Portland polce and fire pension number probably too low
Over on the left sidebar of this blog, we try our best to keep up with Portland's ever-growing unfunded liability for pensions for its police and firefighters. At this writing, the unfunded liability, based in large part on what the city reports, is around $2.9 billion (with a "b").
That's a pretty huge number -- more than $5,000 per resident -- but it may actually understate the city's liability, as this story indicates. At least Portland's actuaries are using a discount rate of 4.5% in figuring out the present value of the liability, as opposed to the fraudulent 8% still being used down in California. But even the Portland numbers are suspect, as are most of the statements of the city's political leaders when it comes to money.
| Posted at 10:33 AM | Permalink |
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Comments (6)
Gee, the pensions understating their liabilty, that's a new trick.
I thought the statement:
The finding also raises vexing legal issues, because public debts in California are supposed to be approved by the voters.
Was interesting. Is it the same in Oregon? Of course, it may be moot since they'll close every school before they skip a pension find contribution.
Posted by Steve | April 8, 2010 12:05 PM
I've heard in California debt repayment is only second to education in spending priority. If true, this would seem to place Pension obligations at no more than third priority. I haven't heard it is so clear in Oregon's constitution. Education doesn't seem to get the same priority as in California. As a practicality, it would behoove our state to first pay its debt obligations before making good on pension obligations as state government is very dependent on keeping a line of credit open.
If I were Governor, I would try to declare an immediate emergency and raise the retirement age for state workers and teachers from the typical 55 year old threshold to something more akin to social security, with age thresholds of early reduced benefits at age 62 and full benefits at 67 or 68. (Of course, I might not be alive too long afterwards given the mafia status of the current government employee unions.) But such a move I should think help close the underfunding hole by reducing cumulative lifetime benefit payments, and reducing the number of new government employees requiring additional pension benefits. It would also seem fairer than present for those in private sector employment and dependent on social security as their main pension benefit.
Posted by Bob Clark | April 8, 2010 5:00 PM
But surely you saw that Moody's says that everything is fine?
http://www.bizjournals.com/portland/stories/2010/04/05/daily26.html
> Moody’s praised Portland for the city’s handling of “unexpected financial pressures the remainder of this fiscal year and into the future.”
Posted by Matt | April 8, 2010 8:37 PM
Yes, and Portland's check to Moody's for that service cleared.
The bond rating agencies contributed mightily to the last economic debacle a year and a half ago, and you can count on them being there for the next, worse one as well.
Posted by Jack Bog | April 8, 2010 8:59 PM
I thought with the pension change from 4 years ago all Police and Fire Employees went to the state PERS System and no longer would increase our debt?
Posted by Scott Fisher | April 10, 2010 7:00 AM
Calpers has used a "discount" rate of 7.75%. In the last twenty years they have earned 7.79% God Bless them.
Posted by Charles | April 12, 2010 12:19 PM