Major cities in disparate corners of America provide a fresh — and stark — illustration of how widespread public pension funding shortfalls are. Pittsburgh and Phoenix, cities that could not be much more opposite geographically, are among those grappling with this troublesome matter. Both cities got some bad news on that front in recent days.
Pittsburgh
Pennsylvania Auditor General Eugene DePasquale and Pittsburgh Mayor Bill Peduto (D) announced an audit of the pension plans serving the city’s employees Nov. 5. DePasquale’s office says that Pittsburgh’s underfunded pension liability is $485 million and its plan is 58% funded.
Pittsburgh is not alone among Pennsylvania communities. Nearly half of its municipalities — 573 of 1,218 — have pension funding shortfalls. And on Nov. 7, DePasquale’s office released audits of municipal pension plans in seven counties: Beaver, Berks, Butler, Jefferson, Northampton, Warren and York.
Phoenix
On Nov. 4, Phoenix voters rejected — by a 13-percentage point margin — a proposal to close the Phoenix City Employees’ Retirement System and create a 401(k) plan in its place. Citizens for Public Reform got the measure, Proposition 48, on the ballot. Phoenix’s Section 457 plan is underfunded by $1.5 billion and is 56% funded, according to the city’s 2013 actuarial valuation report.
Good News in Kentucky
In the meantime, a third city that is contending with the same issue got some good news. According to the Lexington Herald-Leader, the pension plan that Lexington, Ky. runs for its police and fire and rescue personnel is still underfunded by $180 million as of July 1, 2014, but that is $24 million less than one year before, bringing the city’s funding ratio up to 76.2%.
