Portland fourth worst in country for unfunded pensions
It's no news to regular readers of this blog, but the rest of the country is catching on to the time bomb known as public pensions in the City of Portland. A new study by the Pew Charitable Trusts shows that Portland's unfunded pension liability is the fourth worst in the country -- even worse than the State of Illinois's, which is saying a lot.
The real culprit in Portlandia is the insane police and firefighter retirement and disability "system," which has essentially no assets to back it up. This was Fireman Randy's handiwork in the legislature and City Council: a 100% unfunded pension plan, with benefits paid directly out of current property taxes every year. If a private company tried this, its managers would probably go to jail.
Just how bad is the unfunded liability of the city's police and fire pension "system"? It's hard to get a straight answer. The last figures the city is showing in public are from mid-2010 -- two and a half years ago. At that point, the official number was $2.53 billion. But it's hard to have too much confidence in even that outrageously high figure. The actuaries who come up with that number on the city's behalf tend to get switched around -- indeed, the city's just going out for bid for a new actuary now -- and when new ones come in, they are known to change the assumptions on which the estimates are based, so that it's hard to see a real trend. Sometimes we suspect that the actuaries tend to tell the city bureaucrats what they want to hear, up to a point.
Meanwhile, the pensions owing to the city's other employees -- and for public safety officers hired in the last half-dozen years or so -- have some funding behind them. But a lot of it was borrowed money that still has to be paid back to banks and other investors; the latest figures we have show that about $261 million is owed to bondholders. So much for helping the municipal balance sheet. And even counting the borrowed money to the good, the latest figures, now two years old, show the partially secured plan with an unfunded liability of about $127.7 million.
Then there are health care and other benefits promised to retirees beyond their pensions; at last report, these added another $130 million or so to the totals. Depending on the category, those figures are between two and three and a half years old.
Our debt clock (in our left sidebar) has the city's unfunded liability to retirees as pushing $3.3 billion. There's a margin of error in that estimate, but we'd be shocked if the true number, as of today, was less than $3 billion. It could be $3.5 billion or more. The city's population is less than 600,000. It doesn't, as the real estate sharpies would say, "pencil out."
UPDATE, 1:45 p.m.: New estimates of the police and fire pension liability have just been released, and they show a $330 million increase in unfunded liability. Details here.