Study: City among worst in pension solvency
A NATIONAL research group on Tuesday released an analysis of how cities across the country are struggling to cope with enormously underfunded pension and retiree health-care accounts, saying that 61 of the biggest U.S. municipalities came out of the recession with a combined $217 billion shortfall.
Even against that depressing backdrop, Philadelphia's troubles stood out.
Philly and Chicago were the only major cities that ranked near the bottom of the barrel in two key indicators of retirement funds' solvency: how much money they have in the bank and how much they are collecting each year.
The study, by the Pew Charitable Trusts, looked at how America's cities were affected by the combination of the rising cost of paying for retiree benefits and the recent global recession.
Researchers found that the recession, while problematic for all, was twice as damaging to cities like Philadelphia that "lacked fiscal discipline" before the economy turned south.
In 2009, the most recent year the study looked at, the city's pension funds were only 62 percent funded. The researchers set 80 percent as the benchmark for a healthy level.
The Nutter administration says that pension reform is a major priority for the mayor's final term.
In the city's current $3.6 billion budget, the city is paying $629 million to pension costs, city Finance Director Rob Dubow said. That number was less than $200 million a decade ago.
For Nutter, a big part of the solution is signing contracts with municipal unions that will reduce the city's burden for retirees. Forging those agreements, however, has proved elusive.
"That's obviously a question that involves more than just pensions," Dubow said. "We want to get to [contract] deals, and we'll keep pushing for pension reform.
"It's taking up more and more of the budget, and we need to find other solutions," besides paying out of pocket, he said.
Three of the four major unions have been working without a contract since 2009, and one of the biggest issues of contention in those stalemates has been retiree benefits.
The unions for the city's firefighters and blue- and white-collar workers prefer the existing defined-benefit plans. Nutter is pushing for new hybrid retirement plans that would include city contributions to employees' private retirement funds, as well as smaller direct benefits.