At $3.4 billion, the unfunded pension liability in Milwaukee is $14,853 per household. Without major changes, the system will not be able to make scheduled payments in less than twenty years.
|
Municipality (Number of plans)
|
Liabilities, Stated Basis, June ’09 ($B)
|
Liabilities (ABO), Treasury Rate
|
Net Pension Assets ($B) |
Unfunded Liability ($B) |
Unfunded Liability / Revenue |
Unfunded Liability per Household ($) |
| Chicago (7) | 46.3 | 66.6 | 21.8 | 44.8 | 763% | 41,966 |
| New York City (5) | 155.8 | 214.8 | 92.6 | 122.3 | 276% | 38,886 |
| San Francisco (1) | 16.3 | 22.6 | 13.3 | 9.3 | 266% | 34,940 |
| Boston (1) | 7.4 | 11.0 | 3.6 | 7.5 | 430% | 30,901 |
| Detroit (2) | 8.1 | 11.0 | 4.6 | 6.4 | 402% | 18,643 |
| Los Angeles (3) | 34.6 | 49.3 | 23.2 | 26.1 | 378% | 18,193 |
| Philadelphia (1) | 9.0 | 13.0 | 3.4 | 9.7 | 290% | 16,690 |
| Cincinnati (1) | 2.2 | 3.2 | 1.2 | 2.0 | 321% | 15,681 |
| Baltimore (2) | 4,4 | 6.4 | 2.7 | 3.7 | 260% | 15,420 |
| Milwaukee (1) | 4.4 | 6.7 | 3.3 | 3.4 | 687% | 14,853 |
Prior research by the Kellogg School of Management has found $3 trillion in unfunded legacy liabilities from state-sponsored pension plans. However, new research finds additional liabilities from municipalities that magnify the growing public pension crisis.
The paper, “The Crisis in Local Government Pensions in the United States,” is co-authored by Joshua Rauh of the Kellogg School and Robert Novy-Marx of the University of Rochester.
“This new paper calculates the present value of local government employee pension liabilities for about two-thirds of total local government employees, and estimates the unfunded obligation for the remaining one-third of workers covered by municipal plans not in our sample,” said Rauh, associate professor of finance at the Kellogg School. “In total, we estimate that municipal plans in the U.S. are carrying $574 billion in off-balance-sheet debt in the form of unfunded pension obligations.”