Here’s where the shocking numbers come in: San Diego at 10.6/1, New York at 11.2/1, and DC again topping the list at 14.2/1. The nation’s capital city has 13 elected council members and 185 staffers. Keep in mind that U.S. House members, with districts that approach 700k people, are allowed to hire 18 staff members and up to 4 part-timers. How has the situation in DC’s city council been able to exist?