Pension crisis: Fully funded ones a rarity

[Anonymous Bosch]

Southern California has Los Angeles, with its movie stars and beautiful beaches, and the Bay Area has hip San Francisco and Silicon Valley. But working class Fresno has one thing no other city in California does: a fully funded pension.

"The fact they are so rare is a strong indication that government shouldn't be involved in this business if basically you have to find one of every 100 who is doing it right," said Robert Fellner of Transparent California, a non-partisan research group.

Fresno is only one of seven cities or states nationwide with a pension surplus, according to a study by Fellner's organization and the group Wilshire Consulting. The rest are $6 trillion short, setting aside just 35 cents for every dollar promised.

Wisconsin is the only state more than 50 percent funded, according to the American Legislative Exchange Council. The five worst include Illinois, where 60 percent of state workers retired in their 50s. In Connecticut, pensions average $40,000 a year, yet state employees contribute just zero to two percent, compared to 6 percent in North Carolina, according to the ratings company, Fitch.

Back in the late 1990s, pension managers thought they were going to get 7 to 9 percent returns forever, so they gave in to union demands for bigger benefits. Then the bubble burst - first in 2000 and again in 2008.

"It literally is a system that says give us really rich benefits today that appear to be free. And if it does blow up in our faces it won't blow up for 20-30 years," said Fellner.

[GreenGoo]

There is a strong argument to be made that pensions are a bad idea.

There is also an argument to be made that if you're stuck with a pension, having it in the hands of the government is much safer than having it with your private employer.

Just a random comment.

[Smoove_B]

The pension system is a leftover from when private sector salaries crushed whatever it was you could make doing comparable work in the public sector. The pension was your long-term "carrot" that paid off after decades of service, presumably being paid significantly less than your peers, year after year over decades of work. Now that the gap has closed and the differences in public/private salaries isn't nearly as severe, the argument for the need of a pension is definitely up for review. To address the pension model you also need to look at what's happened to real wages, earnings and savings across the middle class here in America.

[GreenGoo]

Now that the gap has closed and the differences in public/private salaries isn't nearly as severe,

This has not been the case in my field or geographic location.

Obviously if you're offering a competitive salary, having a pension plan in addition may be overkill. Presumably the goal is to attract competent people at competitive cost.

[Zarathud]

ALEC is full of bullshit.

[Isgrimnur]

ALEC is full of bullshit.

The American Legislative Exchange Council (ALEC) is a nonprofit organization of conservative state legislators and private sector representatives that drafts and shares model state-level legislation for distribution among state governments in the United States. According to its website, ALEC "works to advance the fundamental principles of free-market enterprise, limited government, and federalism at the state level through a nonpartisan public-private partnership of America's state legislators, members of the private sector and the general public".

I'm sure that has absolutely no bearing on their viewpoint on public pensions.

[El Guapo]

Now that the gap has closed and the differences in public/private salaries isn't nearly as severe,

This has not been the case in my field or geographic location.

Obviously if you're offering a competitive salary, having a pension plan in addition may be overkill. Presumably the goal is to attract competent people at competitive cost.

It varies yugely by geography and level of government. For attorneys, at least, public salaries are not comparable to private sector salaries. At the state and local level, laughably so (and part of the source of the problems in our criminal justice system is that both local prosecutors and public defenders are (for lack of a better term) criminally underpaid. At the federal level the salaries are generally competitive enough that the federal government can be competitive in hiring (especially given that the work schedule in the public sector jobs is generally much better).

[Grifman]

Southern California has Los Angeles, with its movie stars and beautiful beaches, and the Bay Area has hip San Francisco and Silicon Valley. But working class Fresno has one thing no other city in California does: a fully funded pension.

"The fact they are so rare is a strong indication that government shouldn't be involved in this business if basically you have to find one of every 100 who is doing it right," said Robert Fellner of Transparent California, a non-partisan research group.

Fresno is only one of seven cities or states nationwide with a pension surplus, according to a study by Fellner's organization and the group Wilshire Consulting. The rest are $6 trillion short, setting aside just 35 cents for every dollar promised.

Wisconsin is the only state more than 50 percent funded, according to the American Legislative Exchange Council. The five worst include Illinois, where 60 percent of state workers retired in their 50s. In Connecticut, pensions average $40,000 a year, yet state employees contribute just zero to two percent, compared to 6 percent in North Carolina, according to the ratings company, Fitch.

Back in the late 1990s, pension managers thought they were going to get 7 to 9 percent returns forever, so they gave in to union demands for bigger benefits. Then the bubble burst - first in 2000 and again in 2008.

"It literally is a system that says give us really rich benefits today that appear to be free. And if it does blow up in our faces it won't blow up for 20-30 years," said Fellner.

I don't see a link but I don't think this is accurate. I'm pretty sure Wisconsin isn't the only state more than 50% funded. And CNN says otherwise:

http://money.cnn.com/2015/07/14/retirem ... -pensions/

[LordMortis]

Funded pensions seem like they should be a thing of the past. They existed as a sort of life long contract between lifelong employees and lifelong employers. But whatever. OtOH, I don't agree with gubment making promises with future monies. What happens when a corporation reneges on a pension plan? What happens when government does it? That should be the deciding factor as to how fully funded a pension needs to be.

[Enough]

Most states (if not all) spend more on corporate subsidies than on pensions. Just look at how Christie treated his state's pension. First, use the magic deficit word. Oh wow, I better skip state payments into the pension this year (of over $3 billion) and drive it to insolvency, because you know with budget deficits that's the responsible thing to do! We know our workers will make the hard sacrifices they need to keep any of what's left of their pensions.

Oh hey, look over there, a squirrel! We have lots of money in our fine state of Jersey to invest in new business, here's a big ole' fat subsidy of $1.5 billion for my dudes. What too generous? Guys, guys, we can totally afford this, NJ is rich! But seriously guys, we are way too broke to fund our pensions, pity us!

It's sort of like when Congress cut over $8 billion in food stamps support but in the same breath found enough money for additional farm subsidies of something like $15 billion for a group actually doing pretty decent in their sector of the economy.

ALEC definitely has a big ole' axe to grind here, the destruction of state pension systems is an ideology for them, not some novel social science discovery they made while doing good old fashioned objective scientific research. Why would we expect them to be a good source of information here when they are hellbent on ending the pension system? The OP's linked article is just the confirmation bias self pat on the back I would expect.

[gbasden]

Now that the gap has closed and the differences in public/private salaries isn't nearly as severe,

This has not been the case in my field or geographic location.

Obviously if you're offering a competitive salary, having a pension plan in addition may be overkill. Presumably the goal is to attract competent people at competitive cost.

Yeah. As a contractor that works with State IT folks, I know they are making well under market for their skill sets.

[naednek]

Now that the gap has closed and the differences in public/private salaries isn't nearly as severe,

This has not been the case in my field or geographic location.

Obviously if you're offering a competitive salary, having a pension plan in addition may be overkill. Presumably the goal is to attract competent people at competitive cost.

Yeah. As a contractor that works with State IT folks, I know they are making well under market for their skill sets.

Ya I was about to add in my profession (IT) the private side makes quite a bit more that what I make if jobs were equal. But I do know my benefits that I have, retirement, and healthcare makes up for that. And now they want to take that away which is wrong. CA is in bad shape because they overspent, and stopped contributing to the pensions. But hey, we can build a high speed train in the middle of the valley, which nobody needs.

[Moliere]

$999 million out, $90 million in: Chicago pension funds see the abyss, shrug it off

In 2006, Chicago’s two employee pension funds held a combined $8.5 billion in assets.

Since, they have paid out more than that -- $8.511 billion -- to retired City of Chicago workers.

The funds themselves only generated $3.1 billion in investment returns over the period.

Keeping them afloat are contributions by Chicago property taxpayers ($1.7 billion) and active employees ($1.5 billion), who assume they are saving for their own retirements. They’re not.

[Pyperkub]

Southern California has Los Angeles, with its movie stars and beautiful beaches, and the Bay Area has hip San Francisco and Silicon Valley. But working class Fresno has one thing no other city in California does: a fully funded pension.

"The fact they are so rare is a strong indication that government shouldn't be involved in this business if basically you have to find one of every 100 who is doing it right," said Robert Fellner of Transparent California, a non-partisan research group.

Fresno is only one of seven cities or states nationwide with a pension surplus, according to a study by Fellner's organization and the group Wilshire Consulting. The rest are $6 trillion short, setting aside just 35 cents for every dollar promised.

Wisconsin is the only state more than 50 percent funded, according to the American Legislative Exchange Council. The five worst include Illinois, where 60 percent of state workers retired in their 50s. In Connecticut, pensions average $40,000 a year, yet state employees contribute just zero to two percent, compared to 6 percent in North Carolina, according to the ratings company, Fitch.

Back in the late 1990s, pension managers thought they were going to get 7 to 9 percent returns forever, so they gave in to union demands for bigger benefits. Then the bubble burst - first in 2000 and again in 2008.

"It literally is a system that says give us really rich benefits today that appear to be free. And if it does blow up in our faces it won't blow up for 20-30 years," said Fellner.

Please define "fully funded". Is it the idiotic Post Office requirement, or something that is actually a real-world measurement.

[Moliere]

Please define "fully funded". Is it the idiotic Post Office requirement, or something that is actually a real-world measurement.

Let's start with pensions not needing tax payer subsidies to make their payouts.

[Rip]

I don't think being fully funded is the key piece of information. The key piece is they are far better funded than the others. I doubt being fully funded or not would be that important in a world where all the others have gone broke making that factor matter.

[Moliere]

The Hidden $700 Billion Debt Owed to Public Workers

States collectively owe more than $1 trillion in pension benefits to current public workers and retirees, but that oft-cited figure does not include the cost of other retirement benefits for government workers and public school employees.

That's largely because states don't bother accounting for their so-called "Other Post-Employment Benefits," or OPEB, costs in the same way that they do for pensions. Instead of putting money away year-after-year to pay for those liabilities, most states fund OPEB costs on what accountants call a pay-as-you-go basis, meaning that revenue is appropirated from the state budget each year to meet those needs. The majority of OPEB is in the form of health care benefits, including retiree health insurance and other expenses like dental, vision, life, and disability insurance.

States paid more than $20 billion towards OPEB costs during 2015, according to a new analysis from the Pew Charitable Trusts. That sounds like a lot of money, but it's really just a drop in the bucket compared to the estimated $692 billion owed to public workers over the next few decades.

Some states have done better than others when it comes to keeping up with OPEB costs, but only six states (Alaska, Arizona, North Dakota, Ohio, Oregon, and Utah) have set aside more than half of the the assets necessary to meet thier long-term OPEB obligations, according to Pew's analysis. By comparison, 30 states have less than 10 percent of the necessary savings.

[malchior]

I'm not going to dissect that because it comes from reason.com and frankly almost anything they report is bullshit flushed out of some think tank. That said it is not a leap to think that IL or NJ will see a pension failure within the next 5 years and we'll have to see if that starts a major panic.

[Moliere]

I'm not going to dissect that because it comes from reason.com and frankly almost anything they report is bullshit flushed out of some think tank. That said it is not a leap to think that IL or NJ will see a pension failure within the next 5 years and we'll have to see if that starts a major panic.

You don't have to agree with their "fix" or conclusions, but the stats are kind of scary. Eventually, it seems, the house of cards has to fail.

[Isgrimnur]

Well, that pushes it to the front of my "trigger for the next recession" betting card.

[stessier]

I'm not sure it would make sense to try and set aside for those benefits in the same way you do for the pensions because the benefits are undefined. It would be more illuminating to see what percentage of each state's budget goes toward covering those benefits and how much it has varied each year going back a decade.

[Smoove_B]

Well, that pushes it to the front of my "trigger for the next recession" betting card.

It'll be this or the impending collapse of higher education and/or student debt. Maybe all at the same time. It'll be great.

[Moliere]

Well, that pushes it to the front of my "trigger for the next recession" betting card.

It'll be this or the impending collapse of higher education and/or student debt. Maybe all at the same time. It'll be great.

Trump will lead us into the best, most fantastic, biggest recession ever. More people will participate than for any previous recession.

[Isgrimnur]

I'm penciling it in for summer 2020, so the true impacts aren't felt until after the Ds take back the White House, so they can be blamed for it.

[Pyperkub]

Please define "fully funded". Is it the idiotic Post Office requirement, or something that is actually a real-world measurement.

Let's start with pensions not needing tax payer subsidies to make their payouts.

If they are government pensions for positions paid for by tax payers, then yes, they kind of do require that tax payers pay for them as part of the employment contract.

Now, if you want to talk about private pensions not being bailed out, I'm open to the discussion, provided that the private pensions have been regularly audited and regulated (and maybe have insurance against default?).

[Isgrimnur]

I have a private pension that vests in just over a year. When and if I leave the job, I'll be taking an immediate payout to roll the balance to an investment vehicle that I have control over.

[malchior]

I'm not going to dissect that because it comes from reason.com and frankly almost anything they report is bullshit flushed out of some think tank. That said it is not a leap to think that IL or NJ will see a pension failure within the next 5 years and we'll have to see if that starts a major panic.

You don't have to agree with their "fix" or conclusions, but the stats are kind of scary. Eventually, it seems, the house of cards has to fail.

I don't trust their stats or any part of the process to be blunt but there are definite and easily referenced issues with the pensions I mentioned. Specifically in NJ the judicial pension which is easy to fix since it is small and a general fund for certain state workers one that will not be fixable.

[malchior]

Just to put the situation in NJ in context.

The Judicial Retirement System had assets of $225M at end of fiscal 2015. At the end of fiscal 2016 it was $196M. That is about a 13% drawdown on assets and the members receiving pensions increased 5%. That fund goes bankrupt in 7 years at that rate but will likely be faster with more retirements and less asset growth absent a fix.

The big pension PERS is broken down into a State portion and a Local (read municipal and county workers). The local one is rock solid as the town's were required to 100% fund it. The state funds their side at 40%. Consequently the State portion is in a similar place as JRS. However the size difference is massive. The State portion was about $7.3B at end of fiscal 2016. Unfortunately at the end of fiscal 2015 it was about $8.2B. So roughly the same amount of time to it goes broke like JRS. It can't survive with a $1B drawdown by year that is accelerating.

There will consequently be a lot of pressure to fix this shortly. I could see them bail in the PERS by robbing from the Local side to kick the can but that might buy a decade. We will see i guess. It is a nuke waiting to blow up the state/national/global bond market potentially. Good times.

[Kraken]

Well, that pushes it to the front of my "trigger for the next recession" betting card.

It'll be this or the impending collapse of higher education and/or student debt. Maybe all at the same time. It'll be great.

Let's not forget nuking the healthcare sector. They seem really determined to do that.

[Pyperkub]

Some info on the state of CalPERS (the largest public employees pension fund):

As a whole, CalPERS has about 68 percent of the assets it would need to pay all of the benefits it owes to its members immediately.

Within the fund, CalPERS tracks accounts for all of its participating agencies. It does not take assets from one city or county to pay benefits to retirees from another.

A new CalPERS financial assessment of its participating agencies shows that 16 of its members are in worse-than-average shape, with less than 60 percent of the assets they’d need to fund full retirements for their employees.

So, yeah, not fully funded (which I'm assuming is the idiotic "if we had to pay out all of our future obligations today"), but sustainably funded, save for certain municipalities which have been made aware that they are in arrears. Not worried at all about my CalPERS pension.

[Default]

The Post Office has prepaid it's pension forty years into the future.

Of course, we can't buy new trucks or hire new people at a reasonable wage and I haven't gotten an effective raise in 15 years...

[GreenGoo]

There hasn't been an honest discussion of pensions in so long, I just assume anyone writing about them is a lying liar who's main agenda is the destruction of pensions. Particularly when they go after public pensions, the only pensions left, really.

Pensions aren't a great idea but they are not the sinkholes that political agendas would have you believe. As noted, the standard dishonest way of discussing them is by comparing current assets to future liabilities while magically ignoring future (guaranteed, because taxes, yo) assets.

So any attempt to discuss pension viability, liability or feasibility is met with an immediate "go fuck yourself" from me.

None of the discussion really matters because pensions are now a pariah and will be gone within a generation or so, no matter who says what about which.

Double middle finger to pretending to talk responsibly about pension liability.

[Default]

Please define "fully funded". Is it the idiotic Post Office requirement, or something that is actually a real-world measurement.

Let's start with pensions not needing tax payer subsidies to make their payouts.

That Post Office requirement is an attempt to kill us by bleeding off operational capital to the point that the PO becomes non-functional. Then the Republicans swoop in and loot the pension fund. Prefunding the pension up to the year 2075 is insane.

[Anonymous Bosch]

Well, that pushes it to the front of my "trigger for the next recession" betting card.

Since you're in Dallas, you may find investment strategist John Mauldin's Pension Storm Warning pertinent:

Cities and states don’t have the ability to shed their pension liabilities. They are stuck with them, even as population and property values change.

We may soon see an example of this in Houston. Here in Texas, our property taxes are very high because we have no income tax. Your tax is a percentage of your home’s taxable value. So people argue to appraisal boards that their homes are falling apart and not worth anything like the appraised value. (Then they argue the opposite when it’s time to sell the home.)

About 200 entities in Harris County can charge taxes. That includes governments from Houston to Baytown to Hedwig Village, plus 20 independent school districts.

There’s a hospital district, port authority, several college districts, the flood control district, a multitude of utility districts, and the Harris County Department of Education. Some homes may fall within 10 or more jurisdictions.

What about those thousands of flooded homes in and around Houston; how much are they worth? Right now, I’d say their value is zero in many cases. Maybe they will have some value if it’s possible to rebuild, but at the very least they ought to receive a sharp discount from the tax collector this year.

Considering how many destroyed or unlivable properties there are all over South Texas, I suspect cities and counties will lose billions in revenue even as their expenses rise. That’s a small version of what I expect as city and state pension systems all over the US finally face reality.

Here in Dallas I pay about 2.7% in property taxes. When I bought my home over four years ago, I checked our local pension and was told we were 100% funded. I even mentioned in my letter that I was rather surprised. Turns out they lied. Now, realistic assessments suggest they will have to double the municipal tax rate (yes, I said double) to be able to fund fire and police pension funds. Not a terribly popular thing to do. At some point, look for taxpayers to desert the most-indebted cities and states. Then what? I don’t know. Every solution I can imagine is ugly.

...

I have had meetings with trustees of various government pensions. Many of them want to assume a more realistic discount rate, but the politicians in their state literally refuse to allow them to assume a reasonable discount rate, because owning up to reality would require them to increase their current pension funding dramatically. So they kick the can down the road.

Intentionally or not, state and local officials all over the US made pension promises that future officials can’t possibly keep. Many will be out of office when the bill comes due, protected from liability by sovereign immunity.

We are starting to see cities filing for bankruptcy. That small ripple will be a tsunami within 7–10 years.

But wait, it gets still worse. (Do you see a trend here?) Many state and local governments have actually 100% funded their pension plans. Some states and local governments have even overfunded them – assuming they get their projected returns. What that really means is that the unfunded liabilities are more concentrated, and they show up in unlikely places. You think Texas is doing well? Look at some of our cities and weep. Look, too, at other seemingly semi-prosperous cities all over the country. Do you think the suburbs of Dallas will want to see their taxes increased to help out the city? If you do, I may have a bridge to sell you – unless you would rather have oceanfront properties in Arizona.

This issue is going to set neighbor against neighbor and retirees against taxpayers. It will become one of the most heated battles of my lifetime. It will make the Trump-Clinton campaigns look like a school kids’ tiddlywinks smackdown.

I was heavily involved in politics at both the national and local levels in the 80s and 90s and much of the 2000s. Trust me, local politics is far nastier and more vicious. And there is nothing more local than police and firefighters and teachers seeing their pensions cut because the money isn’t there. Tax increases of up to 100% are going to become commonplace. But even these new revenues won’t be enough… because we will be acting with too little, too late.

This is the core problem. Our political system gives some people incentives to make unrealistic promises while also absolving them of liability for doing so. It also places the costs of those must-break promises on innocent parties, i.e. the retirees who did their jobs and rightly expect the compensation they were told they would receive.

So at its heart the pension crisis is really not a financial problem. It’s a moral and ethical problem of making and breaking promises that profoundly impact people’s lives. Our culture puts a high value on integrity: doing what you said you would do.

We take a job because the compensation package includes x, y and z. Then someone says no, we can’t give you z, so quit and go elsewhere.

The pension problem is going to get worse as more and more retirees get stuck with broken promises, and as taxpayers get handed higher and higher bills. These are irreconcilable demands in many cases. It’s not possible to keep contradictory promises.

What’s the endgame? I think much of the US will end up like Puerto Rico. But the hardship map will be more random than you can possibly imagine. Some sort of authority – whether bankruptcy courts or something else – will have to seize pension assets and figure out who gets hurt and how much. Some courts in some states will require taxes to go up. But courts don’t have taxing authority, so they can only require cities to pay, but with what money and from whom?

In many states we literally don’t have the laws and courts in place with authority to deal with this. And just try passing a law that allows for states or cities to file bankruptcy in order to get out of their pension obligations.

The struggle will get ugly, and innocent people on both sides will be hurt. We hear stories about retired police chiefs and teachers with lifetime six-digit pensions and so on. Those aberrations (if you look at the national salary picture) are a problem, but the more distressing cases are the firefighters, teachers, police officers, or humble civil servants who served the public for decades, never making much money but looking forward to a somewhat comfortable retirement. How do you tell these people that they can’t have a livable pension? We will see many human tragedies.

On the other side will be homeowners and small business owners, already struggling in a changing economy and then being told their taxes will double. This may actually happen in Dallas; and if it does, we won’t be alone for long.

[Isgrimnur]

Dallas context

For the first time in the last four years of turmoil, the Dallas Police and Fire Pension System's funding picture is brighter than the year before.
...
Officials from the pension system and Segal Consulting presented a report Thursday that shows the fund's performance in 2016 and projections going forward. The projections showed the dramatic long-term financial impact of legislation, set to become law Sept. 1, that will save the fund from insolvency.
...
But the fund was in such bad shape that the situation remains delicate. Williams warned the board if they "get a couple of bad years, all bets are off."

The Dallas Police and Fire Pension System now stands at 49 percent funded, a ratio that is dependent upon the system making an average 7.25 percent annual return on its investments after the fund's investment expenses are paid. Segal Consulting's analysis showed that the fund returned 6.82 percent on the market value of its investments in 2016. A lower actual annual return would mean a much lower funded ratio.

Williams told the board that the funded ratio will probably get worse in the short term before it improves. But, he advised the board to not "freak out" about the dips. The changes to the system mean the system could be fully funded by 2061.
...
Late last year, the system was projected to be bust within the decade. The system took in more than $171 million in contributions from taxpayers, police and firefighters and bled out $825 million in benefit payments and refunds in 2016.

The bulk of the payments — $606 million — came from the Deferred Retirement Option Plan, known as DROP. The plan was a lucrative perk for veteran workers that functioned similar to a high-interest checking account for retirees. Almost all that money came out in a panic over the future of the system's solvency.

New restrictions on DROP will return those annual payments to a lower, more stable and predictable amount.
...
Some of the spike can be attributed to older police and firefighters trying to avoid an increase in their contribution rates, which means a cut in take-home pay. Those in DROP pay only 4 percent of their paychecks into the fund. The new rate for all officers and firefighters will be 13.5 percent.
...
Gottschalk said the system will likely have another retirement spike in January when officers and firefighters who have been in DROP for 10 years can no longer put any money into their DROP accounts.

Not a standard method of failure, but certainly one that put them under the gun early.

[Moliere]

So, yeah, not fully funded (which I'm assuming is the idiotic "if we had to pay out all of our future obligations today"), but sustainably funded, save for certain municipalities which have been made aware that they are in arrears. Not worried at all about my CalPERS pension.

Cities Facing Fiscal Mess Plead With CalPERS as Pensions Consume Budgets

If you ask the union-controlled California Public Employees' Retirement System about the state's looming pension crisis, you're likely to get this answer: What pension crisis?

But the story was much different at CalPERS' own Finance and Administration Committee meeting held Sept. 19. City officials from across California warned CalPERS board members about the dire fiscal situation their cities face because the pension debt is consuming larger portions of local budgets. The energetic discussion included 18 speakers, many of them local officials who trekked to Sacramento.

"In Hayward, 68 percent of our unfunded pension cost is retiree benefits," said Hayward City Council member Sara Lamnin, who pointed out that "this means the promises of the past weren't paid for, frankly." Hayward's future is really troubling. She said that "over the next three fiscal years, the city of Hayward's revenue is projected to grow 1.4 percent, but our cost for PERS is going to go up 30.5 percent." Lamnin wasn't asking for someone to rescue Hayward. Officials just want to know how bad the damage will be. "We ask you for data," she said.

Oroville Finance Director Ruth Wright said her Butte County city has been forced to cut its workforce by a third and negotiated cuts in police salaries by 10 percent. Oroville expects its cash flow to be gone in three to four years, she said. "We've been saying the 'bankruptcy' word."

Sounds like a bunch of idiotic whiney city managers, eh?

[Isgrimnur]

Sounds like a bunch of idiotic whiney city managers, eh?

As much as it sounds like you're interested in a reasoned discussion of the topic.

[Moliere]

Sounds like a bunch of idiotic whiney city managers, eh?

As much as it sounds like you're interested in a reasoned discussion of the topic.

Well, Judgy McJudge, you might have noticed that I was responding to something Pyperkub said and using the same verbiage. I'm pretty sure these City Managers are intimately familiar with their respective city budgets and trying to figure out how to plan for long term liabilities. But please, tell me more about how I am not providing you enough of a reasoned discussion.

[Fireball]

It should be illegal for corporations and governments to underfund their pension and other retirement benefit obligations — for private corporations, illegal with penalties including jailtime for executives and members of the Board of Directors; for governments, pension funding should be mandatory first-dollar spending for budgets. That’s not to say that I agree with all pension systems, or that there aren’t many pensions that are unreasonably generous.

Retirement programs of all types are in crisis in America because the Baby Boomers were wildly irresponsible, and now expect their children to bail them out. As they did with our Federal and State budgets, with education spending, with funding for road infrastructure, with maintaining a reasonable pay differential between executives and workers in corporations, the Locust Generation approached retirement program funding in a short-sighted and selfish manner. Basically all of our nation’s financial woes can be laid at the feet of a generation that was always happy to underfund future-looking needs like pensions, roads, education systems and maintaining a strong middle class if it meant giving themselves a bonus, pay raise or tax cut in the short term. And because they ran their own personal finances as irresponsibly as they did those of the nation and our country’s businesses, many of them are sticking around in the workforce well past the time they should have retired, thus depriving rising generations of the ability to grow our incomes and advance in our careers.

Eventaully we’ll have to bail out many pensions at the Federal level. But we need a sustainable, livable retirement system for people in this country, and private investment accounts with meager matching from employers will not cut it. Ultimately, funding future retirement expenses, as well as backlogged and future maintenance on infrastructure systems left to rot by the Boomers, will require much higher tax revenues and a much more progressive taxation system — you know, like the one we had before the Boomers became the driving force in American politics in the 1980s.

[Nightwish]

 for private corporations, illegal with penalties including jailtime for executives and members of the Board of Directors;

That's fine, they'll just base the pension funds on Credit Default Swaps and other very profitable derivatives, it's not like those will ever go away.
Yeah, these kinds of big budget long term items need to be enforced and managed by whoever controls the currency printing press, because individual states/nations will always postpone problems until the worst happens.

I didn't know Americans were more fucked than Europeans on anything, but I'm not exactly relieved. Good luck, y'all.