Funded Status of Local Pensions per CSLGE

Based on an analysis of 130 of the country’s larger local jurisdictions, the Center for State and Local Government Excellence (CSLGE) released a brief finding that “as of 2015, local plans have an aggregate funded ratio of 69.9%, relative to 73.9% for state plans – a difference that has been closing in recent years. Also, these local plans contributed 83% of their required contributions in 2015, relative to 76% for state plans, when adjusted to account for a more conservative cost payment approach. The authors suggest that these variances between state and local plans are possibly linked to differences in aggregate investment approaches and funding methods, respectively.”

Nothing alarming here but that might have more to do with CSLGE’s funding than those of the plans.

According to the brief, the “Census of Governments reports a total of 6,276 state and local pension plans in 2016, with over $3.7 trillion in assets and 31.2 million members. Of this total, 5,977 plans – amounting to $684 billion in assets and 3.8 million members – are locally administered.” In a footnote in the appendix it is noted that the the funded ratios are “measured under traditional GASB 25 standards”.

Thousands of plans left out and no attempt to go with the more realistic numbers that GASB 67 is forcing governments to disclose make the brief’s pollyannaish conclusions easily dismissible. What is helpful is a listing of local plans with abysmal funded ratios notwithstanding the flawed methodology:

  • Bridgeport Public Safety Plan A – 23.4%
  • Chicago Fireman’s Annuity Benefit Fund – 21.3%
  • Chicago Police – 23.7%
  • Providence Employees Retirement System – 27.1%
  • City of Spartanburg General Employees Retirement Plan – 28.6%

11 responses to this post.

  1. Posted by Tough Love on January 2, 2018 at 2:32 pm

    Given that the Center for State and Local Government Excellence is a left-leaning/Public-Sector-Worker/Union supporting organization, showing GASB 25 instead of GASB 67 based funding ratios is no surprise.

    And heavens, what would the Funding Ratios look like if PRIVATE Sector valuation assumptions & methodology were used ?

    Answer: Roughly 1/4 to 1/3 LESS than those shown…… so poor, that if they WERE Private Sector Plans, Gov’t Regs would bar MOST of them from granting future service pension accruals.

    Reply

  2. You are right, Tough Love. Good timing on this antidote report from ALEC:

    Only One US State Pension Has Funded Level Above 50%
    https://www.ai-cio.com/news/report-one-us-state-pension-funded-level-50/

    Reply

    • Posted by Tough Love on January 3, 2018 at 1:12 pm

      Jack,

      I saw that article on your website last night. While it is useful to know what the funding ratios are with liabilities discounted at risk-free Treasury rates (the 2.142% used in the ALEC study), and economic theory supports the use of risk-free rates when the payouts are strongly guaranteed, few people can “connect” with rates so low, and most blow-off such valuations as extreme and the bring out the supposedly sinister desires of the far right.

      Personally, I would prefer that studies MOST OFTEN show what the funding ratios would be if valued using the SAME rates required in the valuation of PRIVATE Sector Plans … now in the 3.5% range. I believe people would connect with that more easily and realize that Corporate Plan sponsors aren’t stupid, have legions of lobbyists on staff, and would put up a huge fight if they felt the the Gov’t was forcing them to use unrealistically low rates in their valuation. It would also be MUCH harder for those who look obstruct any and all efforts to reform Public Sector pensions to blow-off such valuations as unreasonable.

      And BRAVO to you for starting and keeping Pensiontsunami running for the past 13 years. While “effective” Public Sector Plan reforms have in all but a VERY few instances still eluded us, your efforts have assuredly advanced the timeline considerably.

      Reply

    • Posted by Anonymous on January 3, 2018 at 7:56 pm

      Does that include the Feds’ pensions and I don’t mean SS?

      Reply

  3. Posted by Anonymous on January 3, 2018 at 7:52 pm

    Their back, taxpayers moving to NJ!

    https://www.atlasvanlines.com/migration-patterns

    Reply

  4. Atlas Van Lines data is worthless except for the free advertising they get from their “news releases”. It is only one of many movers, so only sees a limited sample.
    U S Census has much more info about how many moved, what kind of people, and, I believe, why they moved.

    SMH

    Reply

  5. Quoting TL…

    “Given that the Center for State and Local Government Excellence is a left-leaning/Public-Sector-Worker/Union supporting organization…”

    Quoting Jack Dean…

    “Good timing on this antidote report from ALEC:…”

    (A right-leaning anti-union organization.)

    Where do we go for semi unbiased data and explanations of the pension crisis?

    Reply

  6. […] Bury writes in such items as “Funded Status of Local Pensions per CSLGE” about problems with reporting.  Do we accuse a man of cheating when he follows bad rules?  I […]

    Reply

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