The new report includes the most populous city in each state, plus all others with populations over 500,000. For pensions, these cities had a shortfall of $99 billion in fiscal year 2009, the most recent year with complete data. The rest of the shortfall—$118 billion—was for retiree health care and other benefits.
While investment losses during the recession depleted cities’ pension funds nearly across the board, the Pew report found another factor made the difference between the best- and worst-funded pension systems. “Having studied 61 cities and the 50 states, the better-funded plans all share one characteristic: They have the discipline to pay their annual pension bills,” said David Draine, senior researcher at the Pew Center on the States.Nearly six out of 10 cities made at least 90% of their annual payments in all three years studied. Among those jurisdictions, pension funds weathered the recession better, and their funding levels dropped only half as much as cities with poor funding habits.
The National Public Pension Coalition (NPPC) issued a statement agreeing with Pew’s assessment of factors contributing to the underfunding but criticizing Pew’s suggested remedies. “While Pew acknowledges the factors behind the underfunded pension systems, to suggest modifications that punish public employees is irresponsible and uncalled for,” the NPPC said.
The retirement systems’ funding statuses ranged from 113% in Milwaukee, Wisconsin, to 24% in Charleston, West Virginia. For pensions, the 16 best performing cities included in the Pew study are: Albuquerque, New Mexico; Baltimore, Maryland; Charlotte, North Carolina; Dallas, Texas; Denver, Colorado; Des Moines, Iowa; Los Angeles, California; Milwaukee, Wisconsin; Salt Lake City, Utah; San Antonio, Texas; San Francisco, California; Seattle, Washington; Sioux Falls, South Dakota; Virginia Beach, Virginia; Washington, D.C.; and Wichita, Kansas.
The nine worst performing cities included in the Pew study are: Charleston, West Virginia; Chicago, Illinois; Fargo, North Dakota; Jackson, Mississippi; Little Rock, Arkansas; New Orleans, Louisiana; Omaha, Nebraska; Philadelphia, Pennsylvania; and Portland, Oregon.The Pew report is here.